Mad Money w/ Jim Cramer 04/09/25
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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 Kramerica. I've been with my friends, and I'm just trying to make you more money. My job is not just to entertain, but to educate, to teach you. So call me at 1-800-743-CBC. Tweet me, Jim Kramer. Trashers time.

treacherously negative, treacherously positive, unimaginably bullish, and just totally nuts. That's all I can say about a day where President Trump put a 90-day pause on most of this harsh worldwide tariffs, except in Canada, Mexico, and China, and whizzed back. What a move.

Trump's now going to negotiate with 75 countries that he says are pleading for help, putting a 10% tariff on them now, coupled with a 90-day pause for interim negotiations. But he's still trying to put the screws to China by raising their tariff once again. Now it's 125%, which seems almost comical, unless you have to pay it. Might as well just call it an embargo at this point. Reaction, one of the greatest short squeezes in history. Buy, buy, buy!

This is for the shorts. The Dow soaring 2,962 points. I'm not kidding. 2,962. S&P surging 9.52%. That's the best day since 2008. NASDAQ shooting into orbit up 12.16%. Second best day on record.

What the heck is going on here? Is this the art of the deal at work? With the president now sitting down with trembling, compliant trade partners to get meaningful trade reform? Is it a policy of encirclement against the Chinese? Or is he just backing off because the original plan was wrecking the market? Look, don't try to outthink it. That's what I heard all day. That's not what we do. And the president doesn't work like that. He's not going to tell you.

What we need to do is learn from this experience, because it might be the Rosetta Stone to understanding the ways of President Trump in his second term. Lesson one, nobody ever made a dime by panicking. They know nothing. I know I covered that Monday, but I'm pretty sure it was quickly forgotten. Think about it. Think about how many people threw in the towel, said goodbye, said they couldn't take it. They listened to those three fabled words. Get out now.

Right now, they regret their rash emotional decision to get out now. But because the market is sore without them, they may never come back. That's what happens. That's how so many people left the market. Yet what happens is they get out and then it rallies big like today. And that's the end. Bye bye.

Learn to take the pain. Staying the course is how you make the biggest money. Second lesson, if you're negative and you stay negative, why don't you do this? Why don't you send me an invitation to your funeral?

Last night, anyone who owned stocks left dejected, despondent, thinking they'd lost fortunes. They needed Xanax. They needed Klonopin. But those who went home short, and boy, oh boy, did a lot of hedge funds go home short. I don't know. They were high-fiving and cheering like, ah!

You know, like, ha! And they were under the assumption that they made their whole year in a week. I know some of these people. They were like, and Harry's just slamming them. Those who put the icing on the cake by shorting right into yesterday's high opening, they truly felt clairvoyant and proud. They'd navigated everything perfectly, didn't they? You know me. I like to say bulls make money. Bears make money. But hogs?

Those who stayed short were pigs, plain and simple. And today they went to, bye-bye, Hormel. Third lesson, the president likes, no, no, he loves drama.

He's got a love drama for his whole darn presidency. That's one constant from his first term. So all those talking heads who come on endlessly and say, oh, we need certainty. Will you stop already? I sympathize, but you're not going to get any certainty from President Trump. And hoping for it is at this point, frankly, kind of nuts. Say what you will about Trump. He'll never allow his presidency to become boring. We'll just turn it off.

Fourth lesson, we want so much to count out certain once-loved stocks, don't we? Maybe someday we should. But when you bet against really good companies like Nvidia or Apple or Microsoft, you have to recognize that these companies didn't just get to their status by being a bunch of fugazis. Oh, and if you do hate them, sell these stocks when they're up, not when they're down. I give you permission to sell them tomorrow if you really want it. See you later. Final lesson, let's understand what we do.

We're not money managers talking about blowout munis and the big basis trades. We're not trying to get a job with billionaire hedge fund managers. We're common sense people who are conscious of the fact that all of your typical gains for a year occur on an average of seven days. Today was one of those seven days. And you had to be in it. You had to own stocks to win.

What does this rally off the bottom tell me? It says that if you continue to be too jaundiced, you're going to miss a decent opportunity. As you know, I run a tribal trust. I can't scout for points. I'm not a traitor, at least not anymore.

But there have been large enough declines that I need to be open-minded. My history with the president is that while he's striding on fair trade, just like me for what that's worth, at the end of the day, he's actually not trying to destroy the economy. He doesn't want to ruin your IRA or your 401k. So if he's doing something that's laying the stock market to waste, eventually you have to figure that he will change course. And he did.

At moments like this, highly emotional moments, I like to do something that most people don't want to do. I go to totems, things that have worked for me for so many years. As I've mentioned before, the measurement that's helped me immeasurably the most is a thing called the S&P oscillator. That's brought to you by a company called Market Edge, which has a special relationship with the CBC Investing Club.

That oscillator hit an extreme reading yesterday, minus 10, which shows a tremendous amount of selling pressure in despair. Too much. By way of contrast, zero equals equilibrium, plus 10 on the other end shows that there's too much optimism. So I checked in with my friend at Market Edge to confirm what happens after this degree of selling occurs, after you get to minus 10. And I thought his feedback was most relevant. In the last 17 years, 17 years, the oscillators hit minus 10 only 12 times.

Ten of those times, the S&P 500 was up an average of 2.7% over the next 30 days. If we go deeper to look at those two outliers, the first one was August 5th, 2011, when the oscillator hit 10.02. Thirty days later, the S&P was down 2.1%, 1.2%. Now, that was a bear market. It was caused at 19.3% correction. We had two concurrent crises back then, our debt ceiling crisis, which caused the ratings downgrade of our nation's bonds, and a European sovereign debt crisis.

Both were subsequently resolved, though, and you really never heard from them, and the market went straight up. The other, the oscillator hit minus 10.25 on February 27, 2020. Remember that date? Right as we realized COVID could be a problem. 30 days later, we were down 11.71. Well, you know, automatically, that only fell to a minus 24.36 on March 18th. But 30 days later, we were up 16.74%. But unless you think a pandemic is about to shut down the entire economy again, 2020 really isn't much of a precedent, is it?

So let me give you the bottom line on this, one of the most exciting days of our lives. I don't think that things are all that difficult. They're not COVID difficult. Now, I think that you're dealing with man-made crises. It turns out that one of these man-made crises was easily reversible, as we've said over and over again and told you that. When you see stocks in the blast zone rallying, it pays to realize that good things, not just bad things, can happen too.

Why don't we start with Bob in South Carolina, please, Bob. Hey, Jimbo, how you doing, buddy? You're looking good. Wow, thank you. Well, Bob, I was helped by a really great day and also by the summit. Please, I want to give a shout out to do a great job for me. What's going on for the whole town? Yeah, what's going on? I'm in limbo here with Merck. What? What's it like? I don't know what to do with it. I don't know if I should sell it, hold on to it.

You know, first of all, you're not alone. St. Merc, as we used to call it, has turned in just a complete nightmare. I think that if you buy Merc at a 4% yield, though, you're going to do well. It did touch 76 today. It's back to 81. I feel for what you're doing, Bob. It is remarkable how poorly this stock acts. I do want you to stay the course with it right at this point. And I'm sorry, because it has been a real tough one. Why don't we go to Anthony in my home state of New Jersey? Anthony.

Booyah. How are you doing, Kramer? Anthony, I'm fine. I'd like to ask you about Honeywell at these levels with its upcoming split in the end of 2005 and 2006. Jeff and I talked about this endlessly, up 16 today, by the way. We think the stock is dramatically undervalued. We think that Vimal Kapoor is doing everything right. We could not believe how low the stock got. I am a firm believer and a buyer of Honeywell even at these levels.

Yes, I like it that much. It was down 8% last week. That's nutty. You know what? Why don't we take one more? Why don't we go to Eli in Illinois? Eli.

Hey, Jim, I want to know if the stock Rivian is a buy-seller hole with the tariffs. They assemble their own car. Okay, listen. Go test drive one. Don't own the stock. I really don't have that much more to say about it because I do think that they went through so much money that it is daunting. How about that? Daunting is a nice word. I'm looking at my research director, and he knows when I say daunting, what I really mean is horrible. Can I speak to Lynette, please? Oh, the land of enchantment, New Mexico. Lynette!

I can't okay what a crazy ride right well I'm caught what I'm doing is I'm calling about FedEx and I actually have two questions but I did it number one is by the dip now or wait until May 9 when they report second question is how do you think the spin-off is going to affect the company I also plenty of UPS so I don't want any more I don't like UPS I think that I think that

All right.

are still difficult. I'm not going to minimize that, but when you see stocks rallying to this, remember the best day for the S&P since 2008? Well, it pays to realize that good things can happen, but you have to stay in to win and stop turning us off because it's a bad day.

And if...

If now's the time to buy, well, why don't we do this? Stay with Kramer. Don't miss a second of Mad Money. Follow at Jim Kramer on X. Have a question? Tweet Kramer. Hashtag Mad Mentions. Send Jim an email to madmoneyatcnbc.com or give us a call at 1-800-743-CNBC. Miss something? Head to madmoney.cnbc.com.

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The U.S. and China are competing for global leadership. The country who wins will define the world we live in. U.S. international assistance is vital to our national security. It helps prevent terrorism and avoid costly wars. It fights diseases and saves lives. It helps keep America as the number one economy in the world.

U.S. international assistance protects our interests at home and abroad. If America doesn't lead, China will.

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Indeed.com/madmoney. Terms and conditions apply. Hiring? Indeed is all you need. As the stock market bounces back hard after the president's 90-day pause from most of the new tariffs outside of China, we got to talk about something crazy that's happened over the last couple of days. It's a sudden aggressive surge in Treasury yields.

I'm betting it's one of the more important reasons why President Trump shifted course on trade. Just look at the yields for the longer-term Treasury bonds. The benchmark for 10-year note has climbed more than 30 basis points from 4% at the end of last week to 4.3%. Now, that is a very big move, people.

The 20-year yield has risen from 4.44% to 4.79%, and the 30-year yield is up from 4.41% to 4.75%. You usually don't get these really, really big moves. They don't sound big, but trust me, they are. And that's after rates only calmed down a bit today, pulling back mainly from their highs. If you look at the 10-year, it spiked all the way to 4.51% around midnight last night before pulling back today. This is not really what's supposed to happen at times of stress for the stock market.

The action we saw late last week, really for the past several weeks, is what's supposed to happen. When stocks are tumbling and the VIX, that's the CBOE Volatility Index, is on the rise, investors typically pile into treasuries and other safe haven assets like gold as part of what we call a flight to quality trade. They buy bonds, and when bond prices go up, their yields go down.

For example, from February 19th, when the S&P 500 peaked to last Friday's S&P 500 fell over 17 percent, the 10-year yield fell over 50 basis points from 4.5 to 4.0. Again, that's normal bond market behavior, and it does typically take that long. But this week, the stock market was very weak until today, and Treasury yields still soared.

Monday, when the 10-year yield went from 4.0 to 4.19, even as stocks mostly went lower, investors and market watchers said, huh? I mean, that's odd. On Tuesday, when we had a brutal intraday reversal from big gains to more losses, and the 10-year still jumped another 11 base points to 4.30, we started to hear people wonder what the heck is going on here. And after last night's spike above 4.5%, we can no longer ignore this move. Remember, bonds are bigger than stocks, okay? So what's driving it?

All right, here's what we know for sure. Someone is selling Treasuries a significant size. That's why the yields are going up. Treasury prices move in the opposite direction of yields. So when there's significant selling, the yield goes higher. We don't know for sure who's doing it. No one puts a name on it. Originally, some thought it was the Chinese as part of their response to Trump's now 100% plus tariffs. After the Nikkei got crushed earlier today, some thought it might be the Japanese. By the way, they happen to be the world's largest holder of Treasuries. They have a trillion dollars worth.

But by last night, as the 10-year yield was screaming higher to 4.5%, a new consensus culprit had emerged. It was the cold basis trade that was blowing up and causing all these problems. What is the basis trade, you ask? You heard it all day. Don't worry. You're not alone. This is kind of like last August when suddenly everybody learned it was an incident about the yen carry trade that blew up and caused a sharp sell-off for stocks. Just like the yen carry trade, the basis trade is a needlessly intimidating name

For a simple idea, hedge funds are betting that the difference in price, called the basis, between regular Treasuries and Treasury futures contracts with similar characteristics will shrink as the futures contract approach expiration. That's natural. To make that bet, they buy cash Treasuries and they short the Treasury futures contracts. The thing is, the difference in price between Treasuries and Treasury futures is minuscule.

In theory, it shouldn't exist at all, but it does because of supply and demand imbalances in treasury markets and regulatory limitations that prevent other types of arbitrage trading. So because the difference between treasuries and treasury futures is so small, for the trades to be really worthwhile for hedge funds, they have to do what is known as lever arbitrage.

up, perhaps as much as 100 times they borrow a huge amount of money if they want to make a reasonable return. Typically, they get their leverage from the repurchase agreement market or the repo market, as it's typically known, where broker-dealers provide cash for investors by buying government securities from those investors with an agreement that the investors will repurchase them the next day for a slightly higher price. I know, very convoluted, but when it works well during normal times, the basis trade works for everybody. The hedge funds make their profits.

small, but because they blow them up with debt, it works. The broker-dealer make money by providing the leverage, even the government benefits, because the basis trade provides liquidity for treasury markets. But during periods of turmoil, well, things can get pretty problematic. Mostly because hedge funds have money locked into this basis trade, and they suddenly need that money elsewhere. Or perhaps because the broker-dealer that provide the leverage need the money back.

When that happens, the trade is unwound. They have to undo the whole trade quickly. And the way that it's unwound is by selling treasuries. Remember, I told you somebody's selling treasuries, selling treasuries and using the cash that was raised from the sale to buy back the treasury futures that have been sold short. But notice the first part of that process.

The selling of treasuries. That's where the pressure comes from. There's a bit more to it than that, but these are the salient points. And based on the information we have, including the fact that so much action happened overnight last night, when much of the repo market activity is actually taking place, it seems like this is one of the periods of turmoil where many of the basis trades out there are being unwound, meaning there's forced selling of treasuries happening all over the place. Hence the decline in price and the rise in yields. Somebody got hurt real bad.

So is it the unwinding of the basis trade that's creating all this noise in the treasury market? Yes, that's probably a big part of it. But you know what? I wouldn't be surprised at all if the Chinese are indeed selling some U.S. treasuries, too. And maybe investors are simply selling treasuries that they panic bought during the sell-off last week.

Now, I don't want to dismiss the sharp uptick in Treasury rates entirely. If it reverses quickly, then it's not really a problem at all, except for the hedge funds that are taken out on a stretcher after getting too cute and too complacent from this form of leverage arbitrage. But if this is extended, it's going to be a real problem. Short-term, higher Treasury yields make it harder for the Fed to start cutting rates. Longer-term, higher Treasury yields mean higher borrowing costs for the country and compounding debt problems. I'm not going to panic here.

about the weird move in rates this week, especially now that we have the 90-day tariff pause outside of China. I was very heartened to see that. A rather large $39 billion offering of 10-year treasuries went very well today, indicating there's still demand for treasuries at an attractive price. You want that. We don't want rates shooting up here. That would be wrong. That would be

bad. But here's the bottom line. There's been some counterintuitive action in Treasury yields this week, with rates spiking due to elevated selling in Treasuries, even though rates should normally be going down. It's something to keep an eye on. But for now, it appears to be due to some weird quirks that should fizzle out as we return to a more normal market environment. And with this 90-day tariff pause, I think we're well on our way. Bad Money's back after the break.

Coming up, is the rally in gold losing its luster amid the recent market volatility? Kramer's going off the charts and seeing if now is the time to invest in gold. Next.

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I'm not that high.

The stock market came roaring back thanks to President Trump's 90-day tariff pause. But what does that mean for the one asset class that's been holding up just fine? Gold. Is it possible the gold rally has gotten ahead of itself? To answer that question, we're going off the charts with the help of Carly Garner, a terrific technician who's the co-founder of DeCarli Trading, the author of Higher Probability Commodity Trading, and, of course, our resident commodities expert. When it comes to gold, she thinks that the gravy train has probably left the station. In fact, compared to most other assets,

especially silver and treasuries, she says it looks pretty darn overvalued. Making matters worse, lots of money managers and home gamers are already long gold, and these people are wildly bullish. You never want too many bulls because it means there might not be many people left to buy whatever you're trying to have go higher. In fact, Garner points out that there was recently a Firestorm 1X mass accusations of market manipulation when gold retreated modestly on Friday. For Garner, this is textbook sign of frenzy, frenzy, frenzy.

It always ends badly. As she sees it, gold is not a magical metal that automatically goes up in times of chaos. It's really an element, a periodic table. It happens to be a bit more challenging to mine because it comes in small chunks. It's not necessarily scarce, nor is it liquid, nor is it all that useful to manufacturers. At the end of the day, gold is pretty, but it's not entirely practical. The fact is, if you want to own a stockpile of real gold, it's a huge pain in the neck.

For Garner, there are times when gold works and times when it doesn't, just like any other commodity. And right now, she says that gold hasn't been this overbought, therefore overvalued, since the summer of 2011. Ooh, that's when the debt crisis occurred. Back then, the precious metal pulled back 45% from its euphoric highs. If Garner's right and we see a similar move here, that could take us down to $3.

One thousand six hundred and fifty dollars an ounce. I mean, we're more than three thousand today. Take a look at this long term chart monthly. This is a monthly chart of gold. Sorry, right here versus the S&P 500. According to Garner, gold is a great diversifier. It goes through periods of correlation and then non-correlation with various assets. In other words, sometimes it moves with the markets. Sometimes it moves in the opposite way. But in recent years, gold and stocks have moved mostly in tandem.

Garner says that's primarily the result of the Fed's easy money policies and too many dollars chasing too few assets. Here's the problem. Given that gold and the stock market have been trading together for years now, you

you have to worry that that could plummet. They could plummet together, too. Stock market go down, gold go down. Stocks were the leader on the way up, and Carter thinks they could also be the leader on the way down. If so, the recent breakdown in S&P 500 should eventually lead to a similar breakdown in the precious metal. We'll, of course, recognize we had a big rally today. Since the thesis is that gold's been trading with stocks and stocks have been falling apart since February, let's zoom in on the monthly chart of the S&P 500 futures.

Okay, following a slow motion divergence between the Relative Strength Index, or RSI, down here, an important momentum indicator, and the S&P, where the RSI was making lower highs while the market made higher highs, stocks finally broke down after Trump rolled out his extremely aggressive tariffs. The April 6th Sunday evening futures low tagged 4832, okay, there, just below the 4850 support level offered by the trend line that started in March of 2020. Well, that'd be bad, right there.

Last night, the same thing happened again. Carter said either the Trump follows charts, I don't think he does though, or the charts follow Trump. I think that's probably more like it. But either way, buyers stepped in to buy futures last night on precisely trendline support near 4850 and managed to close around 5500, the previous trendline support. For all intents and purposes, this is technically a rejection of the bear market.

However, Garner says we are still stopping the headline risk and changes in the trade war. If we do head back lower, she would expect 4600 to be an amazing buy opportunity. But if that was it for the sell off, then 6500 is in the cards. Boy, that's back where we started from. The key is to stay safe. Less is more. Now, all right. So now how about the monthly chart of gold itself? Last month, gold ETFs and futures experienced historic inflows.

But Garner believes this is an asset that should be bought when nobody wants it, not when everybody wants it. Gold temporarily surpasses trend line resistance to your 3060 per ounce. But it is unusual for the market to color outside of the lines. So here's the number right there. In fact, when gold breaks out and then falls back beneath support, Garner says that generally means you're looking at a confirmed bull trap.

The monthly relative strength index right here suggests euphoria is buying. Euphoria is drying up here. See that, right? I buy that. It is drying up, which is what usually happens after big gold rallies get overbought like this one. If this repeats, which is what Garner's betting on, then the gold market could be really shaky. A breakdown below 2,900.

Well, that opens the trap door. If you expect a complete retracement of the 2024 rally, which would bring the price all the way back down to 2170, that's hard for me to believe. But, hey, that would be par for the course historically. At the end of the day, she says gold rallies have never yet to survive a monthly RSI reading. Remember, that's the lower one.

of more than 70 without some correction. Well, here we are. Take a look. Every time there's been a correction. That's a very good call by Garner, by the way. Now, check out the monthly chart of gold versus U.S. Treasury bond futures. Right now, the monthly spread between Treasury bonds and gold is pretty wide by historical standards. And here you can see blue is gold and then this mixed color is Treasury. So you see the spread.

Again, if history is any guide, it's almost guaranteed to narrow. The million-dollar question is when. Golden bonds are direct competitors for safe haven investment dollars. One pays interest, the other one doesn't. When rates are high, money eventually moves out of gold and into treasuries, and vice versa. Sadly, rates have been ticking higher this week. Sooner or later, Garner is betting this will be a drag on gold. Let's make it even easier. How about gold versus silver? Take a look at this monthly chart. Normally, these two trade pretty closely together because they're really the same story. But sometimes one gets ahead of the other.

Right now, buying a single ounce of gold costs about 99 ounces of silver. At the trough in 2011, an ounce of gold would buy just 30 ounces of silver. Historically, the average is around 1 to 70. So 99 means gold is very expensive versus its cheaper counterpart. Garner is betting this spread will eventually narrow because that's what always happened.

Back in 2011, silver was the runaway metal, leaving gold languishing in its footsteps. But once the metals boom was over, the spread narrowed with silver falling faster than gold as they both entered a bear market. This time, Garner's expecting a repeat of this narrowing, but with gold leading silver lower, just as it's been leading the way higher. Let me give you the bottom line of this complex situation. The charges interpreted by Carly Garner suggest that the gold rally will soon lose its luster. If you've made money on the way up, you know what? She thinks maybe you could ching it.

I'm a believer in gold and don't want to trade it. But if you are a trader of gold, I'd say take Garner very seriously. Let's go to Mary in California. Mary.

Hello, Mr. Kramer, and thanks for taking my call. My pleasure, Mary. What's happening? Well, I've gotten myself curious about a stock called MP or MP Materials. I ran into it on a program within the last four or five days. Yesterday he was on, okay? He used to come on our program all the time.

James Latinsky, and it's had a good run. It's moved up all the way from the bottom, but it used to be much, much higher. My take is this. I think that rarer special materials are going to do well under Trump, and I like Latinsky. I think he's the real deal, but boy, they keep losing money. This is the year that they either make money or I go against them. Period. End of story. Agatha in New York. Agatha. Hi, Jim. Yes, this is Agatha. Hi, Agatha. How you doing?

I'm good. I hope you're doing well. I think today was just a great day because we nailed it. We just nailed it today. We stayed the course and we nailed it. All the scaredy cats, the basest people, their history.

Good, good. Well, look, I have an old crystal ball, but lately, as you know, it stopped working. But today, today it is working again, so I'm happy. In the meantime, I have done relatively well with Chevron.

Should I keep it? Yeah, definitely keep Chevron. It's got 4.6% yield. It keeps buying back stock. You saw the way it bounced off the bottom today. It closed up nine. I think Mike Worth's doing a terrific job. The only problem I would tell you is I am not a bull on oil. But you came to me and you wanted an oil. And I come back and I say, if you want an oil, then I like Mike Worth. I like Chevron. All right, listen to me. It was a very hard set of charts, but you get the picture, right? Charts distributed by Carly Garner say you got to sell gold. All right. It's losing its luster.

I think the call is worth seriously paying attention to only if you're a trader. If you're a gold person like me who doesn't want anything to just hold it all the time, then just don't do a thing. More mad money ahead, including my look at what's behind the pullback in private equity before today's rally. Then I'm taking a step back from today's tape and breaking down the long-term stories about what I think we should be watching. And the order calls rapid fire tonight's edition of the Lightning Round.

So stay with Kramer. With the 90-day pause on tariffs that we got from the president today, we now have some real breathing room. But that doesn't mean the tariffs are off the table. It just means we've got some much needed time to adjust. Still, now that the averages are roaring as Wall Street declares victory, I think it's worth going over the stocks that were absolutely getting killed until a few hours ago.

Now, some of these were very obvious, but some others snuck up on us, like the private equity stocks. I mean, for today's rebound, most of these had pulled up back more than 40 or more from their highs, 40 percent. And those highs were just set in the past few months. I mean, so what the heck do we do with these? Private equity firms and public markets are a relatively new thing over the past 20 years.

Blackstone, by far the largest in the group, is the most seasoned, having come public back in 2007. Apollo came public in 2011, Ares in 2014, KKR in 2020. And they've all put up some excellent gains in recent years, until the last few weeks. Blue Owl and TPG only came public in 2021 and 2022, respectively. But after getting through the lean year of 2022, they both had nice gains over the past couple of years. These are very attractive stocks.

That's the common thread amongst these private equity firms. Huge gains over the past two years. Over 2023 and 2024, these stocks all more than doubled. KKR more than tripled. And then they fell apart once the stock market started plummeting on tariff roads.

So what that happened here, civil private equity firms did great when the economy was growing steadily, while the long point with low unemployment and a strong stock market, they caught fire in the end of last year's investors thought the Fed would keep cutting interest rates. Remember, private equity firms borrow money to take businesses private. So lower rates save them a fortune.

Then came the election, Republican sweep. And the immediate assumption was this would be fantastic for the private equity business with a much better deal making environment and a better IPO market. These firms need that because they either ring the register by either selling to other companies or bringing their portfolio companies public.

Like right here. And that's why these private equity stocks wore to new all-time highs in November, December, January, even early February. But they didn't get what they were expecting. First, the economy soured. That was happening even before the threat of tariffs emerged with some soft data for January and February. Initially, it wasn't clear if that was due to bad weather in January or other quirky factors. But eventually, it became clear that the macro environment has worsened dramatically.

Then we learned about these high tariffs and things just got worse. The Atlanta Fed's GDP Now tracker paints a grim picture. While the consensus entering this year was for GDP growth of somewhere around 2% in the first quarter, the Atlanta Fed's real-time tracker, which I look at all the time, is currently bringing something in the negative 3% range.

Even after adjusting for elevated gold imports this year, it's still around negative 1%. Now, bad economy is bad news for private equity.

As for the idea of lower interest rates, well, we started losing that leg to the story a while ago. Really, back in December, when some bubbly inflation numbers caused the Fed to pause its rate cutting and say that it would sit on its hands for a while. That's part of the reason why some of these private equity stocks topped out in late November, early December, when we got even more hot inflation readings in early 2025.

Expectations for rate cuts came down significantly. Buy and yields only started coming down again pretty recently, and for the wrong reason, because investors are now betting on a recession, for heaven's sake. Although in the last few days, those buy and yields started going up again, a real bad sign, and possibly one reason why the Trump gifted us with this 90-day pause. I heard that a lot today. I don't think it's the case, but I have to put it out there because it was in the air. Finally, remember that expectation for a more pro-business White House?

Let's say that just hasn't quite materialized yet, although today was certainly a step in the right direction. President Trump's implementation much higher than expected tariffs on essentially all imported goods has terrified the market.

Hence the need for this pause. Originally it was the 25% tariffs on goods from Mexico and Canada and an additional 20% tariff on goods from China, essentially to get them to crack down on fentanyl trafficking. Though really because the president seems to really like tariffs to those who have a big surplus against us. Then came the 25% tariff on all imported automobiles. That was all before Liberation Day when the draconian not so reciprocal tariffs were imposed on essentially all

imported goods, even those coming from the uninhabited islands just off of Antarctica, where apparently there are penguins that are very happy. Now, after some tit for tat in the week that followed, we're looking at massive tariffs on goods imported from China. Thankfully, we got this 90-day pause on those tariffs, which is what allowed everything to just percolate today. But the tariff on goods from China just got up to 125%. Wow.

But needless to say, people investing in private equity stocks now have a lot less faith in the Trump White House than they did coming in. The M&A market's been horrendous. According to data from Dealogic, U.S. M&A volume declined by 13 percent in the first quarter, with the number of deals falling 24 percent year over year. That's horrible. The issue, of course, is the president's tariff agenda, because nobody wants to stick their neck out to make an acquisition.

when it's unclear exactly what exposure the companies in question will have to these tariffs. And by the way, I expect it to continue, even the 90-day pause. Well, because we have no idea what the final policy will look like, do we? In the end, nobody feels confident about dealmaking here, which makes private equity firms, well, they're not going to be able to sell their portfolio businesses to new owners.

It's going to be troublesome. Same with the IPO market. CoreWeave barely made it through the IPO window. They nearly lost a couple of fingers as it slammed shut just behind them. Now, two of the next largest deals for buy now, pay later contenders, Klarna and ticket exchange StubHub, have officially been shelved. And again, don't expect that to change until the market calms down significantly.

Today's rebound is not enough. If the M&A market's dead and the IPO market is dead, these private equity players, they just can't ring the register. So I would say they're kind of stuck. The monetization of existing investments will be delayed, which in turn means the firms can't redeploy funds into new investments. That means none of them are able to take advantage of the recent sell-off or the PE firms will still go through with their planned exits.

but at much lower valuations than they were hoping to get, hurting their returns and make it harder to retain their investors or attract new capital. It's suddenly a very sticky situation for private equity, just a few months removed from a period when things all seem to be unfolding so nicely for them.

Here's the bottom line. There's no shortage of damaged group of stocks these days, are there? But one of the most shocking declines to witness has been the overall downfall of these private equity firms, which seemed totally fine a few months ago. Fortunately, this 90-day tariff pause has allowed the stock market to roar and the PE stocks led the way today. But I think an awful lot of things have to go well in order to reverse the negatives here. And one good day...

does not a private equity bull market make? Mad Money's back after the break. - Coming up, Kramer takes your calls and the sky's the limit. It's a fast fire lightning round. Next. - And then the lightning round is over. Are you ready? Let's start with George in Arizona. George.

A big old wacky Wednesday. Booyah to you, Jim. Georgia and Arizona. Oh, yeah. Georgia and Arizona. Speak to me. Speak to me. I am looking at a company that should be participating in the natural gas move up. High dividend pair dropping debt. New CEO coming on. The company symbol F-L-N-G. Flex.

LNG. But don't you think that it should have already made it by now? I mean, the stock just does nothing, nothing but go down during the greatest revolution of all time. I'm going to have to take a hard pass on that one. I'm sorry, George from Arizona. Let's go to Brandon in Kansas. Brandon. Hey, Kramer. How you doing? I am doing well, Brandon. How about you?

Pretty good. I'm new to investing in Kramer. I'm a rookie investor here, and I want to enjoy my stay in Kramerica. I like that. I'm glad you're here. I'm an employee at Mercedes-Benz here in Kansas City, and we made major cuts this week. So I was wondering, with the used car...

industry be a good look for my portfolio. So I'm looking at KAR Open Lane. KAR is a really, really good company. And because you are so kind and new to investing, can I just say that Carvana is real good, too? We like Carvana in the single digits because I bought one and didn't like it. Tossed it back. Great company. Let's go to Ian in Florida. Ian. We are from Florida, Jim. Man, good to have you on the show. I don't know what part of Florida. I lived there for a while. I love it. What's going on?

Oh, down here in Miami Beach. Oh, so great. So great. We like Delray, too. All right. Yeah. Third time caller, investment club member, of course. Yep. And what a great day today, Jim. It was a good day for those who stayed the course. It was a really lousy day for those people who exited bye-bye.

I totally agree. Yeah, thank you. Jim, I'm looking at a utility play that's well off. It's a 52-week high of $199. It's VST, Vistro. What do you think? See, I never really cared right now, honestly, for the energy trade because then Microsoft will say that it's closing the data center. No one will like the group. So let's stay away from the energy trade. It's too much second derivative, so to speak. Let's go to Jordan in California. Jordan.

Hey, Jim. Thanks for having me. My pleasure. Hey, last time I was on the show, you mentioned him and hers was a sell at about $5 per share. Since then, I've built a... Au contraire, mon frere. I actually reiterated the sell at about $15 or $60 and never said it was at $5. I'm going to have to take another call because that's not correct. Oh, no. I hate to leave on such a downer moment, but I guess that's what we have to do to otherwise up day. And that, ladies and gentlemen, is the conclusion of the Lightning Round.

The Lightning Round is sponsored by Charles Schwab. Coming up, after a day of wild market swings, is now the time to get back into chip makers like NVIDIA? Kramer's giving you his take and breaking down what today's games mean for the AI space. Next. Next.

Let's talk fundamentals for a second, because even if we just had this whamma-jamma short squeeze, there were some things that really were going awry, and those things matter. We've got to address them. First, three weeks ago, we were at NVIDIA's big trade show, and we heard one of the greatest stories of all time, the build-out of data centers that are needed in order to handle all this artificial intelligence functionality. Now, though, 20 days later, there's a belief that the data center El Morte is dead.

Because Microsoft has shaded down some man for some of the latest and greatest NVIDIA chips, and now there's really no reason to own NVIDIA, they tell us. In fact, until around 1 p.m. today, the prevailing belief was that the most risk-free trade, besides shorting Apple, of course, was betting against NVIDIA.

As for CEO Jensen Wong, he was terrific. But you know what they say, he's had his day in the sun. To me, NVIDIA now is a chance to change the narrative. Yesterday, Adam Jonas, the James Joyce of animals, don't laugh, that guy holds up, penned a piece about robots. I happen to have introduced myself to one of the robots when I was at GTC. He was one of those real hail fellow, well-met kinds of characters, kind of foppish, clubby, even you remember them in college. We're talking about someone who can clear the table, do the dishes, sweep the floor, wipe the spills with total aplomb.

A total marriage saver at that. This robot, this robot is a magnet for NVIDIA chips. So if Microsoft doesn't want its chips, I believe that 1X Robotics, the robot's parents, will take as many as it can get. If 1X is going to manufacture these things at scale, it'll need to have as many of NVIDIA's chips that Microsoft will give it.

Jensen told me I can expect to be able to rent one of these robots real soon because I can't make good hospital corners. And if I leave so much as a spoon on the table, it's grounds for divorce more quickly than when I poke fun of my wife's Baconator obsession. I hope Microsoft saves my marriage by giving 1X all the chips it needs. Please, Sacha, please.

The gating factor for these robots is not enough. NVIDIA chips. Yesterday I signed up for perplexity, adding to my collection of Grok, which I love, ChatGPT Pro, Gemini, take that Google search, MetAI, and Claude. Now that's a lot of bots, a lot of competition. And you know what I say? Whoever has the largest number of NVIDIA chips wins.

I hope Microsoft will let these other companies get the chips they need. I spent a lot of time with Corweave in the last few weeks. And, you know, oh, yeah, you may not like their debt. You may like their Jersey attitude. Give me a break. I love them. But the seriousness with which they're building out the data centers, it's real. What's their biggest gaining factor? Again, not enough.

NVIDIA chips. So yes, Microsoft's wavering. Ever since the Chinese unveiled DeepSea, NVIDIA's been in a rut. True Jensen met with President Trump last week and the president agreed that NVIDIA can keep shipping their NVIDIA light chips to China. Nobody even noticed. So many obituaries. Who can see from underneath them?

But what matters more than anything else is that despite Wall Street's near universal belief that NVIDIA's best days are now behind it, despite the largest hedge fund selling it hand over fist, as long as NVIDIA's chips are sold out as far as the eye can see, yet its stock sells at 25 times this year's earnings, I want to be a buyer. You can't go from being king three weeks ago to pawn this morning. Maybe in reality, NVIDIA's just a rook, but I'll pay 25 times for a rook's earnings any day of the week.

Like I said, there's always a bull market somewhere. I promise you I'll find it just for you. Right here on May Have Money, I'm Jim Cramer. See you tomorrow.

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 forward slash madmoneydisclaimer.

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