PayPal’s shares were one of the best market performers Tuesday despite the tie-up between Global Payments and Total System Services that’s worth $21.5 billion of stock, CNBC’s Jim Cramer said.
The stock climbed 1.72% during the same session, while two major indexes declined nearly 1%.
“Every time you see competitors teaming up to try to take share from PayPal, it just reminds people how these guys are already the undisputed worldwide leader in payments, which is what makes this such a fabulous fintech stock,” the “Mad Money” host said.
After the Global Payments and Total System Services merger was announced, investors began speculating that it could dent the market share that both PayPal and Cash App-parent Square Inc. have accumulated, Cramer said.
With Braintree and Venmo under its umbrella, PayPal is “the real juggernaut” of the financial technology sector under CEO Dan Schulman’s leadership, he said. Furthermore, Square has done a lot to simplify the cash register and electronic payments with its card reader, not to mention its lending services to small businesses, he added.
Square has a market cap of about $28 billion, which pales in comparison to PayPal’s more than $131 billion stronghold.
“The merger makes a ton of sense,” Cramer said. “Sometimes, though, the fight isn’t worth winning.”
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Damned if you do, damned if you don’t
Trader on the floor of the New York Stock Exchange.
Brendan McDermid | Reuters
Cramer said that investors should balance exposure to the market with storing cash on the sidelines, because there are “some real worries here.”
“I think we could be on the verge of a significant slowdown in the U.S. economy if something doesn’t change soon,” he said. “Consumer and corporate confidence [is] waning. Things just don’t feel right in this country.”
Based on the action in the major indexes Tuesday – stocks rallied in the morning before the Dow Jones Industrial Average shed nearly 238 points, the S&P 500 dropped 0.84% and the Nasdaq Composite slipped 0.39%. Cramer said it’s hard to live with this market.
“You’re damned if you do and you’re damned if you don’t,” he said. “Be patient. Don’t pay up for anything here. Wait for your pitch. Right now, in most sectors, it’s still too early to take a swing.”
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Growing on snacks
Dirk Van de Put, CEO of Mondelez International.
Adam Jeffery | CNBC
Packaged food company Mondelez International has been able to boost sales despite an “unease” among worldwide consumers, CEO Dirk Van de Put told Cramer.
“If I look at food [companies], they’re doing pretty good,” Van de Put said in an interview. “I would say, as it relates to their overall life circumstances and how the middle class feels … the lower class — they don’t feel well at the moment.”
Geopolitical issues, such as Great Britain’s impending breakup with the European Union, is causing uncertainty and weighing on overall consumer confidence, Van de Put said.
But the company has found success by adapting to changing consumer tastes, especially those of millennials, said Van de Put, who has led the company since the end of 2017. That demographic of shoppers has demanded more and more snack products, he added.
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Gauging the Fed
Federal Reserve Board Chairman Jerome Powell testifies before the Senate Committee on Banking, Housing, and Urban Affairs on Capitol Hill in Washington, DC, on February 26, 2019.
Jim Watson | AFP | Getty Images
Stock traders speculating that the Federal Reserve will cut interest rates this year could be making a “very risky bet,” Cramer said.
Cramer perused Fed Funds Futures analysis by Carley Garner, co-founder of the DeCarley Trading futures brokerage firm. Fed Funds Futures financial contracts are used to predict changes in short-term interest rates.
“The charts, in a completely contrarian way as interpreted by Carley Garner, suggest that a lot of people are anticipating a more lenient Fed,” the host said. “And I don’t think the Fed will go there unless the economy gets substantially worse from here, although that’s always a possibility, given the big-picture data has gotten a heck of a lot weaker over the past few months.”
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Aneel Bhusri, CEO of Workday.
Mark Neuling | CNBC
Cramer talked with Workday CEO Aneel Bhusri after the company reported better-than-expected first-quarter earnings.
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Cramer’s lightning round: You might want to hold off on Alibaba for now
In Cramer’s lightning round, the “Mad Money” host zips through his thoughts on callers’ stock picks of the day.
Alibaba: “Right now, it’s literally the only Chinese stock that I’ll recommend, but now they’re doing some big listing in Hong Kong (it’s) kind of wrecking the whole trade story. This is a proxy for trade. Let’s just hold off for now.”
Okta: “It’s one of our cloud princes. It’s gonna go higher. I like this stock, but it did hit a 52-week high today. So let’s be careful.”
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