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.

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.

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]).

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]).

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]).

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]).

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]).

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])

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.