Environment drives stocks highers, isnt it . Over the average either at or striking distance from the year, dow gaining 18 points, s p advanced. 13, nasdaq inched down, we have to go over what allows us to reach these levels. The backdrop thats conducive to higher prices for the overall market. In short, whats so special about stocks right now that we are at or near or challenging these high s . First, investors like to see low inflation. When you have low inflation, that means the longterm value of stocks, the future earnings streams youre buying are going to be preserved. High inflation erodes that value because it means those future earnings will have less purchasing power. Last friday we gotten a employment number that signalled there is no inflation in the system other than the mandated inflation that comes from higher state and local minimum wages. Tame inflation means that all stocks are worth more so even if you hear that the stock market is expensive, it might not be as expensive as it seems given inflation isnt eroding the value of the gains you get from higher stock prices of future Dividend Payments down the road. Remember, youve got the capital stream and the dividend appreciation scheme, theyre worth more in low inflation. Second positive, the main competition your stocks face, the bond market, just cant measure up in an environment where the Federal Reserve is putting up more it cant put up more rate hikes than its got on hold, right . It means those stocks with the good dividends, the ones that yield north of, say, 3 , they become more attractive. So how much does this matter . Lets really play this out. Why dont you look at the stock of caterpillar, thats the company thats routinely bashed by Hedge Fund Managers because of exposure to weak areas like mining, coal, Oil Exploration and chinese infrastructure and theyre all doing bad. But as poorly as the Company Might be performing, the stock has a 4 yield and its dividend is safe for now. So even though caterpillars nearterm prospects are suboptimal, the yield chasers dont care, you know what they do . Buy. The third thing the bulls always want to sea, a weakening dollar. Now ive said to you over and over again that as the dollar goes so goes this stock market. With the fed on hold, foreigners are going to be buying far fewer dollars than they would have if we were still staring down the barrel of a rate hike. I know the Interest Rate you get in typical savings account isnt anything to write home about these days. But suppose you live in europe and youre earning literally zero interest on euros in a german bank . Why not buy dollars, stick your money in an American Bank . Foreign investors will be far more likely to do that if they knew a rate hike was on the horizon, which is why fridays lousy employment report put the big kibosh on any near term appreciation in the dollar. Now, with the weaker dollar, our exports are priced more competitively versus their overseas customers and earnings that are worth more when theyre translated from foreign currencies back into weaker dollars, thats what we want. Higher earnings estimates typically lead to higher stock prices. And thats how International Companies like johnson johnson, International Flavors and fragrances and 3m cold all hit alltime highs today as they could be with other Foreign Companies and reap the benefits thanks to the weaker greenback and more money left over. Finally fourth positive, we want to see Higher Oil Prices because that tells us the Global Economy is getting better. Now great deal on the oil rally since the bottom in february has come from cutbacks in supply, but the saudis, who are now in charge of pricing because opec has basically become irrelevant, we should stop covering it, are now telling people demand from china and india has gotten stronger. Thats whats lifting prices. The oil stocks carry a bizarre disproportionate amount of weight in this market because theys so darn many of them, including Oil Companies that have humongous amounts of debt and their own problems have hurt the lenders. Typically the big banks, many of which went hog wild with every oil company and its brother. When the price of crude goes higher, these companies can sell oil for more money or sell futures, oil future which is then allows them to pay back their debts which then causes the bank stocks to do better even as youd expect them to perform poorly with Interest Rates staying so low. Oil stocks like Pioneer Natural Resources and others are the tales that are wagging the markets dog. On any given day there will be some part yey poopers to the thesis. We asked the ceo of the new drug company valeant and his Company Reported really disappointing numbers this morning and the stock lost almost 15 of its value. Apparently the competition took advantage of the disarray in their skin and eye care divisions. You mow that j j and allergen are doing their best to eviscerate a worn enemy. At the same time, he told us he had to do price rollbacks, so that doesnt make good for a bottom line. Hes just setting the stage for reduced expectations so he can overdeliver on his underpromises. Or perhaps valeant is in much worse shape than he thought when he came on the show. Too soon to tell. Well have to wait a couple quarters to find out. Then theres rafflph lauren, th Apparel Company that slashed its estimate this is morning and told a dire tale of layoffs and tough love as the mall keeps mauling retailers, excuse my philadelphia accent. Sometimes the stock market judges companies too harshly and initially sent this stock down 10 points before a deserved lateday rally, at the close just down two and change. I Stefan Larson turned around gaps Old Navy Division to bite the bullet and cut back on overhead and excess capacity. Were overstored. You can find ralph lauren stuff in too many places. If the stock was still in the hundreds and not prepped for this tough love i could understand todays morning visceral reaction. But down here in the 90s i say give me and stefan a break. Heres the bottom line, when you have the basics working for you not against you, investors find reasons to throw money at the market. And right now that money is sticking on the stocks with the best global stories. Lets go to tuna in michigan. Tuna . Caller booyah, whats up, jim . I was just wondering what i should invest my money in, walmart, j. C. Penney or sears. Well, i mean sears absolutely not. Sears is sell. J. C. Penney dont buy. Walmart . Im telling people, walmart is could. How about vincent in missouri. Vincent . Caller hi, jim. Thanks for taking my call. Okay. Caller my concerns are i bought a stock called rr donnelly and i noticed in an article that theyre going to go forward, i think, with a spinoff in october. Right. Caller resulting in thee companies. Right. Caller i own about 300 shares of it. Do you have any ideas well, i pulled it up yesterday. Street. Com had a conference and i pulled up with tim quinlan whos the ceo. I feel more strongly than ever that the three companies are going to produce a good return. The chart is good, too. I think rr donnelly should be bought and bought aggressively. I see 18 coming. Its 16. 59 now. Quinlan is doing a dynamite job as his own internal activist. Lesson learned, when the stories wall street watches the most are positive not negativing investors find reasons to buy stocks. Right now theyre investing in stocks with the best international stores. On mad money tonight, another day, another spinoff, less than a year after a landmark split hewlettpackard in two companies, hpe is at it again and i have the exclusive to find out whats next following that merger with Computer Sciences. Then jetblue announced a fare hike and it could impact more than just your vacation budget. Ill tell you what the move signals for the Overall Airline industry. Its a stock flying on helping thousands of businesses that have a bigger presence online. Can wix help you score clicks . Ill talk with the ceo. Still with cramer billions are spent to confuse and, dare i say it, flummox the american public. Save 16 on Car Insurance. Switch now. Well at compare. Com, we say enoughs enough. So we constantly scrutinize millions of rates. Answering the question once and for all, who has the lowest. Just go to compare. Com and get up to 50 free quotes. Choose the lowest, and hit purchase. So you can get back to whatever it is you civilians do when youre not thinking about Car Insurance. Compare. Com sometimes you have no idea how much value is locked inside a company until you break the darn thing up. Look at hewlettpackard. Last october the company spun off its fastergrowing divisions that catered to business classes, Hp Enterprise with legacy slow growth Printing Company naming itself hp ink. Often the first round of breakup is the beginning. Ive been a fan of Hp Enterprise for month but even i didnt see the latest value move creation coming. Two weeks ago they reported a robust quarter but they announced that they were spinning off their Enterprise Services unit and merging it with the Computer Sciences corporations in a stockforstock deal to create a global pure play it services powerhouse, we call it new co. Hp enterprise will own roughly half and the sinnynergies will enormous. Lets speak with meg whitman, the ceo of hewlettpackard enterprise and her attempt to create more value. Meg, youve done it again, we created more value, we like your first split, now we have another but i think some of our viewers are concerned about what theyre going to own if they buy a share of hewlettpackard enterprises today. Well, if you buy a share of hewlettpackard enterprise today, what you will participate in is an unlocking of value for two new companies. So the es portion of our business Enterprise Services will spin merge and create a 26 billion pure play which u. S. Shareholders today would own half of that company. Then, of course, you maintain your shareholders in hewlettpackard enterprise which i think has an incredible future because well be able to focus on three areas, the Software Defined data center, which is growing, the edge, the Campus Branch and the edge where compute is moving and we have a fabulous asset in aruba and then, of course, our software portfolio. Now, i think that there are many people who hear the term edge and for all they know theyre thinking of shaving cream. So were going to solve this once and for all. Youve been using including with my friend tony, im very proud, he called up the lightning round, he gave me that but he asked you directly and you gave a definition of edge that i think would not only be exciting but rigorous when you talk about the car. So could you go through that for our viewers who will then understand immediately why this is where you want to be . Yeah, youre right. We throw around terms like campus, branch, edge. So let me tell you what we mean by the edge and i think the industry means by the edge. A lot of aircraft engines, hospital beds, sensors, are being built like mad. Theres going to be billions of connected devices. But i think the best illustration is a selfdriving autonomously driving car. And i dont know how many of your viewers have ever been in an autonomous driving car but its quite an experience. The good news is, youre lucky if you dont get hit, but thats fantastic. Think about it. It is taking in huge amount of data from all around the car, 360 degrees, it has to figure out is that a stop sign . A person . A car . A tree. Then the car has to decide what to do realtime and when i first took a drive in a car like this i was in berlin and i get out of the car and the driver because you do always have to have a driver just in case said do you want to see the data center that process thises data . And i said yeah. And i wasnt sure what i was going to see and he opened up the drunk of the car and he said look at our baby data center. On board the car was the processing of all this information. So its not in the cloud, its data center at the edge, in this case the edge being the car. Thats something hewlettpackard want enterprises wants to dominate in the way hewlettpackard used to dominate the personal computer and server world, right . Yeah. I mean, this is Natural Power alley for us. Were expert at compute, storage, networking. Were expert at doing that in a very small footprint with low power consumption because, remember, if your data center is in the back of the car, you have to drive quite long distances without recharging, if you will, the power for that data center. So this is Core Technology for us, were super excited and i think its a growth area for the company. You came into a broken company that i didnt like the Balance Sheet and was greatly concerned. You have done several things. Youve created a more nimble fastergrowing company. Two, you have enabled people to participate in other ends of the business that you split off. But, three, you still have amazing cash generation, a lot of money to buy back stock, maybe niche acquisitions like aruba which made it so youre far more competitive in networking. So if you can tell us the journey that youve done and yet at the same time explain we should pay more for your company as the market is doing since its at its alltime high it would put in the perspective for our viewers. Sure. Well, we started the turnaround journey four and a half years ago and i said at the time it was going to take five years. Turnarounds of this scale and magnitude just. Do ive done it before. Its how long it takes. There are milestones along the way but we are now rounding the bend out of that turnaround. So what did we do . We got our cost structure in line with our revenue trajectory. We reignited the innovation engine at hewlettpackard. We brought in a new leadership team. Turnarounds are not for everybody, i will tell you. We reignited our focus on the customer. The core dna of this company is around innovation and Customer Care and customer focus. And we repaired the Balance Sheet. To your point, we had about 12. 5 billion of net debt on the operating company. Today we have about 5. 5 billion of net cash on hewlettpackard enterprise. And then, of course, we began to reshape the portfolio, separating hp ink, the p. C. And printing business from hewlettpackard enterprise the data center business. We spun off 51 of our business in china that was called h3c to shing waugh university. My conclusion was better to own something fantastic than 100 of nothing over time. Weve made some small portfolio modifications like selling tipping point. We bought voltage and then, of course, the most recent announcement was separating es from our core business and remember hpe, without es, will be a faster growing higher margin better Free Cash Flow business. So that will allow us to invest in things like the campus brands. Thats giving the Enterprise Services businesses to new co, as we call it, with csc, a company i like very much and ive been recommending for a long time. I also want you to explain why we would pay more for a fastergrowing company that is spinning off a lot of cash. I think theres a perceptions but you let go in enterprise something that was Enterprise Service that was very exciting that we wanted a piece of but youre still giving us a piece of it, yet youre making so the company that youre left with is faster growing. Exactly. So remember, shareholders of hpe today will own half of the new company. So theyll be able to participate in the upside led by a Great Management Team and be able to part naicipate in a business that ought to carry a much higher multiple with Free Cash Flow. Weve been clear that a big part of our strategy is to buy back shares. Your viewers know when you buy back shares it improves your eps. If you combine that with a higher multiple, that can lead to higher share prices if we execute and we got a lot of confidence in our ability to execute. Im really proud of this company because we have learned how to execute. Look at the separation of hp ink from hewlettpackard enterprise. The Biggest Company separation thats ever been done. Flawless, on time, on budget, basically nine months from announce to operating as two separate companies with no disruption to customers. We have become an execution machine and i think all of hewlettpackard should be proud of that. Last question. It looks like some of the other companies in your industry are actually still selling at a more expensive rate on the future earnings stream than you are. So there would be room even if you look at your company and the speed of growth and the Balance Sheet versus others in your industry that it would be obvious that you should be trading at a premium to those companies. Well, i think, listen, we are really doing a great job of at beating our customers in the marketplace which is the ultimate test. If you look at our networking business. Our networking business grew 18 . Ciscos shrunk three. If you look at our storage business, our allflash storage array is growing twice the rate of the market. Weve gained share every quarter for the last two years against ibm, emc and our allflash business is as big as pure and probably growing a bit faster. So we are leaning in. Weve gotten very competitive over the last four years and we antic