Business

Monday – Friday, 6:00 – 7:00 PM ET

It’s that time again! “Mad Money” host Jim Cramer rings the lightning round bell, which means he’s giving his answers to callers’ stock questions at rapid speed.

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Transocean Ltd: “It is a high-risk stock. I prefer to have something that is certainly a little bit more … known and already doing incredibly well, which is Halliburton.”

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Tapestry Inc: “I think it’s an inexpensive stock. I think Coach is good. I’d like for them to come on the show. I think that it’s a good idea.”

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Boeing Co: “As a long term position — that is really the operative term, because short-term, they keep doing things wrong.”

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Quantumscape Corp: “It’s losing a lot of money … and we do not recommend stocks that are losing a lot of money.”

Disclaimer: Cramer’s Charitable Trust owns shares of Procter & Gamble, Halliburton and Pioneer Natural Resources.

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Monday – Friday, 6:00 – 7:00 PM ET

CNBC’s Jim Cramer on Wednesday advised investors to pick up shares of Netflix in the next market dip.
“You put it on the top of your shopping list, you wait for the next pullback in the averages … and then you pull the trigger,” he said.

CNBC’s Jim Cramer on Wednesday advised investors to pick up shares of Netflix on the next market dip.
“You put it on the top of your shopping list, you wait for the next pullback in the averages … and then you pull the trigger,” he said.

His comments come after Netflix stock closed up 13% on Wednesday after it reported a top and bottom line beat in its third-quarter results. The streaming giant revealed that it added 2.41 million net subscribers during the quarter, topping its forecast for 1 million new subscribers.
Netflix’s quarter represents a possible turning point for the company, whose stock took a blow earlier this year after the company lost subscribers for the first time in more than a decade due to intensifying competition, password sharing among users and persistent inflation.
And while the company still faces macroeconomic headwinds such as a strong U.S. dollar, it’s cracking down on shared accounts and rolling out an ad-supported tier, Cramer said, though he acknowledged the measures likely won’t have a huge impact right away.
He added that the company forecasts 4.5 million new paid subscribers in the fourth quarter and substantial growth in free cash flow next year, strengthening his bull case for Netflix.
“I’m betting 2023 will look a lot better than 2022,” he said.

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Monday – Friday, 6:00 – 7:00 PM ET

CNBC’s Jim Cramer on Wednesday told investors to consider adding shares of well-established consumer packaged-goods companies to their portfolios.
Cramer highlighted three companies’ most recent quarterly results as examples of why investors should have such stocks on their shopping lists.

CNBC’s Jim Cramer on Wednesday told investors to consider adding shares of well-established consumer packaged-goods companies to their portfolios.
“Nobody’s championing what actually works: these old-line consumer packaged-goods names that we all know,” he said.

Cramer highlighted three companies’ most recent quarterly results as examples of why investors should have such stocks on their shopping lists:

“I bet we get something similar from Bristol-Myers, Coca-Cola and Eli Lilly [when they report earnings],” he said.
Cramer also reiterated two points that he’s made throughout this year: invest in boring companies with solid balance sheets and avoid money-losing companies that will likely struggle in a recessionary environment.
“The stocks that historically hold up best in recessions have been lost in the shuffle, namely the high-quality, well-capitalized companies with good balance sheets, big buybacks, meaningful dividends,” he said.
Disclaimer: Cramer’s Charitable Trust owns shares of Procter & Gamble, Johnson & Johnson and Eli Lilly.

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The Vaccines for Children program provides vaccines to kids under age 19 whose families cannot afford them.
Children are eligible for the program if they qualify for Medicaid or are uninsured, underinsured or Native American.
The Centers for Disease Control and Prevention’s independent advisors voted unanimously on Wednesday to include Covid shots in the program.

A child is administered a dose of the Pfizer-BioNTech coronavirus disease (COVID-19) pediatric vaccine.
Mayela Lopez | Reuters

The Centers for Disease Control and Prevention took a major step Wednesday toward ensuring that kids who are uninsured can receive Covid-19 vaccines for free after the federal government shifts its immunization program to the commercial market.
The CDC’s independent advisors voted unanimously on Wednesday to include Covid shots authorized for kids by the Food and Drug Administration in the federal government’s Vaccines for Children program.

The Vaccines for Children program provides vaccines to kids under age 19 whose families cannot afford them. Children are eligible for the program if they qualify for Medicaid or are uninsured, underinsured or Native American.
Including Covid shots in the program does not make them a routine childhood vaccination for school, said Dr. Jose Romero, director of the National Center for Immunization and Respiratory Diseases.
The federal government has been providing Covid vaccines to everyone in the U.S. for free during the pandemic. But the Biden administration is working on a plan to transition the vaccination program to the commercial market as soon as 2023, which means people will have to start paying for the shots.
Dr. Jeanne Santoli, a CDC official, said the public health agency will start awarding contracts for health care providers to give the Covid shots for free to uninsured kids.
Currently, children as young as 6 months old are eligible for Pfizer’s and Moderna’s two-dose primary series with the first-generation shots that target the original Covid strain. Kids as young as age 5 are eligible for the new booster shots that target the dominant omicron BA.5 subvariant.

The decision to include Covid shots in the free vaccine program will prove crucial to maintaining access for many children. As many as 5.3 million kids are expected to lose health insurance through Medicaid or the Children’s Health Insurance Program whenever the Biden administration decides to end the Covid public health emergency, according to the Health and Human Services Department.
“This is an access issue. This is an issue to allow children that don’t have insurance to gain access to this vaccine,” said Romero.
Although Covid-19 is generally less severe in kids than adults, more than 162,000 children under age 18 have been hospitalized with Covid since August 2020, according to CDC data. More than 1,800 children have died from Covid since the pandemic began, according to the data.
Public health officials are also worried about kids developing long Covid even after a mild infection.

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The grants are being allocated through the Department of Energy with funds from the Bipartisan Infrastructure Law to companies in 12 states.
The funding will go toward the creation of battery-grade materials including lithium, graphite and nickel.
In all, the Bipartisan Infrastructure Law, the CHIPS and Science Act and the Inflation Reduction Act put over $135 billion toward electric vehicle manufacturing.

Workers marry the body structure with the battery pack and the front and rear sub frames as they assemble electric vehicles at the Lucid Motors plant in Casa Grande, Arizona, September 28, 2021.
Caitlin O’Hara | Reuters

President Joe Biden announced $2.8 billion in grants for 20 companies to produce batteries for electric vehicles in the United States.
The grants are being allocated through the Department of Energy with funds from the Bipartisan Infrastructure Law to companies in 12 states. The funding will go toward the creation of battery-grade materials including lithium, graphite and nickel.

Increasing manufacturing capacity of in the United States has been a priority for the Biden administration. In all, the Bipartisan Infrastructure Law, the CHIPS and Science Act and the Inflation Reduction Act allocated more than $135 billion toward electric vehicle manufacturing. The president has directed the industry to have EVs comprise half of all new vehicles produced in the United States by 2030.
“The Infrastructure Law also invests in people and companies that are going to build our future like electric vehicles and the advanced batteries that are going to power those vehicles,” Biden said. “This is critically important because the future of vehicles is electric, but the battery is a key part of that electric vehicle and right now 75% of that battery manufacturing is done in China.”

Competing with China is a central incentive for the push. China controls nearly half of global production for some of the materials needed to produce these batteries, Biden said.
“China’s battery technology is not more innovative than anyone else’s,” Biden said. “In fact, our national labs, our research universities, our automakers led the development of this technology here in America, but by undercutting US manufacturers with their unfair subsidies and trade practices, China seized a significant part of the market.”
Biden said the United States is experiencing “one of the most significant economic transitions since the Industrial Revolution.”
In addition to the grants, Biden announced the creation of a new American Battery Manufacturing Initiative which will allow for a full government approach to produce batteries for uses ranging from electric vehicles and homes to defense purposes, the White House says. The move will continue the push to increase American competitiveness by creating more batteries and critical battery components in the U.S.

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Investors in Club holding Disney (DIS) appear to have been encouraged by streaming competitor Netflix ‘s (NFLX) better-than-expected third-quarter results Wednesday — a sentiment that’s not misguided, but requires some context. Disney shares were outperforming the broader market Wednesday, rising about 0.7%, to roughly $99 per share, while the S & P 500 lost 0.8% in midday trading. Disney’s uptick came as Netflix surged more than 12% on the back of strong subscriber additions, breaking a consecutive two-quarter streak in which it lost paying customers, while beating estimates on revenue and profit. Subscriber growth We think Netflix’s quarter offers a positive read-through for Disney on the streaming front. That’s important, even though we’ve argued for months that Wall Street’s intense focus on Disney’s streaming ambitions means the company’s booming theme park business gets somewhat overlooked. In the first six months of the year, Netflix lost more than 1 million subscribers combined and saw many investors head for the exit, too. On Tuesday night, however, Netflix reported it gained 2.41 million subscribers globally in the three months ended Sept. 30. Netflix management intends to deemphasize subscriber growth as a metric now that an ad-supported version of the streaming platform is on the horizon, as well as a paid password sharing product. Nevertheless, some on Wall Street were encouraged to see Netflix return to subscriber growth in the third quarter, suggesting the storm clouds could be dissipating. “The dark days are over. If there’s a unifying narrative for NFLX in 3Q22 it’s that the worst appears behind it,” Wells Fargo analyst Steven Cahall wrote in a research note Tuesday. In general, Netflix and Disney are very different companies — a point we drove home in July when Netflix reported second-quarter results . In simple terms, Disney is an expert at creating beloved fictional worlds then monetizing these iconic franchises through movies and shows, theme-park attractions and merchandise. Netflix, by contrast, is solely focused on making moves and TV shows to stream. When it comes to streaming, Netflix is considerably more mature, having first launched basic digital streaming in 2007 before scaling up and starting to make its own shows . Netflix brought its streaming service to over 130 countries across the world more than three years before Disney’s flagship streaming service, Disney+, hit the U.S. and Canadian markets in the fall of 2019. Disney is still expanding into new countries , serving as a natural well for subscriber growth, which for Netflix has largely dried up. Disney+ added a combined 22.3 million subscribers in its two most-recent quarters , which coincided with Netflix’s period of paid customer losses. That informs why we view Netflix’s fresh subscriber gains as positive for Disney. Even in a period of decline for Netflix, Disney+ was able to keep growing solidly. Now, Netflix’s turnaround with subscribers could suggest the overall streaming environment has become more favorable, giving Disney an even stronger tailwind. Disney’s fiscal fourth-quarter and 2022 annual results are slated to be released after the market closes Nov. 8. Analysts expect the company to have added 9.1 million Disney+ subscribers in its fourth quarter, according to FactSet. Ad versions Another big topic around Netflix’s earnings report is its upcoming advertising-supported tier , which debuts early next month in 12 countries including the U.S., Canada and Japan. In the U.S. it will be $6.99 per month starting Nov. 3 . This is noteworthy for Disney because an ad-supported version of Disney+ is set to launch Dec. 8 in the U.S., costing $7.99 per month. Disney+ without ads currently costs $7.99, as well. However, it will rise to $10.99 monthly once the ad-supported tier is live. Netflix management sounded upbeat about the impending launch, with Chief Operating Officer Gregory Peters saying Wednesday demand from advertisers is “very, very strong.” Peters also noted how quickly Netflix’s ad-supported product came together, partnering with Microsoft to deliver it in about six months. While Netflix’s ad tier will beat Disney+ to the U.S. market by about a month, we’re generally optimistic about Disney’s ability to compete in the digital advertising space. This is primarily because Disney is deeply entrenched in the advertising world both on linear TV — through its ownership of ESPN and other cable channels — as well as through its majority stake in Hulu, a streaming service that has long offered plans with ads. Netflix had for years resisted calls to bring advertising to its service before publicly changing its tune this past spring. Amid a the current economic slowdown, it’s generally encouraging to hear advertisers are interested in Netflix’s offering. We just happen to think Disney occupies a superior position in the race for streaming ad dollars heading into next year. Rosenblatt Securities analyst Barton Crockett offered a similar view in a CNBC interview Wednesday. “Disney, I think, is going to trounce Netflix in eyeballs for [subscription video on-demand] advertising. Disney will be the better ad story, we think, in 2023 than Netflix,” Crockett told CNBC. (Jim Cramer’s Charitable Trust is long DIS. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

An inflatable Disney+ logo is pictured at a press event ahead of launching a streaming service in the Middle East and North Africa, at Dubai Opera in Dubai, United Arab Emirates, June 7, 2022.
Yousef Saba | Reuter

Investors in Club holding Disney (DIS) appear to have been encouraged by streaming competitor Netflix’s (NFLX) better-than-expected third-quarter results Wednesday — a sentiment that’s not misguided, but requires some context. More

BMW Group plans to invest $1.7 billion in its U.S. operations to build electric vehicles and batteries, the company announced Wednesday.
The investment will include $1 billion for production of EVs at BMW’s South Carolina plant, and $700 million for a new battery-assembly facility in the state.
BMW also announced a deal to purchase battery cells from Japan-based Envision AESC, which will build a new battery cell factory in South Carolina.

BMW Concept XM

BMW Group plans to invest $1.7 billion in its U.S. operations to build electric vehicles and batteries, the company announced Wednesday.
The investment will include $1 billion to prepare for production of EVs at the automaker’s existing Spartanburg factory in South Carolina, and $700 million for a new high-voltage battery-assembly facility in nearby Woodruff.

The German automaker expects to produce at least six fully electric models in the U.S. by 2030. The Spartanburg facility, where the investment announcement took place, currently produces BMW “X” SUVs and lithium-ion battery modules for its two plug-in hybrid electric vehicles. Production of the new hybrid-electric BMW XM is expected to begin later this year. 
“Going forward, it will also be a major driver for our electrification strategy, and we will produce at least six fully electric BMW X models here by 2030,” BMW Chair Oliver Zipse said in a release.
BMW on Wednesday also announced a deal to purchase battery cells from Japan-based Envision AESC, which will build a new battery cell factory in South Carolina to supply the BMW plants.
The Envision AESC facility is expected to have annual production capacity of 30 gigawatt hours — in line with plans of other automakers and battery suppliers for U.S. plants, BMW said.
A spokeswoman for Envision AESC said the new plant is expected to be a multibillion investment, but declined to specify an exact amount. She said a location for the facility is expected to be announced by the end of the year.

In April, the company announced plans to spend $2 billion to build a second U.S. plant in Kentucky. Its first plant in Tennessee supplies Nissan Motor. Its other major customer is BMW in the U.S., with discussions ongoing with “a number of global automotive manufacturers and partners,” the spokeswoman said.

BMW has already announced four additional battery cell factories will be built in Europe and China to meet its demand for next-generation battery cells.
The announcements are the latest of several recent multibillion-dollar investments in U.S production of EVs and batteries amid tightening emissions regulations and legislation to encourage domestic manufacturing.
Automakers are also facing stricter sourcing guidelines that are part of the Inflation Reduction Act and the United States-Mexico-Canada Agreement, formerly the North American Free Trade Agreement. Both policies increased requirements for domestically sourced vehicle parts and materials to avoid tariffs or qualify for financial incentives.

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Automakers and dealers have seen record profits as demand outpaced supplies of new vehicles amid production and supply chain problems.
The industry has touted pent-up demand as a driving force for earnings going forward.
But there are increasing concerns among investors and analysts that demand could be weakening.

A sign advertises to purchase cars at a used car dealership in Arlington, Virginia, February 15, 2022.
Saul Loeb | AFP | Getty Images

DETROIT – Since the start of the pandemic in early 2020, U.S. automakers and dealers have seen record profits as demand outpaced supplies of new cars amid supply chain problems.
But with interest rates rising, inflation at record highs and recession fears looming, Wall Street is closely watching third-quarter earnings results and guidance for any signs consumer demand might be weakening.

“Auto sentiment is very poor. We get it. Higher rates, still high prices, low consumer confidence, a potential recession and European energy risk does not make autos a friendly place,” RBC Capital Markets analyst Joseph Spak wrote in an investor note last week.
Spak said third-quarter earnings “should mostly be fine,” with the focus being on company commentary and guidance revisions. He said 2023 estimates for the sector need to “move materially lower.”
RBC and other financial firms have signaled the auto industry’s supply chain issues could quickly shift to demand problems.
Profits for U.S. and European car companies are set to drop by half next year as weakening demand leads to an oversupply of vehicles, UBS analysts led by Patrick Hummel told investors last week.
He said the overall automotive sector in 2023 “is deteriorating fast so that demand destruction seems inevitable at a time when supply is improving.”

GM/Ford

On Oct. 10, Hummel also downgraded General Motors and Ford Motor, predicting it that it would take three to six months for the auto industry to end up in oversupply. He said that will “put an abrupt end” to the unprecedented pricing power and profit margins for the automakers in the past three years.
The investment firm downgraded Ford to “sell” from “neutral” and GM to “neutral” from “buy” – sending both stocks tumbling roughly 8% during intraday trading on Oct. 10.
The downgrades came weeks after Ford said parts shortages affected roughly 40,000 to 45,000 vehicles, primarily high-margin trucks and SUVs that haven’t been able to reach dealers. Ford also said at the time that it expects to book an extra $1 billion in unexpected supplier costs during the third quarter.

Jim Farley, CEO, Ford, left, and Mary Barra, CEO, General Motors
Reuters; General Motors

GM has not signaled such problems for the third quarter, but experienced similar issues during the second quarter that it was expecting to make up for during the second half of the year.
GM CEO Mary Barra this past week told Yahoo! Finance that the Detroit automaker is preparing for increased demand for its vehicles next year, but that it wants to be prepared “regardless of the environment” to continue investing in its electric vehicle plans.
GM is set to report third-quarter results before markets open Tuesday, followed by Ford a day later after the bell.
Before Detroit’s largest automakers report earnings next week, electric vehicle leader Tesla, which has a cult following among investors, is scheduled to report after markets close Wednesday.

Dealers

CarMax fueled Wall Street’s concerns last month after the used car dealer posted one of its biggest earnings misses ever. In its fiscal second quarter ending Aug. 31, same-store unit sales fell 8.3%, steeper than the 3.6% decline Wall Street expected.
Used car prices remain elevated, but Cox Automotive said wholesale prices for dealer auctions have declined for four consecutive months. That could signal consumers are fed up with the near-record prices.
Citing CarMax’s results, J.P. Morgan analyst Rajat Gupta said the sentiment for franchised dealers’ third-quarter earnings “is the most negative we have encountered since the pandemic.”

“The sector is not immune to ongoing macro challenges and we are dialing back our estimates for 2023 materially to reflect a mild recession and hitting a new normal by 2025,” Gupta said in an Oct. 6 investor note.
A potential bright spot for the industry is the low new car availability and sales. Even if there is an economic downturn, sales could still increase though profits would be expected to tighten.
Lithia Automotive on Wednesday reported its highest third-quarter revenue and earnings per share in company history, despite missing Wall Street’s top and bottom-line expectations.
Morgan Stanley analyst Adam Jonas said Lithia’s third quarter may be the last of the “really, really, really good” gross profit per unit quarter of this cycle.
“While [CarMax’s] weak fiscal 2Q results (reported a couple weeks back) set the tone for the used market, we believe [Lithia’s] 3Q miss should set the pattern for the franchise players,” he said in an investor note Wednesday.
Other major dealers scheduled to report third-quarter earnings include Group 1 Automotive on Oct. 26, followed by AutoNation, Asbury Automotive Group and Sonic Automotive on Oct. 27.

Auto suppliers

Looking to auto suppliers, which have experienced significant cost increases during the coronavirus pandemic, several Wall Street analysts expect continued growth this year, followed by single-digit growth, if not less, next year.
Suppliers are largely paid after they deliver parts or products to larger suppliers or automakers. Smaller suppliers that produce materials or parts for lager companies have particularly been under pressure due to lower volumes, increased costs and labor shortages.
Gary Silberg, KPMG’s global head of automotive, told CNBC that a significant number of suppliers are going back to the original equipment manufacturers asking for support.
“Not only just for them but for their suppliers. It’s a dance basically that everyone’s doing all the time,” Silberg said. “They don’t have a lot of leverage is the problem. It’s been a very, very tough 18 months” for smaller automotive suppliers.
A KPMG survey that included more than 100 automotive industry CEOs whose companies have annual revenues of over $500 million found 86% believe there will be a recession in next 12 months, and 60% said it will be mild and short.
Responses for the KPMG CEO Outlook survey were submitted from mid-July to late-August.  
Deutsche Bank expects auto suppliers to report third-quarter results in-line with Wall Street’s expectations. Analyst Emmanuel Rosner said in a note to investors Wednesday that the firm favors suppliers over automakers into next year, but sees potential earnings downside risk from smaller suppliers such as American Axle & Manufacturing and Dana Inc.
– CNBC’s Michael Bloom contributed to this report.

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