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Adobe is the way to play the ‘golden age of creativity’

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CNBC’s Jim Cramer said Wednesday that Adobe could pose a threat to brick-and-mortar retail.

After reporting what Cramer called a “blowout quarter” on Tuesday, the software company saw its stock surge more than $14 per share the following day.

“You just can’t compete against digital merchants if those merchants are armed with Adobe. I don’t know how you do it,” the “Mad Money” host said. “As CEO Shantanu Narayen explains, we are in ‘the golden age of creativity,’ which is stoked from grade school with Adobe Spark … and it’s upending everything as these kids grow up and master e-commerce.”

Cramer said he learned from the conference call that Adobe’s services can duplicate the “best parts” of the mall in an online setting, where customers can shop for what they are looking for remotely. Designers can produce more creative merchandise and use Adobe to target customers better than a shopping center, while also scaling up the business “rapidly,” he said.

It can be done “cheaper, faster, better and, of course, more creative with far less inventory risk,” Cramer said. “In this new world, I really do pity the brick-and-mortar retailers. … Some of the department stores are indeed on their last legs and even the better ones are struggling.”

Nordstrom, Gap, L Brands and Abercrombie are all vulnerable because of Adobe, he said. Macy’s must figure out how to scale the new showroom at its flagship store in New York City, he added.

“Only Williams-Sonoma, which was initially a catalogue store, seems to have done a good job of making the leap to the web, ” Cramer said.

The host suggested viewers read Adobe’s conference call to get the full picture.

Cramer said every consumer now is armed with an “electronic pushcart that looks every bit as fancy as something from Tiffany or a Neiman, but is cheaper, and in many ways better, than what Target or even a Walmart can sell. “

Even after its 5% run Wednesday, Adobe is worth a play in his eyes.

The Fed playbook

Federal Reserve Chairman Jerome Powell holds a news conference following a two-day Federal Open Market Committee meeting in Washington, June 19, 2019.

Kevin Lamarque | Reuters

The Federal Reserve on Wednesday gave investors a reason to be bullish, but pressure from the White House is dragging down optimism, Cramer said.

The central bank decided to hold its benchmark interest rate in place at its June meeting and signaled the possibility for a rate cut in the future to boost a slowing economy. That means President Donald Trump, at least for now, did not get his wish.

“Normally I’d be telling you to buy stocks left and right with the Fed about to cut interest rates, and I still think it makes sense to be bullish,” the host said. “However, with the president on the warpath, you need to be more cautious, because even if the trade war is justified, the longer it goes on … the worse it is for our economy.”