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tv   Mad Money  CNBC  October 31, 2016 6:00pm-7:01pm EDT

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gets scared. i would stay away. >> dan? >> so this is scary. and we're talking about biotech earlier, the xpi, the index, coming down from 70 to 56. i think this one, keep a tight stop on it. >> i'm melissa lee, thanks for watching. have melissa lee. have a safe halloween. "mad money" starts right now. my mission is simple, to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere, and i promise to help you find it. "mad money" starts now. hey, i'm cramer. welcome to "mad money." welcome to cramerica. other people want to make friends. i'm just trying to make you some money. my job is not just to entertain but to educate and teach you. so call me at 1-800-743-cnbc or tweet me @jimcramer. raise your hands if i think this business is difficult. you're right. you're right because too often the facts just don't fit with the story. and that leads to a level of
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confusion. even on days where the dow dipped 15 point nasdaq closed down 0.02%. let's start with politics. a subject i'm usually loathe to talk about but the election is only eight days away, so let's give it its due. on friday, we learned that fbi director jim comey had decided to examine a whole new bunch of hillary clinton e-mails found as part of a separate investigation to disgrace former congressman anthony weiner. immediately the entire market took a hit. it was instantaneous. but right after that, a great deal of the market rebounded. >> buy, buy, buy. >> okay. first the market went down. >> sell, sell, sell. >> on the news because investors don't like uncertainty. for weeks now the market's gotten accustomed to the idea of a hillary clinton presidency whether we like it or not. that's irrelevant.
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not a political statement. just a reflection of what the polls say and how the stock market teinterprets that information. why did the market rebound almost immediately? i think i've got the answer. anything that hurts the democrats right now makes it more likely that we'll have a divided government. the market loves gridlock and hates one-party rule. so anything that prevents total clinton landslide is viewed as bullish. for example, the bank stocks were the best performing cohort friday afternoon. let's think about that. remember, these are all big mosaics and we can put them together. if hillary clinton wins in a landslide the democrats will take the senate and maybe even the house of representatives much if that happens, elizabeth warren and bernie sanders who are widely regarded as enemies of the banks will become a lat more powerful. as convoluted as it sounds,
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anything that puts the e-mails back in the headlines also makes a democratic sweep less likely. that's good news for the bank stocks. i know it's confusing, but that is exactly how wall street interprets this stuff. politics is just the tip of the iceberg when it comes to the confusion that reins in -- reigns in this market. this morning, the commercial department reported a big jump in consumer purchasing for the month of september, up 0.5%. some economists were only looking for 0.4%. it's a government figure. it must give you a good clue. well, try to pin down something. i can count on one hand the number of retailers that actually had a good september in this country. apple and amazon. if you tried to invest in any other retailer off these kinds of numbers, i'm telling you you got scalded. doesn't make sense. so what gives? i mean that's a big number from
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the commerce department. aren't they always right? the answer is that these macronumbers rarely produce anything we can profit from. but they're nonetheless regarded as really important. i know i used to be fooled by them time and again. they always led me astray. important down grain grades of home depot and lowes corp. showing there's been a slowdown in housing related consumer spending. we know there's been a slowdown in spending on apparel based on multiple reports, including this very night from l brands a very good retailer. very good. we know that mall traffic is down. we've had disappointment after disappointment after disappointment when it comes to restaurant sales. both new and used auto sales have hit a wall. here we are getting a big bump in consumer spending from the commerce department. my verdict? worthless number. thestreet.com recently reported a survey they did that the
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government's many recent decisions about approving mergers and acquisitions, they found this is one of the aggressive antitrust moments in history. far more deals have been blocked by the regulators right now than at any other time in recent history. so you get that in your head. the government's blocked more deals anytime than in recent history. despite regulatory hostility, this period has seen the most deals in recent history. just today we heard that ge and baker highs are combining their oil and gas. huge $30 billion deal. create a new oil and gas service colossus. it's a stunning deal that includes a $7.4 billion payment from ge to baker hughes. that's going to fund a special dividend for stake holders. on the same day, we have centurylink buying level 3 communications, another telco provider. comes on the heels of two titanic deals last week, qualcomm buying nxp
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semiconductors. at&t snapping up time warner. this is an insign amount of merger activity. it's doubly insane when you consider how hostile the government has been toward any consolidation. the government has been saying please don't do deals. the private sector says we don't care. have the ceos of these companies lost their mind? these deals are motivated by cheap money. as long as interest rates remain low, companies would rather borrow money to buy other companies and start the process of rathizing or of course firing people to cut costs. perfect exactly. later tonight i'll be talking to mike polk, the ceo of newell brands. that's a perfect example of an acquirer that can use its heft to expand into new markets. in short, these deals most like
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make a ton of sense even if there's a good chance the regulators might block them. finally there's the conundrum of oil that's become almost completely unfathomable. not that long ago when oil was threatening to fall through $40, saudi arabia told us there would be a deal among opec nations to freeze production and it would be arrived at by their november meeting. even though they gave us no details whatsoever, the price of crude shot up right through 50. it made no sense. why would iraq agree to a freeze? why would iran, which wants to add 2 million barrels a day, and it can make it happen now that the sanctions have been lifted. why would any of these nations agree? we had no information on it whatsoever. we had to take the saudis at their word even though i've repeatedly poiblted out to you that saudi arabia is always try to rumor up the price of oil
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short term. traders were pressing their short bets to the max at the moment with the saudis made their statement betting nothing would be said of anythi import. no matter, the traders bit. they covered their shorts and they covered their shorts and oil went
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simultaneously reorganizes the whole company. so delivering that kind of performance in the tyat kind ofs formation is a solid outcome. >> i know that some people felt that jarden, listen, jarden is a dramatic deceleration in earnings here, and you're really lacking some very difficult comparisons. i thought that jarden was fine. >> we had terrific wealth in the appliance business. we had the continuing challenges in coleman, which lost some distribution. we're living with the rollover effect of that. we'll get that back on track with the benefit of a little
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more time. we're really pleased with the assets we acquired from jarden. we want to extend it across a broader set of categories. we've established a set of priorities for investment, and those include both jarden, legacy businesses and newell rubbermaid businesses. >> right from the top of the show tonight and for weeks now, because it's so difficult, is to find companies you like and buy shares in them, things you understand. why don't you just pick some and tell us what your strategy is so people know how important tangible ethics you' tangible things you've got right here. >> we've got the privilege of making life better with hundreds of consumer every day, where they live and work and learn and play. we're a houa households goods company, and the scale as a result of the jarden creates an
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immense set of opportunities. our focused priorities are writing, the appliance businesses, our baby gear businesses, the food businesses whether it's legacy jarden or whether it's legacy newell rubbermaid, our beverage businesses, these are fast growing categories in the consumer space. >> you had great international growth but talk to me about that because the combination of the two seems to be some areas you're good in one company, the combination is very strong. >> we wanted to make sure the whole is greater than the sum of the parts. our vision for doing that is to take an advantage set of brand development and growth opportunities and extend it across the portfolio, disproportion atly. that's the vision we have for the combination. it will take more than 90 days to pull a transformation like that together. but we're quite optimistic. we've got a team of people that have done it before on newell rubbermaid and the people that
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are really excited about the prospects of doing it again through this combination. >> there was in the country a degree of slowing. we had a down grade today of home depot and lowes. people aren't spending as much on their home, inside. now, that's been difficult month to month. are you seeing that? >> look, we don't see that in the numbers. i do see that in the headlines. >> yes. >> but i follow the transactions as opposed to some of the macro bits af nal sof analysis that a. quite frankly, whether the macros are positive or whether the macros are a head wind, it's our responsibility as a brand let company to beat the macros and deliver share in consumption growth well beyond what the underlying growth in our corks are. we're folkcused on design to really unlock those opportunities. >> we are focused on
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sustainability on our focus on something that millennials care about, which is not throwing out things, waste. these seem like products that would make it so that we're not wasting. tell me about this. >> look, we just launched a new line of food storage products called rubbermaid brilliance, which is 100% leak-proof product. you could fill that food storage container up with water, shake it upside down. it will never leak. what you get with that type of seal on a container is fod preservation, longer life benefits. we launched rubbermaid fresh works at the beginning of this year. allows you to sustain your produce 80% longer than if you were to store them in their original container, there by eliminating the waste, the product that you throw out. so these are tangible, functional benefits. they're claimable, functional benefits. whether it's 100% leak proof, that creates value for the consumer.
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that's an important lever that we're always looking for. the seal on our hot beverage n containers create a perfect vacuum such that you preserve coffee longer or hot beverages longer. the pressure builds. temperature rises. it's through that science and technology and design that you can create terrific differentiated benefits. >> look, i know these things now because i got kids and i know what they buy. thank you so much to mike polk, ceo of newell brand. people are too short sighted. think long term. "mad money" is back after the break. thank you very much. >> thank you. >> announcer: coming up, aluminum giant alcoa is spl splitting their company in two. should investors be fired up, or is the spin ooff a test of the company's mettle? >> it's so strongly associated with aluminum commodities.
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morgan stanley nike! today bank of america downgraded. >> sell, sell, sell. >> they're washing their hands of one of the dominant power companies of our time. what the heck is going on? one word. competition. for years nike had the run of the place. ever since founder and former ceo pblew away the competition, all laid out in his autobiography and his successor took it to the next level, nike had no peer in this industry. i remember when we heard about
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re boch, sauk onny, all pretenders. but they all died on the vine as nike ran away with business worldwide. out of nowhere, nike has not one powerful competitor but two. adidas with its retro shoes no less. most of you probably don't know who stan smith was. the guy we wanted to be back in the 70s. his show is on fire. they were as my parents say all the rage. if it were just adee as, i think nike could handle it. but under armour led by kevin plank is in the mix too. and he's not afraid to hurt his own shock short term in order to take share. in his release, he said we need to continue to invest in the business in order to capture the massive opportunity in front of us. invest in the business. those are fighting words. and they're words that say look out below when it comes to gross
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margins. no wonder bank -- under under armour is putting an end to that in order to take share. could there be a winner in all this carnage? i'm still a believer in foot looker. dick's sporting goods can win good. we have to be careful of retail because we know that consumer spending seems pretty soft. it isn't restricted to just sneakers. this morning we heard about price competition. while simm zimmer biomet, it didn't mention softness in the american market. too many joints. last week we got a dramatic shortfall to drug maker nor vo. those have been incredibly lucrative businesses for years.
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then there's the stunning market share value ledmy amercy source berg fn. the numbers weren-- the. here's the bottom line. we're used to price wars in some areas of the economy, sure enough. you know, sprint, t-mobile, that kind of thing. and we've seen them in retail, in restaurants. but sneakers, and drugs and joint replacements? it's all new and all bad. hence the flight from these groups. one that's not done and might not be done until tax loss selling finishes at the end of 2016. aaron in oregon, aaron. >> caller: how is it going? >> man, i don't know, aaron. how is it going for you? >> caller: going pretty well. i was wondering how hurt do you
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think the gopro stock is going to be? >> i got to tell you, gopro is just a hurting stock. people are not going to get behind it. they think it's a toy. doesn't matter. it's an ecosystem. i just say, you know, i've learned my lesson. i managed to tell people not to get in it, and i got to stay away from it. lo let's go to bill in kansas, bill. >> caller: hi, jim. chipotle a current p.e. of 150 and it's forward p.e. of 221, what's it going to take to make chipotle a buy? >> 18 months after the last incident is when the restaurant chains have bottomed. you have to wait until 18 months until in this case, the december outbreak of the norovirus. that's when you start getting the move up. can you jump the gun? i have said if you want to, you can start jumping the gun but it's not going to be until 18 months. that's been the history of it
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whether it be taco bell or jack in the box. chipotle probably isn't any different. you're going to love the price wars between under armour and nike when you go shopping but not when you look at your portfolio. be conscious of these stock destroying battlefields. much more "mad money" ahead. tomorrow alcoa officially splits into two separate companies. should you buy the breakup? then it's the company behind my boston whaler. can the company sail away from the pain? and i got the ceo. all your calls rapid fire in tonight's very special edition of the lightning round. so stick with cramer. >> announcer: tomorrow, kick off the trading day with squawk on the street. live from post 9 at the nyse.
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alcoa breakup is upon us. oh cal woe officially separating into two companies, a second business that makes engineered products mainly for aerospace and automobiles. alcoa's most recent quarter was not as strong as expected. however, once this breakup happens, i think the newly created company could be a very intriguing story. on the eve of this big breakup, let's take a closer look with the current chairman and ceo of alcoa who will be taking the helm tomorrow after the split. welcome back to "mad money." i don't know if you agree with that characterization but i look at the company as primarily aerospace and some auto and a couple of other things. but the aerospace cycle we heard from being is very strong and we know from united technology it's strong. where does it play in the cycle. >> i mean this wouldn't exist if it hadn't been for aluminum.
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90% of all aluminum alloys have been invented by alcoa. now we also play very, very strong on the engine. 90% of the components in the engine, we are making now. this is something that we've built up over the last years. >> fwhothere are many different plane companies. are you agnostic about which company? >> absolutely. pretty much we work with everybody who is building planes and we work with everybody who is building engines. >> where are we in the cycle? i know you had talked about teething in certain places. where are we in the long and short term in terms of demand? >> the auto book is nine years long. i don't know how many industries you know that have an auto book that's nine years long. a lot of it is driven by middle class growth. every year about 100 million new passengers are added in asia alone. another thing that's a big driver is the new planes have a
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20% energy efficiency. 15 percentage points of this come from the jet engine so there's a lot going on in terms of innovation and we are very happy to supply to this industry. au now the super duty 250, 350, also all aluminum, very, very good. aluminum is finding its way. >> do you have to worry ford has been saying there's a little bit of an inventory backup. >> look, i mean this has been boon times again much it's been back to the pre-crisis level much it's plateauing on a high level. the passenger cars show some weakness and also that's what's going on there. commercial trucks, not so good in the u.s. >> do we have to worry about that in terms of the way we look at it because i know that most of the business of ar connick is secular growth. there's some cyclical. in terms of cyclical, it's uneven. >> 65% we call secular, but most
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of these secular businesses, 40% of this is aerospace alone. we talked about it, right? then you talk about auto. i think auto is going to plateau opp a high level. alumnization however is going to continue. >> percentage of vehicles that will be -- >> exactly. lightweight and for emissions reasons. >> will arconic look like arconic a few years from now? there's some competition. in some of the engineer products, there isn't enough engineering to really justify owning it. it's just not as high, the propensity is -- >> yeah. well, you know where we came from, and where we -- where we are now. we are now in a lot of very complicated things. when you look at an engine, all these parts, very complicated, there's not a lot of.
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we are also strong in composite planes. why? because we expanded. in our portfolio, we have some that are unique because they can guide lightning strike through wing without sparking. that's very helpful. >> how many passengers in a typical 737? >> a lot. >> a million? >> no, not up to a million. but interestingly, one of the largest ship sets for us, the total is on the 787. titanium. look at our portfolio today. arconic, we have titanium. that's why we're changing the name. we love alcoa, the brand name, but it's so strongly associated with aluminum and commodities, and that's not what we are. >> pension obligations and debt side seem large to me versus the average company i follow. >> they are large. so on the debt side, we will bring the debt down. >> how?
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>> through a couple of things. one is the separation comes at a time when the commodity prices are very low, lower than what we original natally thought. so the debt carrying capability is limited. we are taking on some debt because we have no other choice if we want to make the separation. but we found this instrument of retaining 19.9% of their stock. the idea of the 19.9% is to monetize that and use it to pay down debt. >> so you'll be able to float that stock after a certain period? >> if we sell it after 18 months and use it to pay off debt, it's going to be tax free. >> okay. and pension? >> we're going to work on the pension, bringing it down. the pension is a function of basically being a 128-year-old company. that's what pretty much everybody has. and the second point is the low interest rate. you can't have it all. but we have some ideas. >> is the plan to take excess cash and pay these things down
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before you go buy anything? >> i think you have to lock at what brings better returns. we look at the return profile of these things, you know, and decide whenever they're in front of us. theoretically, this is not a theoretical discussions. it has to be practical. >> obviously the goal is not to have a high dividend. the goal is to be a growth company that is not too laden with debt. >> that's correct. at the same time, we feel that we want to pay a dividend continuously as we've done through the worst of all times with alcoa. >> exlenlt. remember, tomorrow, he comes the chairman and ceo of arconic, a new and separate company. "mad money" is back after the break.
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>> announcer: lightning round is sponsored by td ameritrade. >> it is time! it is time for the lightning round! that's where i take your calls rapid fire. you tell me the stock. i tell you to buy, buy, buy or sell, sell, sell. we'll play this sound -- [ buzzer ] -- and then the lightning round is over. are you ready, skee-daddy? it's time for the lightning round on cramer's "mad money." let's start with peter in california, peter. >> caller: a very scary booyah,
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cramer. >> i like that. what's up? >> caller: down about 10% on friday, and about $4 today is amgen a selloff? >> you know what, i think amgen is going to have to -- you wait till after the election to buy this. if it's a landslide for hillary clinton, then you're not going to want to buy it. you've got to wait a week. i look at merck after 1992 when clinton got in. it was just soggy for a long time because he decided to beat up on the drug stocks. i'm saying wait, wait, wait. let's go to robert in hawaii, robert. >> caller: aloha and booyah. >> how can i help? >> caller: i'm thinking about holding rpm. >> oh, i like that. great american company. i think it's a great long term hold. freddy in georgia, freddy. >> caller: jim, what's your take on knew ton ix. >> the stock has come down that i think you can buy a little bit, not all at once.
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let's go to bradley in ohio, bradley. >> caller: a big cleveland indians booyah. >> go tribe. >> caller: how about h&r block. >> i see you and raise you with intuit. greg in illinois, greg. >> caller: hey, jim. ba-ba-ba-booyah to you from rosemont, illinois. >> all right. >> caller: thank you for taking my call. i have a question for you in sun power. >> nope, we're not recommending any solar play these days. i did like the look of the solar panels. i think they look nice. let's go to cindy in virginia, cindy. >> caller: booyah from richmond, virginia. >> what's going on? >> caller: with all the pain of gnc, it is now a good interest buy? >> i cannot recommend a stock on a takeover basis. the fundamentals aren't going right. omar in new york, omar. >> caller: booyah, jim. what's going on.
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sorry about the eagles loss on sunday. >> it's all right. it didn't even bother me. it didn't even affect me. i didn't even care. it was fine. >> caller: all right. atr, buy, sell or hold? >> that's a buy. what's up, man? >> celgene. ? >> celgene is okay. i like the quarter. it's okay. i mean, okay. what have we got here? let's go to joe in jersey. joe. >> caller: hello, cramer. i was rooting for your eagles last night. tough loss. >> okay. go ahead. >> caller: my stock is hewlett-packard inc., hpq. >> i like hpq. i think it's good.
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doesn't make up for last night, but it's good stock. you know, on the fourth and one, i would have kicked and missed the field goal. mo in new jersey, mow. >> caller: hey, gyp. how are you? >> i'm okay. i'm trying to recover from the previous couple of calls. what's going on? >> caller: i'm calling about oncology which got a lot of hype back in august because of the fda. it had a strong dip after its less than spectacular lab results. i just want to know is there anything i should be waiting for. >> it's speculativspeculative. i think celgene is fine. i think merck with that yield is good. that's the way i would go. brian in california, brian. >> caller: booyah, jim. greetings from gray eagle, california. >> oh, man, did he say eagles?
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>> caller: gray eagle, california. what are your thoughts on buying rai. >> too late. we're done. i say ka-ching, ka-ching. one more. jeff in california. jeff. >> caller: jim, how are you doing? i'm doing well. i've recovered. what's up? >> caller: twilio, buy, sell, or hold? >> i think it's come down a lot. you can buy a little bit but it's still room for it to climb. and that, ladies and gentlemen, is the conclusion of the lightning round! >> announcer: the lightning round is sponsored by td ameritrade. so that i can take my trading platform wherever i go. you know that thinkorswim seamlessly syncs across all your devices, right? oh, so my custom studies will go with me? anywhere you want to go! the market's hot! sync your platform on any device with thinkorswim.
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bc, the world's largest maker of recreational boats along with boat engines. stock peaked early last year. had a hard time rallying since. more of a function it seems of exercise equipment sales of late. let's take a closer look with the chairman and ceo. welcome to "mad money." good to see you, sir. >> thank you. >> so it seems like a difficult situation for you. you're the only guy who is really making the numbers. in the whole big-time discretionary spending and because of what i -- i kind of think is the functik, people ar selling your stock. is that an accurate depiction of
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what you think is going on? >> i think there's a number of things going on. first of all, we keep getting compared to lots of other industries. so people will be looking at us against power sports, motorcycles, automobiles. >> polaris. >> but 50% of our company today is marine parts and accessories and fitness. so hardly all consumer products as you would think about. >> let's talk about the one that i thought was very small but dominated a lot of conversation, which is the cybex retail local and federal government was something that people focused on. you had this acquisition for eight months but some people made a judgment this was not a good acquisition. >> it's an absolutely great acquisition. we thought we could do one transformational acquisition in the fitness space. we were number one, and we bought number five. we picked up a great brand, international. some unique products as well.
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but the softness in the particular quarter was a little bit about we haven't ramped the revenue up quite as good. we're right on target for the year and on target for the 20 cents by 2018. the acquisition is doing what we want. where the softness was was in the a little across the fitness sector in local and federal government. it's doing well in clubs, hospitality. >> it's pricey. i went and checked a bunch of guys to be able to get the best price. >> none of our equipment is. we're really focused on the commercial business. so not so much the consumer. we're selling to large clubs, places that are going to look for 24/7, 365 days. >> tell me how the actual boat business is doing worldwide because some areas seem to be stronger than others. united states seems very strong. >> the united states is doing extremely well.
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we had projected and based our plans on getting 3% to 5% growth, and we're seeing that. the data, if you go in and look at it for the last five years, fundamentally growth has been 5.2 growth, revenue growth is around 8 because we're getting some asp movement. all those things are happening. on the global, it's more about a couple of markets. i don't think it will surprise you. you know, we're down in brazil. >> right. >> and also in like africa, middle east. they're small markets. >> canada. >> canada, the retail has picked up, but, again, the wholesale side, dealers are being fairly tight and conservative about the reordering. >> do we have to worry about this stern drive inboard? is that something that's not coming back? >> i think it's more a case, jim, that the outboard engines have come so far. in fact, one of these days you'll move up from that 90 on your whaler -- >> 90? >> to a new 90.
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>> so i can go in the ocean? >> to find out all the benefits. fundamentally the outboard technology and features have just moved so far. it's displacing some of the stern guys. stern guys, it's a great application for certain situations, and when the market comes with that, it will be there with some great product. >> i look at the joy that i get from your product, and i think other people feel the same. i look at the numbers that you have in the united states. and then i look at the what people have in the polls, what i call the malaise, what i call the jimmy carter period, the crisis of confidence. the numbers and the spin don't jibe. people do not feel as bad as the polls indicate. >> the market consumers don't like uncertainty and we're certainly going through that this year. hopefully in another week, some of that uncertainty is going to come off the table. but the fundamentals of the business, people who have, as we
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call the water gene or it's in their dna, they want to fish. they want recreation. they want family time. and it's a phenomenal way to do it when you think about boating. >> right. >> and when you go to the fitness side, people want to live long, healthy lives. >> do you think it's -- we happen to have -- we have a company that does very well. i think that your business is more comparable. millennials like the experience of having a boat, right? >> absolutely. as the younger audiences, it's more a testament to the ownership, and a lot of people keep thinking about boats as a rich man's brukt. it's only for the wealthy. we make products for middle class america. >> okay. thank you. full disclosure, yes, i do own a boston whaler and i do love it. stick with cramer.
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all right. we had a nice stabilization in health care, but oil went down. i still think this market is very unsteady going into the election. the only group that is really holding up right now is technology because the technology stocks actually are doing pretty well on an earnings basis. i want you to take a look at this newell. i think newell is doing much better than the stock is indicating. 45, 47 is the level. i like to say there's always a bull market somewherement i promise to find it for you right here on "mad money." i am jim cramer, and i will see you tomorrow! .
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- [male] taking an invention from concept to reality takes hard work. - i think we've gotta take a bunch of weight out of it. - [woman] and a willingness to do it over, and over again. - i've been at this over 16 years. - [man] but 98% of inventions never make it to market. - all i see is problems, problems, problems. - [woman] to beat those odds, inventors need help. - i've been ready to take this to a totally different level, i just need help. - that's where we come in. kurtis! - oh my god. - hi! - hey! - i'm deanne bell, a mechanical engineer, and mentor for inventors. - i'm george zaidan, an m.i.t. chemist, and advisor to start ups. - [deanne] and together, with our design and engineering team, we take inventions to the next level. - how cool is that! - holy cow. - we'll share our expertise.

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