Mad Money w/ Jim Cramer 04/21/25

Summary

Mad Money w/ Jim Cramer – Episode Summary Episode: April 21, 2025
Host: CNBC
Release Date: April 21, 2025

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1. Market Overview: A Grim Landscape for Bulls

Jim Cramer opens the episode with a somber assessment of the current stock market conditions. He highlights a prolonged downturn, particularly emphasizing the tech sector's struggles.

• Tech Sector Collapse: Cramer notes, “The staggering losses among these once loved stocks have turned off the oxygen for shareholders” (02:30). He specifically points out Tesla, Apple, Nvidia, Amazon, Microsoft, and Meta as the primary culprits behind the market's bleak performance.

• Market Indices Decline: The Dow plummeted by 72 points, the S&P 500 fell by 2.36%, and the NASDAQ nosedived by 2.55%, marking five consecutive down days across these indices (05:15).

• Political Interference: Cramer criticizes the current administration's approach, stating, “I know that, you know that it can really get you down. I'm not used to seeing a White House that doesn't seem to care that it's causing the decline” (03:00). He expresses concern over potential constitutional crises, such as the President’s attempts to fire Federal Reserve Chair Jay Powell, which he believes could exacerbate market instability (07:45).

2. The Plight of Tech Giants: Apple and Nvidia Under Pressure

Cramer delves deeper into the specific challenges facing Apple and Nvidia, two of his long-standing favorite stocks.

• Apple's Decline: “Apple stocks now down 22% for the year,” Cramer laments (06:00). He attributes this downturn to Apple's heavy reliance on manufacturing in China and fears that the administration's aggressive stance on tariffs is undermining the company's profitability.

• Nvidia's Struggles: Nvidia has seen a more severe drop of 28%. Cramer questions his own judgment, asking, “What did I miss here? Did I foolishly fall in love with these two stocks?” (07:10). He expresses frustration over governmental policies that he believes are unfairly targeting these companies, particularly regarding export restrictions to China.

• Government Bias: Cramer asserts, “I fear the government is incredibly biased against both Apple and Nvidia,” suggesting that these companies are being unfairly penalized in favor of broader political agendas (06:45).

3. Resilient Performers: Netflix Shines Amidst Chaos

Contrasting the turmoil in the tech sector, Cramer highlights Netflix's impressive performance, portraying it as a beacon of hope in a turbulent market.

• Strong Earnings: “Last week Netflix reported tremendous quarter... made up the vast bulk of its losses and the stock still up double digits for the year,” Cramer explains (14:00). Netflix's ability to consistently exceed earnings expectations has bolstered investor confidence despite overall market declines.

• Management Confidence: Netflix's management remained unperturbed about economic uncertainties, reiterating their full-year forecast and providing strong guidance for the current quarter. Cramer cites, “There's been no material change to our overall business outlook since our last earnings report” (15:30).

• Subscriber Retention: Emphasizing Netflix’s resilient subscriber base, he notes, “Their subscriber retention, which they believe is a good leading indicator of the business, describing it as, 'stable and strong'” (16:45).

• Diverse Content Portfolio: Cramer praises Netflix’s vast array of content, including successful originals and live events, which cater to a wide audience and drive continuous viewership growth.

4. UnitedHealth Group's Quarter Missteps: A Case Study

A significant portion of the episode is dedicated to dissecting UnitedHealth Group's disappointing first-quarter performance.

• Earnings Miss: UnitedHealth reported a substantial revenue miss and a slight earnings miss, forcing the company to cut its full-year earnings forecast by approximately 12% (23:10). Cramer describes this as a “heinous quarter” that sent shockwaves through the managed care industry (21:30).

• Medicare Advantage Challenges: The core issue stems from UnitedHealth's Medicare Advantage plans, where excessive usage by patients led to higher-than-expected medical care ratios. Cramer explains, “too many people are using their Medicare Advantage plans and their Optum Health subsidiary... is getting paid much less than they expected” (24:50).

• Optum Health's Role: Inaccurate health assessments due to insurers exiting the market contributed to underpayments for care, exacerbating financial strains on UnitedHealth (25:15).

• Industry Implications: Cramer points out that UnitedHealth's troubles have cast a shadow over the entire managed care sector. Despite competitors like CVS Health showing resilience, the collective market sentiment remains bearish following UnitedHealth’s downgrade (26:45).

• Potential Buying Opportunity: Despite the grim outlook, Cramer hints at a potential buying opportunity, albeit cautiously. “Normal. May I say this is tremendous buying opportunity. Get into the amazing stock. But now I think it's just too fraught for me to tell you to do that” (28:40).

5. Managed Care Industry Insights: Competitors and Comparisons

Cramer contrasts UnitedHealth's struggles with the performance of other major players in the managed care industry.

• Elevance Health: Elevance Health pre-announced their Q1 numbers, which beat expectations significantly, allowing their stock to recover from a previous drop (23:50). This suggests that UnitedHealth's issues may be company-specific rather than indicative of the entire sector.

• CVS Health: CVS remains strong, with speculative improvements stemming from Walgreens' strategic moves. Cramer remains optimistic about CVS's prospects despite the sector-wide downturn (24:35).

• Overall Sector Health: While UnitedHealth faces serious challenges, other companies in the managed care space appear to be managing better, indicating uneven performance across the industry (26:00).

6. Lightning Round Highlights: Rapid-Fire Stock Recommendations

In the Lightning Round segment, Jim Cramer responds to caller inquiries with swift buy, sell, or hold recommendations on various stocks.

• McKesson Corporation: Cramer expresses surprise that McKesson hasn’t executed a stock split, praising its strong market position and continued profitability. “I think it's doing better than they are. But I think gold is a good place to be” (29:35).

• Simon Property Group: Despite some exposure to retail challenges, Cramer recommends buying Simon Property Group, citing its strong balance sheet and attractive 5.7% yield (37:39).

• Carmax: Advising caution, Cramer acknowledges Carmax's significant decline but ultimately discourages selling, reflecting broader market pessimism (39:12).

• Plains All American Pipeline: Cramer maintains a cautiously positive outlook, recognizing the company's resilience despite higher yields and market pressures (40:33).

7. Final Thoughts: Comparing to Historical Crises and Looking Ahead

Cramer closes the episode by drawing parallels between the current market turmoil and the 2011 European debt crisis, highlighting the recurring theme of political-induced market instability.

• Historical Comparison: “We find ourselves in a similar situation... as the President begins to create a constitutional crisis of potential fire of Jay Powell while Congress once again deals with the interminable debt crisis” (39:50). He underscores how external political factors can overshadow even strong earnings reports, diminishing their impact on stock performance.

• Debt Downgrade Concerns: Cramer warns of a possible U.S. debt rating downgrade, reminiscent of the 2011 scenario, which could further destabilize markets. “It's possible to realize that a strong Apple with business in China is very much in our nation's interest” (43:10).

• Market Resilience: Despite the challenges, Cramer remains cautiously optimistic, suggesting that the market may eventually stabilize once political tensions ease and structural issues are addressed.

• Final Commentary: “We need to get used to a market that's down every morning because the earnings won't matter in this environment. It will be the tariffs and the talk about firing Jay Powell that defines this period,” Cramer concludes, urging investors to navigate the current landscape with prudence and awareness of the underlying political dynamics (43:55).

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Notable Quotes:

• Jim Cramer on Tech Sector Downturn: “The staggering losses among these once loved stocks have turned off the oxygen for shareholders” (02:30).

• On Political Interference: “I’m just trying to save you a little money... Ground zero is tech” (04:00).

• On Apple and Nvidia Challenges: “I fear the government is incredibly biased against both Apple and Nvidia” (06:45).

• On Netflix's Performance: “Netflix represents such tremendous value that they might not be hit with that hard” (16:00).

• On UnitedHealth Group's Issues: “This report sends shockwaves through the managed care industry because UNH is the largest player in the space” (22:50).

• Historical Market Comparison: “Draghi will just buy the pigs bonds... This time the United States is not a safe haven” (42:00).

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Conclusion

In this episode of "Mad Money," Jim Cramer provides a comprehensive analysis of the current market's bearish trends, focusing on the tech sector's significant downturn and the political factors exacerbating the situation. He spotlights Netflix as a resilient performer amidst chaos and offers a critical examination of UnitedHealth Group's challenges, which have broader implications for the managed care industry. Through the Lightning Round, Cramer offers targeted stock recommendations, balancing optimism with caution. Drawing historical parallels, he underscores the impact of political instability on market performance, advising investors to remain vigilant and informed as they navigate these turbulent times.

Transcript

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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 want to make friends. I'm just trying to save you a little money. My job is not just to educate, but explain how days like today can happen. So call me at 1-800-7-RADO CNBC or tweet me Jim Cramer. Look, these are hideous, depressing days for the bulls. I know that, you know that it can really get you down. I'm not used to seeing a White House that doesn't seem to care that it's causing the decline. It's dazzlingly counterintuitive to see a Republican in particular be so callous toward the shareholder class. After all, historically the that constituency has been very pro Republican. It's a total blast zone out there. And ground zero is tech. The staggering losses among these once loved stocks have turned off the oxygen for shareholders. Turn off the oxygen, that's toto. They're devastating. Led by Tesla of all ironies, but also Apple, Nvidia, Amazon, Microsoft and Meta, they're all. They've been terrible. The former Magnificent Seven have been down for five straight days, contributing mightily the brutal decline in the average. Entire dow tumbling down 72 points today. S&P plummeting 2.36%. The NASDAQ nosediving 2.5. 5%. Five straight down days. Gobs and gobs of points and no end in sight unless you got some hope from a late day rally from even further depths. Now look, it's not just the magic. There are plenty of other losers all over the place. But the most visible stocks have also experienced the most visible losses. And those losses have been nothing short of relentless. This morning my colleague David Faber asked me as how I felt about two stocks in particular that I've long championed Apple and Nvidia. He heard that I violated my own long standing discipline to own them, don't trade them. Something I have said repeatedly to members of the CBC Investing Club and that I told people to do some selling. I told him that indeed at the beginning of last week I did advise people to sell some Nvidia and Apple every Sunday. See, I do this think piece for investing club members. The Sunday before last I did this gut wrenching piece. I said that I could no longer stand by and have these two fantastic stocks be eviscerated. So people had to sell some. In retrospect, it was a great time to sell. I mean hindsight, I know, but these stocks have been crushed in the interim. Then last Wednesday, in a heartfelt emotional talk with investing club members, I reiterated that Apple Nvidia had to be parted with because I couldn't see a path to avoid big declines portion. If you listen to me, you just avoided the latest declines. Unfortunately, there's been some serious damage to these stocks. I mean Apple stocks now down 22% percent for the year. Nvidia stocks down 28%. Now I have to ask what did I miss here? Did I foolishly fall in love with these two stocks? Look, over the years, people don't extremely well owning Apple and video. With me, whenever I travel, I'm always looted for both, especially Nvidia. There are so many people who told me, for example, when I signed my wife's phosphoro mescal bottles that they're in video millionaires that I feel terrific. I love hearing that. But after still one more miserable day, let me expand on what I told David Favor this morning. First, the President is hectoring Fed chief Jay Powell in a very derisive way. We're in some unfathomable territory here. We could be in for a constitutional crisis. President Trump tries to fire Jay Powell and you may need some cash. If that happens, Chairman Powell could conceivably say this isn't worth it. But that doesn't seem to be him. Nor should it be because he made a principle. And to me, I always was under the impression that the President can't fire a Fed chair. Others shared that impression. It's a shame that there's not a fraternity of economist types that could be candidates that simply say, listen, we couldn't consider being Fed cheap because we already have one. Plus, it's not like the President's calling for pals firing that it can help the market. It's real bad for stocks. We know that along with the tariffs, this talk has done immense damage, crushing certain stocks beyond recognition. I know it might not be that important to the President right now, but these losses could easily accelerate from here if he keeps trashing Powell without a good tariff deal. Somewhere in particular, I explained that I fear the government is incredibly biased against both Apple and Nvidia. Nvidia is simple. I think the White House believes that Nvidia doesn't do enough to stop the Chinese from getting its latest and greatest chips. I fear that Trump will endorse the Biden rules that allow only 18 friendly countries to get unlimited access and amounts of Nvidia's best merchandise. It's a pretty arbitrary thing. Many countries that are friends are not on the friendly list. I had hoped that the administration would realize Nvidia is not just a good actor, but it's a great actor, a national champion that's done everything it can to live by the letter and spirit of our rules. I can no longer justify that level of hope. I think the White House cares more about cutting off China than it does about advancing our own interests. And that's made in video. Very hard stock to own, but not as hard as Apple. You know me, I love Apple's products. They make the greatest consumer products on earth. Are they late on AI? Oh, do I really care? I mean, they're going to get it right in the end. That's what they always do. That's what they've always done. Unfortunately, Apple does a ton of manufacturing in China. Now, I'm not a huge fan of the government of the People's Republic of China. That should be obvious to anyone who watches the show. However, I always felt that as long as there was commerce between our two countries, there was hope that the people, not the government, but the people, would make it untenable for the Chinese government to be as anti American as they might otherwise be. Until Trump became president, our policy was peaceful coexistence and commerce with China, even if they didn't play by the rules on trade. I didn't like that. I wanted to play by the rules. But now our policy is nothing but scorched earth without military confrontation. And Apple's caught in the crosshairs. As I see it, this administration believes that Apple selfish that Apple wants to have its cake and eat it. To the White House app to the White House. Apple should either make its products here or not at all. Now, here's what's really important. It seems like there's no one in the administration who says, look, Apple's one of the best companies in the world and we don't want to hobble it. We want to promote it. We want the government of China to know that we make the best phones, not the Chinese. And the Chinese people want ours, not theirs. But that's so off message for Trump's trade team that I sound like a rube for even floating the idea. I am not a rube. I just don't think there's anything particularly selfish about Apple's approach to China. In fact, it's kind of brilliant for everyone in this country, from the White House to Cupertino. In the end, Nvidia and Apple are emblematic of what's happening right now. There are stocks, and stocks are going to go down if the White House triggers a constitutional crisis by trying to fire Fed Chairman Jay Powell. Can you imagine a day when, say, Kevin Marsh, someone rumored to be a potential Fed chief, is named chief with Powell still as chief and he shows up at the Fed. I mean, they get a wrestling match with Powell. I mean, that's where we're headed. WWE at the FT. In that world, it's hard to imagine the SB staying above 4805-the- intraday low we hit two weeks ago. In the interim, I can get behind some companies with weaker earnings. But you don't want to bet on companies where the government's mandating weaker numbers. And that's what it's doing to Nvidia and Apple. If you're a member of the investing club, you would have known that we only trimmed these stocks. We did not jettison them out. We didn't blow them out. Why? Because I believe there will be a moment where the pain gets so great that the White House walks back the most puter parts of its of its financial agenda. There has to be some sanity here. If not, I'll be wrong. And the stocks. But the bottom line, nothing's etched in stone with this president. It's possible to realize that a strong Apple with business in China is very much in our nation's interest. That a rule bound Nvidia is Worth supporting. It doesn't have to be this way. Then again, maybe he never comes around and the stocks keep getting pummeled. It could go either way, but only one way makes sense long term to back great American businesses that want to dominate and can do so unless our government won't let them. Jerry in Missouri. Jerry.

[Caller]

Hey, Jim, thanks for taking my call.

[Jim Cramer]

Of course.

[Caller]

Last Wednesday it was revealed that hedge fund manager Bill Ackerman started a sizable position in this rental car giant. I sold about a third of my position as the stock was basically at a double. Should I cash out or stick with Ackerman from here?

[Jim Cramer]

Okay. Well, you know, I don't know what Bill Ackerman's going to do because I don't know him. And all I can tell you is that the stocks had a very big run. It's not a great company. I've seen great people be felled by the stock. So I think you could take the money and run and be. Or at least take out your cost basis. How about that? And let the rest ride. That would be the most prudent thing to do. Let's go to Pete in Florida, please. Pete.

[Caller]

Jimbo.

[Jim Cramer]

Yeah.

[Caller]

Hope you're doing great, man.

[Jim Cramer]

Well, trying, you know, it's a very hard market. Trying to deal with it like everybody else. How can I help you? Well, thanks to you for all you.

[Caller]

Do for us home gamers and thanks to your team for all they do for keeping you from running off the rails. I really appreciate all that.

[Jim Cramer]

It's not easy, believe me. This is a very emotional time and I feel strongly that we have to backgrade American companies doing their thing.

[Caller]

Speaking of American companies, I'm a youngish retiree looking to lock in some accidental high yield. And a while back ago you recommended the stock before all the tariff tantrums and stuff. So can I build a safe dividend stream with Stanley, Black and Decker?

[Jim Cramer]

Well, it's interesting to say that, you know, I've been writing this book, it's actually done now be talking about making money in any markets. And what's incredible is that I was going to have this as an accidental high yielder and at the last minute I pulled it. Why? Because I don't have the kind of security mentally to be able to do that. I think there are too many problems with the company. We had Mr. Allen on the show, he was talking about a 2027 game plan. So you cannot recommend something for its dividend if you don't think the dividend is totally safe. And that's what I worry about with Stanley Bach and Decker. Ouch. Carla in California. Carla. Carla. Carla. Go ahead. Carlo, you're up.

[Caller]

All right.

[Jim Cramer]

The one thing, the only problem I.

[Caller]

Have with the American economy is that the oil was seeping. So I was wondering if I should.

[Jim Cramer]

Vessel Chevron, which went. Chevron. It's funny again, I don't make money in any market. It's very funny because Chevron was going to be one that I included too, as an accidental high yielder. But it's oil related and we can't tell where oil's going to go. So I decided I couldn't include that, even though I know Mike Wirth has done a remarkable job. He got a 5% yield, but I just feel like the principal could go down so much that it doesn't matter. So I got to tell you, I like Chevron very much. But in the end, what is it? An oil company and the president seems to want oil much lower. Can't make money in any market when you have a president says he wants that one lower. Also seems to want some of the other stocks I like lower too. But nothing's etched in stone and it's possible that the president doesn't realize that it might be worth backing two great American companies that are the pride of our nation. On My Money tonight, Netflix posted an earnings beat last week, helping the stock ended in the green, thank heaven. I'm looking at what the numbers reveal about the state of the super the UnitedHealth sank on Thursday after cutting its forecast UnitedHealth. But what does it mean for the rest of the sector and for the market in general? I'm breaking down the pin action and later I'm digging into the pullback in the homebuilders and revealing if maybe they're at the right time to buy or maybe not. So stay with Freeman.

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[Jim Cramer]

Today's horrific session hey, by the way, something we've gotten used to over the past month is one more reminder that you have to be very careful when you're hunting for the kind of stocks that can work in this environment. The ones that seem immune to all that tariff turmoil. But aside from the traditional recession plays, some of which are working, some aren't, there are some very obvious ones popping up this earning season. Not a lot, but a couple of very noticeable ones. Take Netflix. You might have missed it, but last Thursday night Netflix reported tremendous quarter. The stock popped more than 3% in after hours trading. We had to wait until today for the broader markets reaction, but the stock finished up nicely. And when you look back at the last couple of months, Netflix has held up surprisingly well. So what makes Netflix a beacon of hope in such an uncertain time? Well, some of it's the fundamentals. Netflix reported great quarter in January and they did it again last week. Of course, the stock hasn't been immune to this ugly market. From its highs in mid February to its lows in early April, this thing plunged almost 23% few short weeks. As of today though, it's made up the vast bulk of its losses and the stock still up double digits for the year. Very few are like that again. A big part of that is because Netflix keeps on delivering. Last week they reported better than expected numbers across the board, a solid revenue beat paired with a monster earnings beat. They made $6.61 per share when Wall street was only looking for $5.67. Perhaps more important, Netflix didn't sound the least bit nervous about the future. They didn't wring their hands about the state of the economy. They simply reiterated their full year forecast and gave strong guidance for the current quarter. Felt like the old days. Like many were expecting, management gave us some commentary on how they see the macro environment shaking out despite all the uncertainty. Management noted down the quote here there's been no material change to our overall business outlook since our last earnings report. Hey, that's about as good as you can get in this environment, Netflix also answered some questions about how their business might potentially get hit in the event of recession. While management's keeping an eye out for a possible slowdown right now, they're just not seeing anything. Magic cited their subscriber retention, which they believe is a good leading indicator of the business, describing it as, quote, stable and strong. On top of that, Netflix rejected any notion of disappointing consumer confidence readings that we've been seeing trickle out are having any impact on which subscription plans people are willing to pay for. In other words, they're not seeing their customers trade down to lower priced ad supported plans. But for those convinced that we're headed for a recession, management provided additional commentary about what the prognosis would be in the event of a more prolonged economic downturn. Co CEO Greg Peters noted that, quote, entertainment historically has been pretty resilient in tougher economic times, end quote. And then he went on to say that Netflix specifically quote, also has been generally quite resilient and we haven't seen any major impact during those tougher times, end quote. Who makes sense to me? As I've mentioned before, if consumers are going to pull back on their entertainment spending, they probably start with skipping tonight's Knicks game with tickets going for 250 bucks minimum. Hey, some of those courtside are 30,000 for every second. Stay at home is the much cheaper option. And if you're staying at home to save money, well, Netflix is your best entertainment payment option. It's just great value for your money. Of course, the stock markets, a quote, what have you done lately? And quote, business. So what else is there for shareholders to look forward to? Why should we keep buying it up here? For starters, management believes that the company still has a lot of room to take market share. Netflix still makes up less than 10% of TV hours for an audience or a connected household perspective. As management sees it, this means, quote, we still got hundreds of millions of folks to sign up and quote, they go on to make the point. Quote, from a revenue perspective, we're about 6% of consumer spend ad revenue and quote, now if you just heard that part of the call, you might forget that Netflix is already a massive company with over $40 billion in revenue and an audience of over 700 million individuals across 300 million paid households. But despite the size and current success of the company, management still believes that they're in the, quote, minority of our addressable market. That's pretty good, right? What makes Netflix so confident they still have lots of room to grow organically? Simple. It's their never ending treasure trove of entertainment options both new and old that people can't stop watching. Last quarter they had some huge titles including three movies Back in Action and Advertisement that's a French kidnapping tale and Counterattack, a Mexican action thriller. I was trying to get my wife to watch that with me. She said, oh, maybe it's too bloody. I think we should just watch it. And then one hit TV series Adolescence, which is not for the faint of heart and was certainly not uplifting. Even if you haven't heard of it. By the way, it's great and there've been a lot of articles about it. You should go see it. All right, just watch it. Even if you haven't heard of any of these names, the viewership numbers are huge because there's something on the platform for everybody. That's what I love about it. Netflix even licensed four episodes of the toddler learning series Miss Rachel that got 29 million views. Massive win for the under five crowd. At the same time, Netflix keeps winning with these live events. This past quarter it was the launch of WWE Raw, which saw the wrestling program on the top 10 list every week. Some of you may remember the excitement generated from Mike Mike Tyson vs. Jake Paul fight, but what you might not know is that the boxing match just before that fight was the most watched professional woman spending sporting event in US history. So how is Netflix continuing to leverage that success? They booked a rematch, but that's not all in the live sports department after the success of their Christmas Day NFL slate a few years a few months ago. Neville, just bring back the Christmas doubleheader for 2025. They also teased more international live programming after originally focusing on events in the us. Plus the third and final season of Squid Games will be airing on Netflix later this year. The great thing about this platform is they know what people want to watch everywhere. They can finance these foreign shows and make them used worldwide. In the end, Netflix represents such tremendous value that they might not be hit with that hard. That hard. If we go into the tariff induced recession, what the heck else are you going to watch if you don't want to spend big money? Oh by the way, while we're on this topic of streaming, hey, today CNBC is launching its newest streaming product, CNBC Plus. Now you can stream Mad Money and any of your other favorite CNBC programs anytime, anywhere, on the go and also on demand. I just want you to go to cnbc.com/ to sign up cnbc.com/plus. That's easy. Here's the bottom line. Netflix has held up because it's outside the tariff blast radius. And just as important, the company keeps putting up these truly stellar numbers with great programming. While the Stock was up 1.5% today, I think it's insane that you're getting such a huge earnings beat for such a small premium. I like this stock.

[CNBC Representative]

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[Jim Cramer]

Let'S talk about the biggest mystery of last week. What in the world happened to UnitedHealth Group? Last Thursday, UNH reported a heinous quarter and its stock collapsed, tumbling 22%, dragging the rest of the managed care names down with it. I was shocked before the UNH corps. The health insurance stocks have been holding up pretty well. In fact, many of them were up double digits for the year, which is very impressive in such a brutal market. Suddenly we've lost one of our few remaining sources of outperformance. So what exactly did happen here? And by the way, I'm going to tell you this before you do this piece that I didn't think Wall street had any explanation for it, so we got to do that. Where did UnitedHealth drop the ball? Let's start with the first quarter results, which were legitimately sub par US posted a big revenue miss and a small earnings miss. Nothing to celebrate there. What's worse though, management cut their full year earnings forecast by roughly 12% at the midpoint. Previously they were talking about $29.50 to $30 a share per share. Now they're talking 26 to 2650. That is very big, especially when I'm used to seeing United just blow away the numbers time after time after time night. I'll name two main culprits here. Both are related to patients on Medicare or Medicare Advantage plans, which are essentially private health care plans where Medicare shares some of the cost. Basically, too many people are using their Medicare Advantage plans and their Optum Health subsidiary, where they actually provide care directly, is getting paid much less than they expected from Medicare patients. A double whammy. And again, Optum has just been perfect. This is amazing. The optic problem. It's a complex issue in the world of Medicare. You get paid based on the health status of enrollees. Basically, you get paid more for treating patients with more health problems because the government wants to incentivize taking care of people who are actually sick. But United Health is running into a problem where the health profiles for many of the Medicare patients it treated through Optum Health were inaccurate. In large part that's because many of these patients came from insurers who exited those markets last year and thus those insurers really didn't care if they had accurate health assessments. It wasn't going to be the problem anymore. More but now is Optum Health problem because they're treating people who need more care, but they're being paid like they're treating people who are much healthier. At the same time, UNH hasn't been great about adapting to new Medicare Medicaid rules on payments for so called complex patients. That surprised me too. So the Optum issue is incredibly suboptimal. But this is a small piece of the pie for you and h and it's business that most health insurance companies don't have any exposure to. The really worrisome part of this numbers comes from the UN UNH core managed care business. And this is something that all the health insurance companies have been struggling with. The problem here is that patients, in particular Medicare Advantage patients, are using their insurance more than UNH expected them to. In the first quarter. UnitedHealthcare's medical care ratio, that's the key thing here. It's the amount that the company pays out for patient care divided by the total premiums received came in at 84.8%. That's up a bit from 84.3% in the year ago period. And by the way, with this metric, this is really important. Lower is better. While the first quarter medical care ratio was still better than expected. That's because most patients are still working through the deductibles at the beginning of the year. Once you go over the deductible, UNH is on the hook for these higher than expected medical medical bills for the full year. They raised their medical care ratio forecast by a full percentage point, which may not sound much to you, but it represents a gigantic earnings hit. Of course these two problems are intertwined. For example, many of the patients seen by Optum Health the care business are covered by United Health Care, the insurance business. And those patients are using their insurance more, which is bad for the entire industry. Normally you can fix this stuff over time by changing your pricing, but for whatever reason, UNH got it wrong Again. This report sends shockwaves through the managed care industry because UNH is the largest player in the space and with all the data that it's able to compile to its spoiling organization, it's supposed to be the most sophisticated player in the business to the managed care companies have known about the Medicare Advantage utilization problem for over a year. Most of these outfits adjusted the pricing to avoid making the same mistake that they made in 2024. But unh somehow, somehow screwed up again. And if you and H can't get it right, Wall Street's afraid that nobody can get it right. And that's why the whole group sold off. That's why investors sold down shares of Humana, a huge player in the Medicare Advantage space, as well as Elevance Health, the company formerly known as Anthem, and CVS Health, which owns Aetna. While I understand the gut reaction, I'm not totally convinced it's the right move. Early last week we did a piece on CVS explaining how the company's become one of the best performing stocks in the market this year, in part because its chief competitor Walgreens, they've been taking in private. And once that does, Walgreens is going to close hundreds if not thousands of stores that compete directly with cvs. But I also imagine CVS has been saying that it feels much better about its Aetna business, a competitor, you and H. And specifically that it's gotten the Medicare Advantage issue under control after tweaking its prices and offering for for 2025. In fact, just about two weeks ago, CBS reiterated for your earnings forecast outlook. So clearly they aren't experiencing the same issues as UnitedHealth, at least not to the same extent. But on Thursday morning, about an hour after the market opened, with all the managed care stocks getting hammered in response to each quarter, we also saw Elevance Health take the extraordinary step of pre announcing its own first quarter numbers. And the numbers were fine. Elements expects 1197 of earnings per share for the first quarter, which was much better than the analysts were looking for. And these guys also reaffirmed their full year your forecast. And that's why Elvin saw its stock rebound from down 10% on Thursday morning to finish the day off just 2.4%. By the way, we'll get the full first quarter results from Elvis tomorrow morning before the open. But it sure looks like many of the UNH problems are UNH specific. A year ago, I never would have believed that's possible. Either the whole managed care industry is falling apart or somehow this once great company has lost its mojo. Here's the bottom line. When UnitedHealth Group slashed its forecast on Thursday, the pin action destroyed the whole managed care complex. But if you listen to the competitors, many of them are telling a much Better story. As shocking as it is to say this, maybe unh. The former best of breed notice I said former is simply having some serious execution issues and the rest of the industry is in better shape. I'm not sure. Well, we're going to start finding out tomorrow morning when we get those full year results from elements. I wish UnitedHealth would come on Mayor Bunny and explain what happened here. Normal. May I say this is tremendous buying opportunity. Get into the amazing stock. But now I think it's just too fraught for me to tell you to do that. Wow. Unh. Ed in Illinois. Ed.

[Caller]

Jim, I've had the bat on my shoulder for a long time to start a position in intuitive Surgical is now the time to strike.

[Jim Cramer]

You know, people didn't like that last quarter and I mean when I say they didn't like it, I mean they really crushed the stock. But even after that it's selling at 58 times earnings. And this is worrisome to me. The whole market is paying less for earnings. This company may be, might may see multiple compression even if it makes its numbers. We have to wait till tomorrow after the market. Market. I am not going to stick my head in the lion's den now ahead of tomorrow because that is just too dangerous a thing for me. And we don't play the pre game earnings. It's just not. We just don't like to do it. Let's see tomorrow and we'll decide. Ed, what to do. Matt in Arizona. Matt, hey.

[Caller]

Booyah. Jim from Arizona. Phoenix. How you doing today?

[Jim Cramer]

I am doing well. How about you Matt?

[Caller]

Awesome. Awesome. Hey, I'm calling Stock McKesson. There's some big pops in it. I'm a long term investor. Real long, I mean really long. It's climbed as when the tariffs were announced April 3, jacked up, went up 29 points to 722 whenever. When everyone else's stock dropped.

[Jim Cramer]

Right.

[Caller]

I've talked to you in the past as well. These are years back and it's been in the fours, fives and six hundreds. My question to you is is there a point in what are the conditions that a company seems though if it gets back up in the seven hundreds may consider a stock split. And what do you feel about.

[Jim Cramer]

I'm telling you I am surprised McKesson hasn't split the stock. But let's deal with the fundamentals here. This is one of the strongest stocks in the market because these middlemen are making so much money and I see no end to that. That's why I like McKesson so much even as some people think, including our president, that they are not playing a valuable role. It doesn't matter. McKesson is a valuable company and I think it's stocks should be bought here, not sold. And thank you for your confidence people. I'm not convinced the pin action in the managed care space is justified pace of UnitedHealth's results as their issues may just be company specific and the only reason why I'm saying that haltingly is I'm used to unh making it. Making it, making it and recommending it to you in hard times. I can't do that now. Much more man money ahead, including my look at how macro data is shaping the decline in in the home builders. Plus how much could this earnings season impact the market moving forward? Oh well, hold it. Maybe not enough at all. And of course all your calls Rapid Fire. Tonight's issue, the lighting. So stay with Crane. Over the last six odd months, few groups have been hit harder than the homebuilders. Major ETFs that track the industry are down roughly 30% from their highs last fall, including declines of more than 15% year to date. It was like a tech company. Even before the tariff turmoil and the recession worries, the homeowners were taking heavy fire from persistently high interest rates, which have made getting a mortgage very expensive. There are also lots of real signs that certain housing markets got overheated during the pandemic and its immediate aftermath, and they're now seeing sizable pullbacks, especially in the Sunbelt. Think Florida. And for the last couple of months, the White House has been making things real hard for the homebuilders. The big immigration crackdown means these companies might face labor shortage. The tariff agenda will likely increase building costs. And if the economy keeps deteriorating, well, that will translate into lower demand too. No wonder these stocks are justifiably, I think, getting pulverized. And I wouldn't be surprised if they keep coming down. Why? Well, first and foremost, persistently high long term interest rates are lethal to the whole housing complex. Last year we got our hopes up that when the Fed started cutting rates, the long rates set by the bond market could come down to. Makes sense. But it didn't happen. In fact, when the Fed started cutting last fall, wall rates soared. Normally when people worry about a recession, long rates will come down. But that hasn't happened either because there's so much turmoil in the bond markets. You know what? Maybe President Trump's protest that short rates are too high may not even be the issue for the economy at least when it comes to housing. Just look at the yield in the 30 year treasury bond, the key benchmark for mortgage rates. The 30 year yield kissed the 5% level a couple of times in mid January, then fell quickly as the stock market sold off hard. Eventually the 30 year yield bottomed at 4.3 on Friday, April 4, two days after the Liberation Day tariff announcements terrified Wall Street. Almost immediately after that though, treasury yields started climbing again and a week later the 30 year was back up to 4.99. That was temporary, but even now the 30 years only back to around 4.9, which is not great for the home builders. At this point. The average rate for the 30 year fixed mortgage has come down from 7.3 at the beginning of the year, roughly 6.9 now. But that's way too high for an environment where so many people seem scared of where the economy might be at. And remember, housing prices are elevated to begin with. Second, Bob, we've gotten some new macro data to chew on. None of this looks good for the homebuilders. Last week we learned that US housing starts fell 11.4% March much worse. Wall street was looking for a 5.4% decline. I think your homebuilders are looking around and not liking the housing market that they're selling into. So they're pulling in the horns a bit. Maybe the word about rising rising costs once the tariffs kick in or a labor shortage is why. You know the latest cracking down immigration. Either way we get new home sales numbers on Wednesday and existing home sales on Thursday. But let's just say I'm not all that optimistic. Third, we got some more forward looking housing data from the private sector last week when Zillow's research team published their housing price forecast model for the first time this year. They project that US home values will decline over the next 12 months. Certainly the the mode now expects a 1.7% decline in home prices over the next year. Now back back in January they were looking for 2.9% increase. Well that is huge. No home builder wants to put up a lot lots of new units when they see real estate values slipping. That's what the model shows. Fourth negative. Last Thursday morning we got results from Dr. Horton. That's the nation's largest homebuilder and the numbers were lackluster to say the least. This was a sizable top and bottom line miss with Wall with disappointing home closings, 15% revenue shrinkage and earnings per share down 27% year over year. Sales orders were horrible coming at more than 1700 units or over $1.6 billion short of expectations. I was shocked. Horton's guidance was even worse. Management slashed your full year forecast and issued a very light outlook for the current quarter. SDR Hortons executive chairman David all put it, quote, the 2025 spring selling season started slower than expected as potential homebuyers have been more cautious due to continued affordability constraints and declining consumer confidence. Our tenured operators responding appropriately to market conditions by increasing sales incentives where necessary to drive traffic and incremental sales while carefully balancing pace versus price to maximize returns, end quote. Ouch. Overall was pretty discouraging quarter for the largest nation nation's homebuilder. But. But somehow after all that bad news, dear Horton stock actually finished up almost $4, more than 3% on Thursday. Now, some of that's because management threw in some positives on the conference call. President CEO Paul Romanovsky noted that, quote, our weekly sales in March and to date in April have outpaced our February rate, end quote. That means the cadence is good, which is somewhat encouraging, even as the guidance for the current quarter was certainly not. Romanovsky added, quote, our cancellation rate remains at the low end of our historical range, indicating that buyers in today's market are able to qualify, qualify financially and are committed to their home purchase despite the volatility and elevated uncertainty of the current economic environment, end quote. Hey, that could be worse. While Horton cut its most important numbers, they say they'll be buying back a lot more stock this year. $4 billion when they were previously planning for 2.6 to $2.8 billion. I understand the appeal of a huge repurchase program when Your stock's down 40% from its highs. But I sure hope they're patient with a buyback because things could get a lot uglier for the homebuilders before they get better. The best thing I can say about these stocks is that they've already come down dramatically. I think that's one of the reasons why we're in stock bounce. That's a pretty thin read for the bulls. The overall picture for this industry still looks very grim at this point, and I bet it won't be getting much better anytime soon. But the bottom line, for now, we just don't know how bad things are going to get for the homebuilders. And until we have enough certainty to put some numbers on the potential damage, I think it's too dangerous to stick your neck out for any anything connected to housing. You're taking your life in your Hands when you bet on the homebuilders here, even if their stocks already look like they've come down dramatically. Net money's back after the break. It is time. It's time for the white route. Time. I step first for the only planet set and then the lightning round is over. Are you ready, Ski dag? Time to the right. You don't care as much as I'm starting with Paul in Ohio. Paul.

[Dogtopia Representative]

Booyah.

[Caller]

Jim Cramer.

[Jim Cramer]

Booyah.

[Caller]

Hey, I'm calling about a company with a strong balance sheet, a long tenured and well respected management team and was wondering what the tariff impact might be, if any, on this real estate investment trust, Simon Property Group.

[Jim Cramer]

Well, they have some exposure because they have some retail. But you know what? I've got to tell you, they are a terrific company. Got a 5.7% yield. I think Simon Property should be bought and bought right here. Let's go to Alex in Oregon. Alex.

[Caller]

Hey, Jim, thanks for taking my call. Yeah, I'm looking to diversify a little bit. I like kind of under the radar smaller cap companies. I'm looking at Device, medical company, pays a little dividend. It is lmat, Bonaire, Vascular.

[Jim Cramer]

I don't know, gotta do some work. I don't know that company. I also even would mispronounce it, so that's really important. It's all very funny. New Yorker company. Can I repeat that and correct you on the way you pronounce it? Nope. We'll do the work. Let's go to Harvey in Connecticut. Harvey.

[Caller]

Connecticut.

[Jim Cramer]

Oh, fantastic. I love it up there. What's going on?

[Caller]

I'm eager to get your thoughts. That's on Transdigm Corp. An aerospace manufacturer.

[Jim Cramer]

I like aerospace very much. Now my favorite though is there's no reason to descend to Transdigm when you have ge, which reports tomorrow and I think is a fantastic company that I've been thinking about for the travel Trust. I've been reluctant at any name. So as we've been taking off stock, we're not oversold enough yet. Let's go to Joan in Texas. Joan.

[Caller]

Hi, Jim. I'd like your opinion if I should hold or sell Carmax.

[Jim Cramer]

Well, you know, I am a Carvana guy. I don't want you to. This stock. Whoa, man, this stock has come down so much. No, I can't. No, I don't want you to sell it down here. That's a remarkable decline, down 24% for a very high quality company. But that's what's happening. That's endemic to what's happening in this country right now. We're losing a lot of money and I don't need to tell you every single time why. Let's go to Gary and Matt, Massachusetts. Gary.

[Caller]

Hi, Jim. Thank you for taking my call.

[Jim Cramer]

Of course.

[Caller]

Happy Patriots Day From Massachusetts.

[Jim Cramer]

Oh, that's right.

[Caller]

Yeah. Yeah. I wanted to see what you thought about gold.

[Jim Cramer]

Barrick Gold, a gold company is. I mean, I hate to just say this because it really doesn't take a weatherman to know which way the wind blows, does it? But gold, I think, is going higher still. And Barrick Gold has a lot more room to run. I think it's doing better. I wish they weren't so far flung. Nico is doing better than they are. But I think gold is a good place to be. Let's go to Paul, New Jersey. Paul. Booyah, Jim. Booyah.

[Caller]

Marie P. Caller and very happy club member.

[Jim Cramer]

Oh, thank you, buddy. Thank you. I appreciate that.

[Caller]

You're welcome. You've counseled us in the past be wary of stocks with high yields, but you have been positive about this one stock in the past. I want to know if you're still feeling positive. And it's now a good time to start a position in Plains All American Pipeline.

[Jim Cramer]

You know, my understanding, Plains PAA is doing quite well. I mean, it's a very tough moment for this group. There's a lot of sellers in it. But I understand that Plains is okay. I mean, I don't know I'm going to redouble my efforts because it is a little higher yield than it should be. Let's do that. And that, ladies and gentlemen, is the conclusion of the lightning round. Could this be another earnings season? That simply doesn't matter because there are bigger forces at work that are going to crush the entire market. It's happened before, back in 2011. I didn't see it coming back then because the proximate cause of it occurred in Europe when a series of countries ran into problems paying their debt. The sick men of Europe, Portugal, Ireland, Italy, Greece and Spain, alternatively called the pigs, would roil the entire world with their crises. They all had to refinance their debt and we'd hang on every bond to auction the questions. Little country Greece transfixed us as the European Central bank seemed powerless to help many question the whole idea of the euro. It seemed like a financial suicide pact. Time, of course, we had our own problems. The infantile debt ceiling debate, a pathetic constant among a series of do nothing congresses, triggered chaos, as it always does. Even though it looked like things were going to hold together with that Budget Control act which raised the debt ceiling in exchange for spending cuts. Standard importers downgraded the U.S. government's credit rating from Triple A to Double A plus, where it remains today. The stock market declined all that summer right into the debt downgrade on August 5, and then resumed its decline before bottoming In October almost 22% peaked a trough as Europe's debt crises continue to roil our markets. In retrospect, that was true buying opportunity, although it sure didn't feel that way at the time. On October 4th of 2011, the S&P hit a low of 1074. It's now at 5158 and the yield on the 10 year fell from 3.74% that February to 1.72% in September as Europeans flooded our bond market with cash. And yes, there was a flight to quality. In retrospect, the whole thing looks almost manufactured. In 2012, the new head of the European Central Bank, Mario Draghi, declared that he would do, quote, whatever it takes to solve the sovereign debt crisis. He put it off. Our debt downgrade meant very little. We plowed on. But I bring this up because all during this period of euro panic, earnings meant nothing. We come in down a percent almost every morning, which was insane. Kind of like now though, because of all this meant very little to our best companies. In this big earnings, we wouldn't matter like now, it's just happening. The dollar did get much more powerful, hurting the earnings of our exporters. But that's not what anybody's really focused on for this show. I kept insisting that we should ignore Europe with my head writer and only writer Cliff Mason telling me that in the end Draghi will just buy the pigs bonds. And the crisis when this too shall pass was our state of the course mantra. And then though our stock market got pummeled and the state of the course philosophy was severely diorite it test. It was really tested, but only it was the right call. And by the way, it's exactly what Draghi did close watch of the show. Now we find ourselves in a similar situation. Markets down nearly every morning, even as it has nothing to do with earnings which have already proven themselves to be pretty strong. Aside from anybody who does a lot of business in China, as that's now an anathema for American companies. At least this time the problem is about America itself. As the President begins to create a constitutional crisis of potential fire of Jay Powell while Congress once again deals with the interminable debt crisis. I think we can expect another ratings agency to begin the discussion of a debt downgrade. Honestly, if they don't downgrade our debt, then they're not doing their jobs. They downgraded for far less than 2011, so how can they resist this juicy conundrum? No one is talking about a debt downgrade right now, but it could get get ready. Long story short, we need to get used to a market that's down every morning because the earnings won't matter in this environment. It will be the tariffs and the talk about firing Jay Powell to find this period. As I keep saying, it's the Wal Mart White House we're getting every day lower prices. Just like 2011. It's a very manufactured crisis, something totally manmade that can be unmade with the stroke of a pen. I think that means it will go away, but not before the market tests lower levels. Unfortunately, this time the United States is not a safe haven as other countries appear much more stable and our bonds act squirrely, almost as if they're anticipating another payment. Meaningful debt downgrade. Ironic. We could get much higher yields because the President wants them to be lower in the worst way. The worst way being to poke fun, to ride chide and make life hell for man who has served our country well and I think deserves better. Alex says always more market somewhere and prompt it just for you. Right here on that Money. I'm Drew Kramer and I will see you tomorrow.

All opinions expressed by Jim Cramer on this podcast are solely Kramer's opinions and do not reflect the opinions of cnbc, NBC Universal, or their parent company or affiliate, 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. Cramer'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 introducing CNBC plus.

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