Mad Money w/ Jim Cramer 02/03/25

Summary

Mad Money with Jim Cramer – Episode Summary (02/03/25)

Introduction On the February 4, 2025, episode of Mad Money with Jim Cramer, hosted by CNBC, Jim Cramer delves deep into the tumultuous landscape of global trade policies, market reactions, and specific stock analyses. The episode provides listeners with valuable insights into navigating the complexities of Wall Street amidst significant geopolitical shifts.

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1. President Trump's Tariff Announcements and Market Reactions Jim Cramer opens the episode by addressing the immediate market turmoil following President Trump's unexpected implementation of tariffs on Mexico, Canada, and China. The swift imposition of these tariffs led to considerable investor panic, as reflected in the market's initial downturn.

• Market Response: Cramer notes, “The market was hideous until Trump gave her the 30-day pause...” ([07:45]). Despite the initial negative sentiment, the Dow and Nasdaq experienced a rebound after positive statements from other world leaders, particularly Mexico’s President Claudia Scheinman.

• Trade Dynamics with Mexico: Cramer commends President Scheinman for her proactive approach in mitigating the impact of tariffs. “Claudia Scheinman suddenly went from down about 2% to the Dow, finishing just off 123 points. It was positive 1.76% and be dropping 0.76%,” he explains ([06:20]). This strategic collaboration between the U.S. and Mexico helped stabilize the market and showcased a potential shift towards more targeted trade policies.

• Implications for China and Canada: While Mexico saw a pause in tariff enforcement, Cramer expresses uncertainty about China’s future tariff rates, suggesting, “I think the Chinese will see the 10% number go higher if they're recalcitrant” ([05:50]). Regarding Canada, the tariffs were deemed harsher than expected, leading to significant shifts in trade relations.

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2. Stock Market Highlights: Winners and Losers Cramer offers a comprehensive analysis of the S&P 500’s top performers and decliners in January 2025, highlighting sectors influenced by the new tariff policies.

• Top Performers:

  • Constellation Energy & Vistra: Both nuclear power companies surged due to increased data center developments and electricity demand. “These nuclear stocks have had explosive multi-year moves as the data center build-out created this electricity shortage around the whole country” ([08:20]).

  • CVS Health: Remarkably up by 25.8%, CVS rebounded despite prior struggles, driven by increased Medicare Advantage payments. “There really is no clear catalyst... but early payments from CMS boosted the stock” ([09:10]).

  • GE Aerospace: Up 22%, GE Aerospace excelled with impressive earnings and a robust buyback plan. “Under the leadership of CEO Larry Cole, GE Aerospace has more staying power” ([10:05]).

  • F5 Networks: Specializing in application security, F5 saw an 18.2% rise, bolstered by beating sales and earnings expectations. “This stock's humming deserves every point of this move and more” ([11:15]).

• Biggest Decliners:

  • Edison International & PG&E: Both utilities in California suffered due to wildfires, with Edison down 32.4% and PG&E sliding 22.4%. Cramer suggests, “It's worth buying after last month's weakness” ([11:50]).

  • Constellation Brands (SDC): Dropped 18.2% amid tariff-induced pressures on its Mexican beer brands. “Liquor is a tough thing to own in this market” ([12:00]).

  • ON Semiconductor & Electronic Arts (EA): ON Semiconductor fell 17% due to a bleak outlook in automotive sectors, while EA declined 16% following underwhelming sales in its soccer franchises. “Their earnings call was shocking with light numbers for the latest quarter” ([13:20]).

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3. In-Depth Analysis: Deckers Brands Crash A significant portion of the episode is dedicated to dissecting the dramatic downturn of Deckers Brands, the parent company of UGG and Hoka.

• Stock Plunge: Following a stellar previous year, Deckers' stock plummeted by over 20% in a single session after a disappointing forecast. “Sell, sell, sell. Losing more than a fifth of its value in a single session” ([28:10]).

• Earnings Report: Despite reporting the most profitable quarter in its history, Deckers issued a conservative forecast citing inventory shortages and anticipated revenue growth slowdown. “Their most important brands did great, but management gave a disappointing forecast for the current quarter” ([29:00]).

• Cramer's Take: Cramer weighs the situation, stating, “If you're a trader, stocks that fall more than 20% on earnings usually do not bounce back overnight... But for the longer-term investors, I actually think this is a solid buying opportunity” ([30:00]).

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4. Exclusive Interview: Ryan Peterson of Flexport Cramer engages in a candid conversation with Ryan Peterson, Founder and CEO of Flexport, to explore the real-world implications of Trump's tariffs on global supply chains.

• Impact on Logistics: Peterson explains the disruption caused by the sudden tariff implementations, emphasizing the challenges faced by businesses in adjusting their supply chains. “The implementation timeline was pretty unprecedented... It took them time sometimes” ([32:15]).

• De Minimis Rule Changes: The new executive orders have effectively shut down the de minimis exception for goods from China, Mexico, and Canada, compelling companies to reassess their import strategies. “There's no duty owed if goods are less than $800, but now this is shut down for major countries” ([34:50]).

• Future Outlook: Peterson remains optimistic about long-term trade growth despite short-term disruptions. “Global trade has grown 4% on average over 800 years... there's gonna be way more trade than there is today” ([37:00]).

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5. Lightning Round: Rapid-Fire Stock Picks In the high-energy Lightning Round segment, Cramer responds to callers with quick buy, sell, or hold recommendations on various stocks.

• Emerson (EMR): Cramer expresses regret over exiting the stock prematurely. “I should have felt... these guys are going to pull it off. My bad. Boss missed out on 20 points” ([39:53]).

• Five9 (FIVN): Endorsed as a strong buy, Cramer encourages listeners to “pull the trigger” on this customer relations management stock ([40:27]).

• Big Bear (NASDAQ: BEAR): While sympathetic to its growth, Cramer advises focusing on Palantir instead. “You don't really need me. That's the one to be in” ([41:12]).

• GameStop (GME): Dismissed as a meme stock, Cramer shifts focus to more promising investments like Take-Two Interactive (TTWO) ([42:15]).

• Take-Two Interactive (TTWO): Recommended due to upcoming releases like the new Grand Theft Auto edition, positioning it as a lucrative opportunity ([42:50]).

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6. Personal Anecdotes and Final Thoughts Towards the end, Cramer shares personal insights related to the discussed tariffs, highlighting proactive measures taken by his family business to mitigate potential financial impacts.

• Phosphoro Mezcal Strategy: Cramer's family preemptively stocked up on inventory to brace for potential tariffs, demonstrating strategic foresight. “We knew what Trump ran on, so why the heck wouldn't we try to get ahead of it?” ([44:15]).

• Collaborative Trade Policy: Emphasizing the productive dialogue between the U.S. and Mexico, Cramer underscores the importance of collaboration over confrontational trade measures. “Claudia Scheinman lives up to her end of the deal. This opens the door for a change in trade policy to one that's much more targeted” ([47:31]).

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Conclusion Jim Cramer's February 4th episode of Mad Money provides a thorough examination of the current economic climate shaped by President Trump's tariff policies. Through detailed stock analyses, expert interviews, and interactive segments, Cramer equips investors with the knowledge to navigate these uncertain times. Whether it's identifying resilient stocks, understanding the nuances of global trade, or leveraging market volatility for investment opportunities, this episode serves as a comprehensive guide for both novice and seasoned investors.

Notable Quotes:

• “My mission is simple to make you money.” – Jim Cramer ([01:03])
• “Stop panicking when Trump does something you think is crazy, and remember that he promised to do most of this stuff before he was elected and he still won.” – Jim Cramer ([08:30])
• “Deckers is a high-quality business with strong brands, a great balance sheet... this dip could be the best chance to get in at a discount.” – Jim Cramer ([30:30])
• “Global trade has grown 4% on average over 800 years. So I just expect that... there's gonna be way more trade than there is today.” – Ryan Peterson, CEO of Flexport ([37:24])

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This summary captures the essence of the February 4, 2025, episode of Mad Money with Jim Cramer, highlighting key discussions on tariffs, market movements, stock analyses, and expert insights to provide a comprehensive overview for listeners.

Transcript

[Jim Cramer]

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[Jim Cramer]

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 Kramer. Welcome to Mad Money. Welcome to Cramerica. Other people my friends, I'm just trying to make you a little money. My job is not just to teach you, but to entertain you. So call me at 173 CBC or tweet me Jim Cramer Just because there's a flurry of business analysis by President Trump does not mean the sky is falling. Especially when he's doing exactly what he told you he's going to do, putting tariffs on Mexico, Canada and China. Yet that's all I heard last night and this morning where once again we heard that the war was ending with the market looking like it's about to fall apart, only to rebound when we got an amenable statement from the President of Mexico. Claudia Scheinman suddenly went from down about 2% to the Dow, finishing just off 123 points. It was positive 1points and be dropping point 76%. Nasdaq losing 1.2% but it was the worst last night. Looks like the end of the world though didn't occur. Now I want to take a moment here to talk about panic. I think many investors had a panic attack last night because President Trump quickly announced these tariffs. 25% invested 20% on Canada except for oil which is 10% and 10% on China. Now these moves were shock talking to many people, which is insane to me. Candidate Trump said that he would take that. He said he Told you again and again that he's going to take these actions against these countries. So how the heck do you commit yourself that he won't do it? There was one part of this that was surprising in a good way. I figured China would get the highest tariffs and Canada would get the lowest. Given that Canada's a terrific ally, the 25% duty on the good seemed pretty radical, especially since it's not like we have a big fentanyl or migration crisis on the Canadian border, do we? Plus, they seem relatively innocent as far as trade policy goes. But President Trump said over and over again that Canada was taking advantage of us. So they got hit by the way the tempers. A break we got with Canadian oil was a serious concession because they sent us 4 million barrels a day and there's no place to store it if we stop taking delivery. Canada was surprised and didn't have much of a plan except to hit us with their tariffs of their own. I don't blame them for being somewhat blindsided. I know that Prime Minister Trudeau got a stay of tariff execution for the close one month could bode well for tomorrow. But there was a way to change the narrative with our president. You just had to be more like Claudia Scheinbaum, the President of Mexico. Chaibon. She was ready. She knew that Trump was going to change the rules. She knew he had the upper hand. She understood his goals. Stop illegal immigration, stop the fentanyl. She knew that that was in her interest too. What was not in her interest was a trade war. Chai Luck didn't want to throw her country into recession just because Trump was doing what he threatened to do. The market was hideous until Trump gave her the 30 day pause after she committed 10,000 Mexican National Guard troops to the border to stop the immigration fennel and also automatic weapons. Look, I have no idea. President Trump was surprised. Maybe it planned it, I don't know. But I do know this. He can already claim a victory. He can say that he got Mexico to do what he wanted Mexico to do. He gave them a path and they took it. Last night, it felt like most investors believe that every leader would respond in kind. China had a little bluster, but it seemed that they understood they got off easy. I think the Chinese will see the 10% number go higher if they're recalcitrant. To me, this was obvious. The President told me there could be some good news with China when I interviewed him on the floor of the exchange after the election. I have no idea why he went so easy on the Chinese. But it's possible that he might want to try to extend an olive branch to China, at least a start. If he started 25%, he would have much room to navigate. But what would he do now, though? He's got plenty of room. Plenty of room. And China's nose is getting a pretty good deal. I think they should do something, maybe take it. Oh, and a lot of people were bummed that that Trump moved on tariffs first. He also didn't tell us that Elon Musk would start some real doge work creating havoc by taking action to save taxpayer money, even if most of these savings were probably unconstitutional. Again, why do people not believe Mosque does he impression of someone who doesn't care who's moved on? Again, if you didn't believe the President's campaign rhetoric, you were indeed shocked. If you did believe then there was nothing surprising here at all. Now there's some real crazy stuff that happened today. If you offered a value meal, your stock went up higher. Brinker, Darden, Dutch Bro, McDonald's, Starbucks, they all moved higher. Hey, even Chipotle, which could have real avocado problem, did quite well today and they're about to report their quarter tomorrow. Wow, this group made no sense to me at all. Tariffs could make dinners more expensive, but the market was indifferent because their domestic operations. How about Costco? You got a big tomato field near me in Mexico, Wal Mart. They both really rallied even as they do sell a lot of Mexican vegetables. Less crazy health care easy. Many of them report this week and they're down pretty hard from their highs. What an easy group to buy safety stocks if tariff caused a recession. Medical devices rallied big. Idex Labs, the vet supplier, reported an amazing quarter and it roared. We got some furious action. Old fashioned fintech to MasterCard, Visa, and of course Palantir. Holy cow. I mean there's no ain't no stopping Palantir now. It's on the move over. It's I said it was going to go above 100, which is actually par in Wall street parlance, and it sure did. Now we had a lot of tech stocks trading down pretty hard in premarket action, but many rallied from the bottom as traders realized that the tariffs weren't so horrible for the group. Now I don't want to say that we had some sort of clearing event today that somehow we got a crescendo and a lot of tax and the sellers are finally done. Many of these stocks came back from within, but Alphabet and Amazon report this week and they've got to be good. They also have to say that they're standing by Nvidia Lock stock and Blackwell, their most expensive new chip. In the afternoon, we heard. And off the cup, President Trump talking about a sovereign wealth fund. And after the bell, he signed one into law. I mean, talk about something to move the tech stocks up. They've been in the doghouse lately. Anything's possible. This guy, although that was not a campaign promise. He said he might buy Buydance, the Chinese owner of TikTok, which is in limbo. Who knows where that money's going to come from? Beats the heck out of me and probably everybody else. I think it's time for the people who hate President Trump or those who hate parts of his agenda to recognize something. They got to recognize that most presidents try to follow through in their campaign promises, even if it might hurt the stock market. Trump's not focused on conventional inflation. He's not focused on the Fed and interest rates. He doesn't focus on the supermarket. He's focused on tariffs because he believes that's how he can make America greater man. He's tariff man. You may think the tariffs don't make America great again. Hey, maybe you think they're terrible policy or that these blanket tariffs are downright insane. It doesn't matter. You're not the President of the United States. Believe me, Trump's not going to hold back on his agenda just because you think it's a bad idea. So here's the bottom line. Stop panicking when Trump does something you think is crazy, and remember that he promised to do most of this stuff before he was elected and he still won. Many say this is a precarious moment. I heard that again and again. I simply say you got what your country voted for, whether you like it or not. It really doesn't matter. So get used to the turmoil. You don't have to enjoy it. Remember that in the end, the President sure does. Let's go to Scott in Tennessee. Scott. Hey, Jim.

[Caller]

Huge, huge fan of the show.

[Jim Cramer]

Thank you, Scott. Thank you. Goberts.

[Caller]

Yeah, Yeah, I was calling you.

[Jim Cramer]

I was interested in what your thoughts are on Oracle.

[Caller]

I've been acquiring, you know, shares over time, right across averages, and it's been kind of flat for the last five months or so. So I was wondering what your. What your thoughts are on it.

[Jim Cramer]

Well, I mean, Oracle had this gigantic move. I mean, just huge. And everyone thought that it was just terrific. And then what happened, frankly, is that we got all the great news and now we're waiting for more Great news. And I don't see any more great news. I think you have to wait until they report and when they report they're going to have to have something really special. But it's not till March 11th are you going to be biting time in the stock. For now I want to go to Bill in Massachusetts. Bill, Jim, I just wanted to say thank you for your honesty and your.

[Caller]

Integrity when it comes to the stock market.

[Jim Cramer]

I really do enjoy it. Thank you. You got to put yourself out there to say the good with the bad. And I say a lot of bad. I say a lot of things I made a mistake on. I think that's what makes me authentic. How can I help you? As a club member? I recently sold some of my tech and I invested into BlackRock and Goldman Sachs. Today I did add to my BlackRock and I'm wondering, should I add more to Goldman Sachs? I really do like it. I think Goldman is incredible. The Stock sells at 13 times earnings. It's doing amazingly well. I think it is a solid buy. So it down at one point today. So low 622 was terrific. Blackrock might be down because Vanguard cut its fees. I trust Larry Fink. I think it's a great opportunity to buy and you saw because you're a club member that we picked at some today. And thank you for being a member of the club. Let's go to oh Joe in New Jersey. Joe, hello Mr. Kramer.

[Caller]

Thank you for taking my call.

[Jim Cramer]

Always. Joe, great to have you on the show and thank you for calling it. You're being consistent. How can I help you? On my way to. On my way to work. About a mile and a half away from my house.

[Caller]

I've been watching this beautiful warehouse go up.

[Jim Cramer]

About a year or so later it's up and it's called Vertif.

[Caller]

I never heard of it.

[Jim Cramer]

I look it up and it manufactures.

[Caller]

Digital infrastructure for data centers.

[Jim Cramer]

Do I buy this company? This is Ford. This is Fortive. Fortif Or Fortive. Vert. Vertive or Vertive. Okay, look, Vertive. The look, you need to know that the chairman of Vertive is Dave Cody. He was my former next door neighbor. He's a brilliant industrialist. The stock is down very big. It's involved with data centers. Indeed. It's actually a data center center play. And I think the stock has come down enough that I think you should buy some. But Joe, not all. Not all and not all at once. This is a wild trader. And if it's a wild trader, you don't need to stick your neck out. All right, look, it's just not worth selling and saying the sky is falling every time Trump does something that you think is crazy. Remember, most of these things are things that he promised, so get used to the turmoil or get out. Well, Tonight we're officially one month into 2025. On outline the S&P 500 stocks that stood out and sank in the markets. January action + the company behind Oats and Hoka posted a hideous decline after report last week. I'm going to tell you if I think Deckers is a buy or a sell at these levels. And later, I'm getting a read on how President Trump's tariffs might shake up supply chains in my off the Tape exclusive with Flexport. So stay with Kramer.

[Mad Money Production]

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[Jim Cramer]

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[Jim Cramer]

Now that we're a month into 2025 and the market's already reacting to President Trump's agenda, it's worth looking at what's been working and what hasn't been. Jerry was kind of an overall solid month for stocks, although some of the biggest winners have now pulled back substantially from their highs. When you look at the five best performers in the S&P 500, let's see what you get. Constellation Energy is first and Vistra is fourth. Those are both nuclear power plays. Then there's CVS Health in second, GE Arrow Space in third and F5 in fifth. When you look at Constellation Investor, these nuclear stocks have had explosive multi year moves as the data center build out has created this electricity shortage around the whole country and nuclear remains the preferred power source for any company that cares about climate change. Now we got some huge data center announcements from Microsoft Metal as well. Then Oracle SoftBank and OpenAI teamed up to form something called Stargate with a $500 billion infrastructure plan that was announced at the White House on President Trump's first full day in office. In response, stocks like Constellation Vista soared. But then Deep Sea Cap and Wall Street's now trying to figure out if the tech titans have been spending way too much money on hardware. Both Constellation Investor got obliterated in response, although they've now rebounded pretty substantially from the lows and again, they still finished January up big. I've seen some analysis suggest the Deep Sea has been downplaying its real costs, but until we get more clarity, I don't want to stick my neck up for nuclear stocks because these only work when the data center story is ironclad. Now I do know that Scott Tracyk from GE Vernova, which builds nuclear power plants, is getting more bullish about the near term possibility of orders. But even under the best of circumstances, these things take years to construct. The second best S&P 500 stock in January is frankly pretty shocking. It's CVS Health up 25.8% last month. Now CVS and Chief Rob of Walgreens have both been spiraling in the post pandemic year. Last year was no exception. CVS in particular they fired CEO Karen lynch and its stock finish 2024 down more than 43%. So maybe you could argue was due for bounce. But the odd thing about CBS January rally is the fact that there really is no clear catalyst for it. Now there was plenty of news involving Walgreens last month, very little bit good, but it looks like CBS mostly rallied in response to an announcement from the Centers for Medicare and Medicaid Services, which said early last month the payments from the government to Medicare Advantage plans are expected to increase by over 4% from 2025 to 2026. But I'm going to need to see more legitimate good news from CVS for I believe in any term. The company reports next Wednesday. Let's see what they have to say before chasing the January rally. Third best performer JD was GE Aerospace. Yes, the part they left over left over after they spun off health care and power businesses. Now GE Aerospace finished January up 22%. The old fashioned a true blowout earnings report. It's delivered on January 23rd. Not only did the company smash expectations for the quarter, management also issued strong earnings and cash flow guidance for 2025. They raised dividend by 30%, announced a new $7 billion buyback plan what's not like Gee is another stock with huge gains in recent years. But it's a huge run, has been supported all the way by steadily improving numbers, so I think it has more staying power. I remain firmly bullish from GE Aerospace under the leadership of this remarkable turnaround artist, Chairman CEO Larry Cole. I really like him. I mentioned number four, Vista already. So why don't we wrap things up with the fifth biggest gainer? It's called F5. Has nothing to do with Formula 1 or anything like that. This is up 18.2% January. This tech company formula as F5 Networks specializes in application security and delivery solutions. Oh boy, this is the kind of thing that everybody's crazy about. It's a story I really should have covered much, much more often because it has been a strong performer, literally for decades. When I was a hedge fund manager, stock had already been rising steadily through January, but then gapped up last week after the company put an excellent quarter. Not only did F5 handily beat sales and earnings expectations, but the company also raised its full year forecast substantially. While the guidance for the current quarter was not as strong. If I've got a pass, the stock's humming deserves every point of this move and more. Hey, by the way, let's have an honorable mention for Travel Trust holding, Starbucks. That was 6 in the S&P 500 last month it gained 18% primarily because of a big move last Wednesday after the company reported a better than feared quarter with positive commentary from new CEO Brian Nicholl, formerly of Chipotle. While the stock moved a lot since Nickel was announced its new CEO last August, I'd still much rather bet with him than bet against him even up here. Those are the winners. How about the biggest losers? Two biggest decliners are both California utilities because of the wildfires in Southern California. The biggest loser, Edison international, was down 32.4% in January. This is the parent company of Southern California Edison, which services the areas that were actually impacted by the fires. But the second biggest decliner is very intriguing. It's PG&E. That's down 22.4% last month. Now it seems to be just guilt by association. Patty Poppy told us that she's the CEO. It doesn't operate in Southern California. I think it's worth buying after last month's weakness. Yes, it's dirt cheap. Buy it. The third worst name is a tough one for me is Constellation Brands SDC, down 18.2% as Bravaire Mexican beer brands Modelo, Corona and Pacifico. This stock was already under pressure after the election and then the bottom fell out if they reported a bad quarter early in the month. Now, we spoke to Constellation CEO Bill Nuance that night and came with pretty disappointed with what I felt was a lack of urgency about fixing the company's problems. It almost feels like they're in denial. Where do I come down on this one? Well, with the arrival of tariffs this past week, the chapel just sold half its position. Constellation today Enough. Even with the pause of the Mexican tariffs announced this morning, this position has just become way too hard to own. Liquor is a tough thing to own in this market. The fourth worst performer in the SB last month was ON Semiconductor, that's down 17%. This chip maker is a leading supplier for the auto industry, and though it doesn't report until next week, the stock got hit after Texas Instruments reported last Monday and gave a door outlook for the automotive and industrial end markets. The semiconductor cohort is all over the place. The one selling into the theme are still doing pretty well, but anything like Texas Instruments or on semi has it had a real tough go. Finally, the fifth worst stock in the SB 500 in general is Electronic Arts EA, the video game publisher with a stock down 16% last month. Now, simple, simple story. Last month, EA preannounced Shockingly Light numbers for its latest quarter, thanks primarily to significant underperformance for some of the company's biggest titles. Their soccer business now looks to be a shambles. A couple of years ago, EA took a gamble by forging forward with its previously lucrative franchise despite losing the license to use the name of soccer's top global governing body. That gamble has not paid off for reporters tomorrow, but it is Tough to see how he tells a better story. Bottom line, pretty disparate group of winners and losers of VS me. Very different from 2024. So why don't we, why don't we see how things play out for the rest of the year? That money is back.

[Mad Money Production]

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[EY]

What's at stake when administrations change? From the first 100 days and beyond, EY brings insights on the issues that matter. Executive orders, regulation of AI, the fate of billions in tax credit, global trade and workforce stability. No matter the policy shifts, EY helps business and government leaders remain resilient and seize dynamic growth. EY navigate the geopolitical and economic landscape with confidence.

[Jim Cramer]

What the heck just happened to the stock of Deckers Brands? That's the parent company of the Ugg brand and Hoka, one of the fastest growing sneaker brands in the world. Going to earnings last Thursday, Deckers had rallied more than 70% over the previous year, primarily thanks to the strength of hookah. But after the company reported its stock plummeted on Friday. Oh my. Sell, sell, sell, sell, sell, sell. Losing more than a fifth of its value in a single session. And it fell another 3.8% today. Now, everyone likes to talk a big game about how they'd immediately buy more of their favorite stock. Never see a big decline, right? But when the time comes, people are a little squeamish. Ask themselves, what do the people selling deckers down 20% know that I don't? And that's why it's important to take a step back, do some research before you decide on the next move. Which brings me back to my initial question. What the heck did happen to Deckers now? First glance, this actually seemed like a pretty darn good report. The reported quarter was actually the largest most profitable in company history. Higher than expected sales all time high gross margins and a 42.42 cent earnings beat 42 off of a $2.58 cent basis. Their most important brands that did great. Ugg sales surged 16% fueled by strong holiday men. Hoka was up 24% proving the running shoe brand has still has legs. So then what went wrong? Simple management gave a disappointing forecast for the current quarter talking about roughly 1% revenue growth. Bolster was looking for 11%. They expect Ugg sales to decline double digits and their earnings to be down nearly 50% year over year. The house of pain. Their gross margins also expect to contract from 325 to 350 basis points thanks to higher freight costs and promotions as they're lapping unusually low levels from a year ago. Now this was a brutal reality check for investors who expected the strong momentum to continue unchecked. I know every time I looked this thing was going up. Deckers essentially told the market quote we just had a great quarter but don't expect that to continue in quote. That's massive buzz kill for a stock that was already priced for perfection. Why the soft guidance? Largely because while Uggs had an incredible quarter, that strength came at a cost. Demand was so strong over the holiday season that the company sold through too much inventory leaving them sold out of key styles going into the next quarter. Now to be clear, this is a high quality problem, right? Because demand is still strong, but they don't have enough inventory to take advantage of it this quarter. Unfortunately Wall street hates sequential revenue declines, especially for high flying brands. Even just because of timing, they're not going to look through it worse. Decker's guidance implies that hocus growth is slowing, a serious problem because so many people own this stock precisely because of Hoka, which has been an incredible growth engine. Now also while Hoka sales grew 24% in the quarter they just reported was pretty good at face value, that was only in line with expectations when 24% growth can be seen as almost a disappointment. Maybe the expectations got too high. And for the current quarter management implied that HOKA might only grow in the low double digits. Not exactly like hitting a brick wal wall. But when you're used to much higher growth, decelerating to the low double digits might cause some real turbulence. Sell, sell, sell. Yeah, you got it. In short, investors are worried that hookah might be peaking. Again this is Deckers key growth driver. If it slows down dramatically, the whole thesis falls apart. We've seen plenty of sneaker businesses crash and burn over the years. Now before the report, Deckers was trading at over 34 times forward earnings which a big premium for a footwear company. You know it's even more expensive than in video. And while the world may run on hoka, the revolution does not. Fast forward to today and after the sell off. And Deckers now sells for under 27 times forward earnings. There's a simple reason for this. Wall street doesn't tolerate high valuations if the growth rate is slowing down. Deckers was indeed priced for perfection. And imagine didn't deliver perfection, didn't deliver floor support. This stock, it just got torched. All right, so is it a golden opportunity to buy or is it a sign of more disappointments? Despite all the fear that a sell off generates, it's important to take your emotions out of the equation to see whether it's worth buying the stock. Now, I can come up with a few reasons to believe that this pullback's overdone. For starters, management here is notoriously conservative. They love to under promise and over deliver. Additionally, demand frags is still strong. They just don't have enough merchandise. Once management restocks their inventory, unless everybody bought something else, sales should normalize. Despite the worries about a potential slowdown in hoka, management has several big launches coming up that should continue invigorate the brand. These new shoes include the Body 9, the Clifton 10 and New Trail running models that should keep the brand growing. Regular viewers this show know that we love to read that biannual Piper teen survey that does a great job of giving us insight into what younger people are buying. I love that thing where Deckers is consistent winner with both UGG and hoka. On the conference call, Deckers mentioned that Hoka was the second most worn brand at the high school cross country national championships. Now that's a good sign. Matt also has a massive cash pile. I really like this aspect. Deckers has $2.2 billion in cash. It has zero debt. That's got a lot of a lot of flexibility. Meaning they can focus on long term growth of the brands without having to choose short term sales. As they explain the comic, I'm quoting here. We don't want to be in a position to have to trade brand equity for short term revenue, end quote. But honestly, the best argument for Deckers is that the stock's a heck of a lot cheaper than it was last Thursday. Especially with today's additional 4% decline. Of course, there's also plenty of reason to stay away and stay cautious. Stocks don't go down 20% for no reason in a single day. Now we know the current quarter will be rough and investors won't want to touch the stock until they See improvement. Hoka's slowing growth is a real risk. If it drops below the expected 20% growth rate next fiscal year, I think the stock could still keep falling. As for the tariff news that came over this weekend, which is what Stacker sent down another 3% today, this isn't actually much of a concern to me. While the company makes a lot of products in Vietnam as well as China, their business outside the US has been growing at a faster rate anyway. So the lower relative sales domestically are already priced in to some extent. So here's where I come down. If you're a trader, stocks that fall more than 20% on earnings usually do not bounce back overnight. If you're short term focus, you might want to wait for a clear bottom before jumping in. We don't know just how conservative management's been for the fourth quarter or what their forecast for the next fiscal year will be. Deckers is still an elite company, but sentiment took a real hit here and it might take a little time to recover. But the bottom line for the longer term investors, I actually think this is a solid buying opportunity. Deckers is a high quality business with strong brands, a great balance sheet and the wherewithal to not chase short term revenue at the expense of its brands. This dip could be the best chance to get in at a discount. But there will always be people who will be disappointed all over again if the numbers don't improve the next time Decker supports. So you can afford to take your time before you buy. I want to go to Sam, my old home state of Pennsylvania. Sam.

[Caller]

Jim, how are you?

[Jim Cramer]

I'm doing okay. How are you saying I'm good.

[Caller]

You know, Jim, I know the market was upset today about the prospect of tariffs, but one of the companies that I think is strong enough to withhold through these tariffs is On Holdings. The company that I called about that one year ago to the date called when it was at 27, looking at 58. I think it's a great buy here. Long term. What do you think?

[Jim Cramer]

Okay, I think ON is a great buy. I think it's got the momentum. But understand when you say longer term I get a little nervous because sneakers, unless you know, look what happened, even Nike. Longer term, I think on is a hot sneaker. I think it's going to stay hot for another year and then we have to revisit. But I think you've got upside on every single pullback on on. Dan. Pennsylvania. Dan.

[Caller]

Booyah. Kramer calling for cpa. Go Birds.

[Jim Cramer]

Go, go Eagles. What's happening?

[Caller]

You introduced me to this stock in 23 and it has earnings this Thursday. So it's in a quiet period. It's down 30% in three weeks on heavy volume with no news. It might be about Chinese tariffs. The stock is health.

[Jim Cramer]

Yeah, well, it's going to report. I do think that the Chinese news, they, they make this stuff in China is real bad and it's going to hurt the profit margin. We got to hear what they're going to have to say. I have to tell you, I'm very uncomfortable buying something that is all sourced in China given the fact that we don't know what the President's going to do if China doesn't play ball. All right. I think this dip in Deckers outdoors, solid buying opportunity for long term investors. It could be a chance to buy some of a really good stock that's on sale. Much more money ahead, including my exclusive look at the trade landscape with supply chain logistics company Flexport. They know it all. And where do American companies doing business in Mexico stand after today's back and forth on tariff? Don't miss my take and all your calls. Rapid fire in today's edition of the Lightning Round. So stay with Kramer. Tammy came in terrified by President Trump's new tariffs from goods from Canada, Mexico and China, although the market bounced back when we learned that the Mexican tariffs would be late for a month. I'm surprised so many people were surprised by this given that Trump talked about it a lot on the campaign show. Still now the tariffs have arrived and companies need to cope with it, especially companies with international supply chains. Which brings me to Flexport. It's a leader in global supply chain technology, helps companies do a better job of managing their logistics. We got to know what kind of conversations are having with our customers and how they plan to handle these new import duties. So let's check in with Ryan Peterson. He's the founder and CEO of Flexport. Get a better sense of what the heck is going on. Mr. Peterson, welcome back to Man Money.

[Ryan Peterson]

Booyah. Jim, thanks for having me back.

[Jim Cramer]

Right? Thank you. All right, so what are the conversations been like with your clients who do business in China, Mexico and Canada? Each one tell me is it's got to be crazy.

[Ryan Peterson]

Yeah, it's a little bit crazy. It's day to day. I mean, I tried to take one day off this weekend and next thing you know, I'm getting 40 texts from my team saying, did you see this new executive order? And that one? So we're trying to be really communicating very clearly with our customers about everything. We know, but it's kind of that balance of how much is overcommuting is communicating because sometimes you're waiting for more official policy to be issued than just a White House statement.

[Jim Cramer]

For example, well, you got a break with Mexico. But tell me what would have happened if they had done, done them immediately with a, would a trucker be invoiced? Would they not let him in? I mean, what's the actual physical process?

[Ryan Peterson]

Yeah, you know, the way that we think it works is that you basically have this cutoff date and they said that it would be, would have been tomorrow and it's have the goods been loaded at that point in time and then you have to make a case, they might charge you duties and you can make an appeal effectively saying that no, in fact with the goods were this is for ocean freight, if it's a truck, it's got to clear the border, of course, but for ocean freight, if it's, if it's already on board, you can make that claim that your goods were already loaded.

[Jim Cramer]

Well, I mean to me there would be pure chaos. I mean everyone is overtaxed, no one's ready for it. I mean, wouldn't there just be lines around the whole globe because of this?

[Ryan Peterson]

Yeah, the implementation timeline was pretty unprecedented. You know, in the 301 tariffs that Trump did in his prior administration, they gave us at least a month's notice to put things in. It's also for CBP themselves to, to go and implement these things. It takes them time sometimes. So we weren't really surprised when Mexico got expended extended. We'll see what happens with Canada though. There hasn't been an agreement yet today.

[Jim Cramer]

Now Ryan, did you tell people, look, you got to get in ahead of this. If you have any spirit spare capacity warehouses in America, you got to ship the stuff now unless it's perishable. And did people listen to you?

[Ryan Peterson]

Yeah, we've seen a lot of that, especially in China. China has been, you know, long foreseen that there would be sort of escalating duties on the imports from China. And we have seen that in our customer base that people have been importing much more, trying to pull goods in the next. We had a 10% increase on duties from China. That's on top of all additional duties that was issued this week. But really the real review is on April 1. That's when the Treasury Secretary is required to give a report to the President advising next steps on Chinese trade and whole range of policies. And you know, I would expect the duties will continue to go up. So. Yep, if brands can, they're likely trying to import those goods ahead of time.

[Jim Cramer]

Okay, so could you explain to me the de minimis stuff? I see a lot of stuff from Sheehan and Tamu and it seems like they were getting a real break. It looks like there's no more break for them. Is that what's happening?

[Ryan Peterson]

Yeah, effectively. So if de minimis means if the goods are less than $800, you don't. And they're directly consigned to the final consumer. That's you and me. If it's less than $800 per day per transaction, per. Per customer, then it's. There's no duty owed. Regardless of what the duty rate is. There's no duty owed. So with this latest executive order, they shut down the de minimis program for goods that are made in China, for goods that are made in Mexico and made in Canada. Now, this is a very big regulate. There's a very big change. It's a huge. Some people call it a loophole. I don't, you know, it's a statute passed by the government. I don't really call it a loophole, but whatever you want to call it, it's very big. A lot of companies use this. You mentioned Temu and Shane. And Shane. But of the top 100 Shopify brands that sell, you know, E Commerce direct to consumer brands, 30 of the top hundred are also importing in this fashion. What they'll do often is put the goods in Mexico or in Canada and then ship them one at a time so they don't have to pay for air freight. They'll ship them one at a time from a fulfillment center in Tijuana, that. That has been postponed. If it's coming from China, you can no longer do that. If it's made in another country, say Vietnam, that has not yet been shut down. So we're going to monitor that very closely and see if they see if they close that.

[Jim Cramer]

How about the unfortunate people who move their business from China to Mexico, Mexico, thinking they were reshoring, they just kind of gone from bad to worse at this point.

[Ryan Peterson]

It has. And Mexico, you know, actually we haven't really talked about it here, but back in December, right before Christmas, the Mexican government actually made a huge change to their import policy with zero days notice. Just announced it the day before Christmas and it sent all kinds of brands into a tailspin trying to move their fulfillment. In fact, Flexport offers E Commerce fulfillment services. Here in the US we doubled the size of our business Already we hit our annual goal in January because so many companies had to move their fulfillment operations back from Mexico into the U.S. so, yeah, it's been a crazy time in the logistics world.

[Jim Cramer]

Okay, so how is your house flexport doing? I haven't talked in a long time.

[Ryan Peterson]

Well, you know, we're doing great, but we're. Our customers are really trying to stay on top of all these changes. And so it's a really interesting time. I think the more complicated global, global trade becomes, the more valuable our services is. Our job is to make things simple. We want to make international trade as simple as flipping a light switch. And so the more regulations that come out that make that harder, the more important our work is. And so we've, we're having a great time working with customers and trying to solve for these complexities.

[Jim Cramer]

Do you think today was a bit of an overreaction both with the customers and with the stock market in general?

[Ryan Peterson]

I'm not a stock market investor. I don't know how to weigh in on that stuff. But I think the long march of history says that human beings want to do trade with each other. Governments may put up tariffs, they may take down tariffs, but if you look at 800 years of history, back to the Mongol invasions, Global trade has grown 4% on average. So I just expect that, you know, if you look in 50 years from now, there's gonna be way more trade than there is today. And I don't pay attention on the day to day.

[Jim Cramer]

Well, in the end, who gets hurt?

[Ryan Peterson]

Yeah, I mean, at the end of the day, businesses that are don't like complexity. They want to have some certainty about what's going to happen. It's very hard to plan a supply chain when it's changing day to day. And so I think it's really hard for these businesses to figure out, you know, what is the government going to do and how should they set themselves up? Possible that this will lead to higher prices in for consumer goods. But there's all kinds of other variables that may lower taxes or may create a simpler regulatory framework that might increase demand. I mean, we're going to see the price of air freight come down a lot if Sheen and Timu can no longer do the same amount of volume. We're going to see, we've seen the Houthis back off a little bit here, probably out of fear of what Trump administration may do, but they were. All the container ships in the world have not been able to go through the Red Sea for over a year that we're Starting to hear rumors and talk that maybe the container ships will start going through the Red Sea again. That would really bring down the price of ocean freight. So it's hard to operate in really simple black and white world when global trade is this complex.

[Jim Cramer]

Well, we know that it can be navigated because this is your world. And I really appreciate you spending the time with us. I know you're very busy man, but I want to thank Ryan Peterson, founder and CEO of Flexport. I love having you on the show. Thank you so much.

[Ryan Peterson]

My pleasure.

[Jim Cramer]

They have my back after the break.

[Mad Money Production]

Coming up, Kramer takes your calls. And the sky's the limit. It's a fast fire. Lightning round.

[Jim Cramer]

Next it is. Hi. It's over the white rail. Contemporary white Ralph. Cold nights and stocks. Bye. Bye bye. Soccer question. My staff person, Grant. Bye. Plan this out and then the lightning round is over. Are you ready, Ski daddy? Tell me the lightning round because you'll start with James in Connecticut. James.

[Caller]

Hi, Jim. Thanks for taking my call. I'm a club member and I was a club member of your other club. My question is about Emerson. Are I trip.

[Jim Cramer]

Emerson? I got out too soon. I was worried that they did a hostile takeover. I don't like hostile takeovers. It was a mistake by me. I should have felt. You know something, these guys are going to pull it off. My bad. Boss missed out on 20 points. Very bad. Let's go to Ryan in Ohio. Ryan. Hey, Jimbo.

[Caller]

Good luck to your Eagles this weekend, brother.

[Jim Cramer]

Oh, thank you, buddy. Appreciate that. What's up?

[Caller]

I found a stock that I usually watch the either the financials or, you know, the indicators. And I found one that's just getting ready to cross the 50 and 200 day.

[Jim Cramer]

What are your thoughts on Five9, customer relations management? They do a very, very good stock. Stock is way too cheap. I think I am with you and I would pull the trigger. Let's go to Russ in Texas. Russia.

[Ryan Peterson]

Welcome.

[Caller]

It's great to speak to you.

[Jim Cramer]

Shane, what's going on?

[Caller]

Long time viewer, first time caller. Love the show.

[Jim Cramer]

Thank you.

[Caller]

This stock has a great pipeline of military and public sector contracts. It's up 160% for the year. But I've also read there's a good amount of short interest as well. It's considered a baby brother of Palantir who had a great earnings call today. But I think it's actually the big Bear brother. I want to know your thoughts on Big Bear.

[Jim Cramer]

No, no, you got to go with Palantir. Palantir is not done. This guy is Amazing carp. I mean, I can't say enough good about them other than the fact that everybody else is saying it good. So you don't really need me. That's the one to be in. Sue in Minnesota. Sue. Hi, Jim, this is sue from Minnesota. Axel, what's going on?

[Caller]

Oshkosh Corp. They went up so significantly last Thursday, over 18% and.

[Jim Cramer]

Yeah, well, they. They did. They blew away the numbers. I mean, I have to tell you, I was surprised that the numbers being that strong. I know that we had them on. I didn't see that coming. Another great American company that just shot the lights out that no one was paying attention to it. I need to stop, start. I need to go to John in Massachusetts. John.

[Mad Money Production]

Jim.

[Caller]

Cheers.

[Jim Cramer]

Cheers. Happy Monday.

[Ryan Peterson]

How you doing?

[Mad Money Production]

Doing, Jim?

[Jim Cramer]

Wow. I. I like it. I like your attitude. You're bringing it. You're bringing it today. I'm doing fine. How about you? I gotta bring in the energy, Jim.

[Ryan Peterson]

But you know, first off, I have.

[Jim Cramer]

To say I'm very, very sorry for.

[Mad Money Production]

You, the people of Philadelphia, with the recent news.

[Ryan Peterson]

I'll just leave that there.

[Jim Cramer]

But Jim, what are your thoughts on GameStop? And you think K, I'll tell you. If you want games, you got to be in Take two, because Take two is going to have a Grand Theft Auto brand new, brand new edition this year. And that's the one to be in. You got a momentum. I mean, look at what happened with EA. So I can't recommend GameStop. I just know it's a meme stock. But if you want a meme stock, of course, you just buy Palantir. I think everyone just go by Palantir. I mean like Palantir. It's like, what can I say? Alex Karp, I think he'd find you if you didn't buy Palantir and I'd give you a little talk and do. Let's go to Mike in Connecticut. Mike.

[Caller]

Hey, Jim, thanks for taking my call. And go Eagles 59.

[Jim Cramer]

Wow. It's the America's Team here. Absolutely. What's going on?

[Caller]

Last Friday you were speaking on the show about stock and insider buying. Well, that very week I was researching two companies of stock so I can swap out two. I wanted to take a profit on two stocks and put two more in the chute. One of these stocks was a retail stock and the inside of buying was overwhelming. And the stock itself has had trouble throughout the years, but it doesn't seem to want to go away. I wanted to know if you thought that the insider buying may be falsely inflated the stock. Their agreement between the Container store completed on January 31st.

[Jim Cramer]

Okay, what?

[Caller]

And what is the store stock right now? The stock is Byon.

[Jim Cramer]

Yeah, byo. They're buying everything about Bye Bye Baby too. I guess it's Lemonis. Look, I actually like their style. I thought Container Store was poorly run. I thought Bye Bye Babe was poorly run. Maybe you can make it better. And that, ladies and gentlemen, conclusion of the Lightning Round.

[Mad Money Production]

The Lightning Round is sponsored by Charles Schwab.

[Jim Cramer]

My family does a lot of of business in Mexico. My wife owns a mezcal company named Phosphoro. It's sourced near Pueblo, a huge city of 3.4 million people, fourth largest in the country. We took the President seriously when he campaigned on placing tariffs on Mexico. So we brought in a huge amount of products, 7,200 bottles, far more than we needed, and stuck them at a Texas warehouse. We knew what Trump ran on, so why the heck wouldn't we try to get ahead of it? Seems simple, given that he did win the election. What's amazing to me though, is how few people truly took them seriously. While it's been delayed a month, the 25% tariffs real and if executed, it's us at least right on the bottom line. Real impediment to profitability. We weren't alone. I wasn't satisfied with the analysis. The bill, new ones. The CEO of Constellation Brands who told us that he didn't think the company would be hit with tariffs because you can't make Mexican beer, in this case Modelo Corona in the United States. I had no such illusions. But what I didn't count on was that newly elected Mexican President Claudia Scheinman would call up 10,000 National Guard soldiers to try to interdict illegal immigration and to stop the flood of fentanyl in return for a one month pause before the tariff hits. I think this opens the door for a change in trade policy to one that's much more targeted. Now there's a heck of a lot smarter. That's much smarter than the tit for tat approach that China adopted, one that could possibly preserve a lot of commerce we have with Mexico, our biggest trading partner. We did 807 billion in business with this country in 2023. Trump could really sink them if they're not careful. But there's no free lunch in this business. If Mexico slips into recession because of the tariffs, then we can expect a surge in illegal immigration no matter what. The border is too big for 10,000 soldiers on their side. A wall and as many soldiers and ICE officials, officers to police. It's not going to work. However, Seinbaum said that she had a good 30 minute conversation with respect and equ quote, it's about collaboration, coordination without losing sovereignty, end quote. I like that. For example, she said she was concerned about the smuggling of automatic weapons too, and that President Trump agreed to help her stop it. I think Trump knows that trade with Mexico isn't tomatoes or guacamole or building materials or even the intertwined nature of the auto business. He knows that if you hurt all these businesses, you can hurt the Mexican economy and knock into recession. If that happens, then there'll be many more immigrants. Much crazy immigration. That's the wild card and neither president wants that to happen. Now, if we step back for a second, it's worth thinking about China Bomb's courage. A new president could have been confrontational, oppositional. Instead, she came to the table in a collaborative way. I know that a month from now everything could change. It's true that Mexico has 162 billion trade deficit with the United States, but it's also true that the President ran on stopping illegal immigration and fentanyl smuggling and now he already has a win with the President of Mexico. He doesn't have to get much more than that, provided that Shein Bomb lives up to her end of the deal. The market was incredibly ugly before Shein Bomb came to the table with a peace offering that no, that will no doubt include Mexico buying more of our stuff. But President Trump can now crow the tariffs work. It's giving my wife a chance to import one more truckload of phosphor agave spirits. Just in case things break down, which with Trump is always a possibility, I'd like to say, as always, more markets on my punch out Friday just for you. Right here on Mad Money, I'm Jim Cramer. See you tomorrow.

[American Express]

All opinions expressed by Jim Cramer on this podcast are solely Kramer's opinions and do not reflect the opinions of CNBC, NBCUniversal or their parent company or affiliates, and may have been previously disseminated by Kramer on television, radio, Internet or another medium. You should not treat any opinion expressed by Jim Cramer as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. Kramer's opinions are based upon information he considers reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Mad Money disclaimer, please visit cnbc.com madmoneydisclaimer Finding the music.

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