Mad Money w/ Jim Cramer 04/21/25
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Hey, I'm Kramer. Welcome to Mad Money. Welcome to Kramerica. 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 1-800-743-CBC or tweet me at Jim Kramer.

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, 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. Turned off the oxygen, that's Toto. They're devastating. Led by Tesla, of all ironies, but also Apple, Nvidia, Amazon, Microsoft, and Meta. They've been terrible.

The former magnificent seven have been down for five straight days, contributing mightily to the brutal decline in the average and dial tumbling 972 points today as it be plummeting 2.36 percent and the Nasdaq nosediving 2.55 percent. 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 magazine. 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, I asked how I felt about two stocks in particular that I've long championed, Apple and Nvidia. He heard that I violated my own longstanding 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 of them. 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 and Nvidia had to be parted with because I couldn't see a path to avoid big declines. Fortunately, 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 and video stocks down 28 percent. Now, I have to ask, what did I miss here?

Did I fool she fall in love with these two stocks? Look, over the years, people have done extremely well owning Apple and Nvidia with me. Whenever I travel, I'm always saluted for both, especially Nvidia. There are so many people who told me, for example, when I signed my wife's phosphor on mezcal bottles, that they're Nvidia millionaires, that I feel terrific. I love hearing that.

But after still one more miserable day, let me expand on what I told David Faber 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 if President Trump tries to fire Jay Powell, and you may need some cash if that happens.

Chairman Powell could simply 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 chief because we already have one.

Plus, it's not like the president's calling for Powell's 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 Nvidia a 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's selfish, that Apple wants to have its cake and eat it, too. 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. 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. Their 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 Warsh, 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. It's WWE at the FED. In that world, it's hard to imagine the S&P staying above 4835, 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 trim 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 putrid parts of its financial agenda. There has to be some sanity here. If not, I'll be wrong. And the stocks go wrong.

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 about 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. Hey, Jim. Thanks for taking my call. Of course. 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? You know, I don't know what Bill Ackerman is going to do because I don't know him. And all I can tell you is, is that the stock's 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.

Jim Boya, hope you're doing great, man. 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 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. It's not easy, believe me. This is a very emotional time, and I feel strongly that we have to back great American companies doing their thing.

Speaking of American companies, I'm a youngest retiree looking to lock in some accidental high yield. And a while back ago, you recommended this stock. That's before all the tariff tensions and stuff. So can I build a safe dividend stream with Stanley Black & Becker? Well, it's interesting you say that. You know, I've been writing this book. It's actually done now. I'll be talking about it, Make Money at Any Market. And what's incredible is

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 Black and Decker. Ouch. Carlo in California. Carlo.

Carla? Carla? Go ahead. Yeah, I'm here. Carla, you're up. All right. The one thing, the only problem I have with the American economy is that the oil is a secret. So I was wondering if I should guess each other off.

Which went Chevron? It's funny. 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 is going to go. So I decided I couldn't include that even though I know Mike Worth 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've 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. Look, 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.

I'm in Money Tonight. Netflix posted an earnings beat last week, helping the stock in the day. It ended in a green, thank heavens. I'm looking at what the numbers reveal about the state of the consumer. The United Health sank on Thursday after cutting its forecast. United Health? 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 Freeport.

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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 proof plays, some of which are working, some aren't. There are some very obvious ones popping up this early season. Not a lot, but a couple of very noticeable ones. Take Netflix. You might have missed it.

But last Thursday night, Netflix reported a tremendous quarter. The stock popped more than 3% in after-hour trading. We had to wait until today for the broader market's 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 its fundamentals. Netflix reported a great quarter of 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 percent in a few short weeks. As of today, though, it's made up the vast bulk of its losses, and the stock's 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. It 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 on 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. Management cited their subscriber retention, which they believe is a good leading indicator of their 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 or 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 price to add 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. Makes sense to me. As I've mentioned before, if consumers are going to pull back on their entertainment spending, they'd probably start with skipping tonight's Knicks game with tickets going for $250 minimum. Hey, some of those courtside are $30,000 for every second.

Staying at home is the much cheaper option. And if you're staying at home to save money, well, Netflix is your best entertainment option. It's just great value for your money.

Of course, the stock markets say, quote, what have you done for me lately? End 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 percent of TV hours for an audience or connected household perspective. As management sees it, this means, quote, we still got hundreds of millions of folks to sign up. End quote. They go on to make the point, quote, from a revenue perspective, we're about 6 percent of consumer spend and ad revenue.

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 Advertum, 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, and by the way, it's great, and there have 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, Ms. 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 Tyson versus Jake Paul fight. But what you might not know is that the boxing match just before that fight was the most watched professional woman sporting event in U.S. 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 months ago, Netflix is bringing back the Christmas doubleheader for 2025. They also teased more international live programming after originally focusing on events in the U.S.

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 use worldwide. In the end, Netflix represents such tremendous value that they might not be hit with 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+. 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 slash plus to sign up. cnbc.com slash plus. That's easy.

Here's the bottom line. Netflix is 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. We have money's back in for breakfast.

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Let's talk about the biggest mystery of last week. What in the world happened to United Health Group? Last Thursday, UNH reported a heinous quarter and its stock collapsed, tumbling 22 percent, dragging the rest of the managed care names down with it. I was shocked.

Before the UNH quarter, 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 we 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 subpar.

UNH posted a big revenue miss and a small earnings miss. Nothing to celebrate there. Much worse, though. Management cut their full year earnings forecast by roughly 12 percent at the midpoint. Previously, they were talking about $29.50 to $30 per share. Now they're talking $26 to $26.50. That is very big, especially when I'm used to seeing United just blow away the numbers time after time after time.

Not all named to be a culprit. 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. It's getting paid much less than they expected from Medicare patients. A double whammy. And again, Optum has been perfect.

This is amazing. The Optum 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. The government wants to incentivize taking care of people who are actually sick. But UnitedHealth is running into a problem where the health profiles for many of the Medicare patients it treated through OptumHealth were inaccurate. In large part, that's because many of these patients came from insurers themselves.

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 their problem anymore.

But now it's OptumHealth's 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 and 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 UNH, and it's business that most health insurance companies don't have any exposure to. The really worrisome part of this problem

numbers comes from the 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 a hook for these higher than expected 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 OptumHealth, the care business, are covered by UnitedHealthcare, 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 this space. And with all the data that it's able to compile through its spoiling organization, it's supposed to be the most sophisticated player in the business, too. The managed care companies have known about the Medicare Advantage utilization problem for over a year. Most of these outfits suggested the pricing to avoid making the same mistake that they made in 2024. But UNH somehow screwed up again.

And if you and I 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 taken private. And once that does it, 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 to UNAIDS, and specifically that it's gotten the Medicare Advantage issue under control.

If you're tweaking its prices and offering for 2025. In fact, just about two weeks ago, CVS reiterated its four-year 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 an age quarter, we also saw Elevates Health take the extraordinary step of preannouncing its own first quarter numbers. And the numbers were fine.

Elevents expects $11.97 of earnings per share for the first quarter, which was much better than the analysts were looking for. And these guys also reaffirmed their four-year forecast. And that's why Elevents 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 Elevents 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 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. We're going to start finding out tomorrow morning when we get those results from Elevents. I wish UnitedHealth would come on Mad Money and explain what happened here. Normally, I say this is a tremendous buying opportunity to get into the amazing stock. But now, I think it's just too fraught for me to tell you to do that. UNH. Ed in Illinois. Ed. 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?

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 may see multiple compression, even if it makes its numbers. We have to wait till tomorrow after the market opens.

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 pregame earnings. 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, Booyah, Jim, from Arizona, Phoenix. How are you doing today? I am doing well. How about you, Matt?

Awesome, awesome. Hey, I'm calling about Doc McKesson. There's some big pops in it. I'm a long-term investor, real long. I mean, really long. It's climbed when the tariffs were announced April 3rd, went up 29 points to 722 when everyone else's stock dropped. I've talked to you in the past as well. These are years back when it's been in the 4s, 5s, and 600s. My question to you is, is there a point in which...

And what are the conditions that a company, seeing as it gets back up in the 700s, may consider a stock split? And what do you feel about that? Well, Matt, 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 its stock should be bought here, not sold. And thank you for your confidence. Now, people, I'm not convinced the pin action in the managed care space is justified because

Casey and I health results as their issues may just be

Company specific. And the only reason why I'm saying that holdingly 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 mad money ahead, including my look at how macro data is shaping the decline 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. It's nice to see the lighting around. So stay with Crank.

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. Ooh, it's like a 10%.

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 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'll 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, too. Makes sense, but it didn't happen. In fact, when the Fed started cutting last fall, long 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 protests 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 4.30 on Friday, April 4th, 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-year is only back to around 4.9, which is not great for the homebuilders. At this point, the average rate for the 30-year fixed mortgage has come down from 7.3 at the beginning of the year to 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 headed. Remember, housing prices are elevated to begin with. Second problem, we've gotten some new macro data to chew on, and none of this looks good for the homebuilders.

Last week, we learned that U.S. housing starts fell 11.4 percent in March. Much worse. Wall Street was looking for a 5.4 percent decline.

I fear homebuilders are looking around and not liking the housing market that they're selling into, so they're pulling in their horns a bit. Maybe they're worried about rising costs once the tariffs kick in or a labor shortage is the way to crack down on 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 U.S. home values will decline over the next 12 months. Specifically, the MoD now expects a...

1.7% decline in home prices over the next year. Now, back in January, they were looking for 2.9% increase. Well, that is huge. No homebuilder wants to put up 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 D.R. Horton. That's the nation's largest home builder. And the numbers were lackluster, to say the least. This was a sizable top and bottom line miss with disappointing home closings, 15 percent revenue shrinkage, and earnings per share down 27 percent year over year. Sales orders in the quarter were horrible, coming in at more than 1,700 units or over $1.6 billion short of expectations. I was shocked.

Horton's guidance was even worse. Management slashed their full-year forecast and issued a very light outlook for the current quarter. As Dara Horton's executive chairman, David Ault, 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 are 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, it was a pretty discouraging quarter for the largest nation's homebuilder. But somehow, after all that bad news, Deerhorten's stock actually finished up well.

almost $4, more than 3% on Thursday. Now, some of that's because management threw in some positives on the conference call. President and CEO Paul Romanowski 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. Romanowski added, quote, our

Our cancellation rate remains at the low end of our historical range, indicating that buyers in today's market are able to qualify financially and are committed to their home purchase despite the volatility and elevated uncertainty of the current economic environment. 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 the buyback because things could get a lot uglier for the homeowners 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 anything connected to housing. You're taking your life in your hands when you bet on the homebuyers here, even if their stocks already look like they've come down dramatically. We'll be right back.

And then the lightning round is over. Are you ready? Let's keep that coming. You don't care as much as I do. I'm sorry. We're pulling off. Paul. Booyah, Jim Kramer. Booyah. Hey, I'm calling about a company with a strong balance sheet, a long-tenured and well-respected management team who is wondering what the tariff impact might be, if any, on this real estate investment trust, Simon Property Group.

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. Hey, Jim. Thanks for taking my call. Of course. Yeah, I'm looking to diversify a little bit. I like kind of under the radar of smaller cap companies. I'm looking at device medical company. Pays a little dividend. It is LMAT, Lemaire Vascular. I don't know them.

Got to 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? No, we'll do the work. Let's go to Harvey in Connecticut. Harvey. Yo, yo. Oh, fantastic. I love it up there. What's going on?

I'm eager to get your thoughts on Transdime Corp., an aerospace manufacturer. All right. I like aerospace very much. Now, my favorite, though, is there's no need to descend to Transdime 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 to add any names, though, as we've been taking off stock. We're not oversold enough yet. Let's go to Joan in Texas. Joan. Hi, Jim. I'd like your opinion if I should hold or sell CarMax.

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. You have 24 percent 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 are losing a lot of money and I don't need to tell you every single time why. Let's go to Gary in Massachusetts. Gary.

Hi, Jim. Thank you for taking my call. Of course. Happy Patriot Day from Massachusetts. Oh, that's right. They raced today.

Yeah, yeah. I wanted to see what you thought about G-O-L-D, 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. You know, I wish they weren't so far flung. NECO's doing better than they are. But I think G-O-L-D is a good place to be. Let's go to Paul, New Jersey. Paul.

Booyah, Jim. Booyah. Marie P. Collar and very happy club member. Oh, thank you, buddy. Thank you. I appreciate that. You're welcome. You've counseled us in the past to 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 about this one stock.

And it's now a good time to start a position in Plains All-American Pipeline. 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 OK. 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 auction. The crisis in the little country of Greece transfixed us as the European Central Bank seemed powerless to help. Many questioned the whole idea of the euro. It seemed like a financial suicide pact at the 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 & Poor's downgraded the U.S. government's credit rating from AAA to AA+, where it remains today.

The stock market declined all that summer, right into the debt downgrade on August 5th, and then resumed its decline before bottoming in October. Almost 22% peaked the trough as Europe's debt crisis continued to roil our markets.

In retrospect, though, it was a terrific 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 1,074. It's now at 5,158. And the yield on the 10-year fell from 30.74% 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 pulled 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. And this big earnings week 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 will end. This too shall pass was our stay-at-the-course mantra. In the interim, though, our stock market got pummeled and the stay-at-the-course philosophy was severely diverted, tested. It was severely tested. But ultimately, 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 it 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 Palin to find this period. As I keep saying, it's the Walmart White House we're getting every day lower prices. Just like 2011, it's a very manufactured crisis, something totally man-made 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 squirrelly, almost as if they're anticipating another painful 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, deride chide and make life hell for a man who has served our country well and I think deserves better.

I like to say there's always a bull market somewhere. I promise you I'll find it just for you right here on MadMoney. I'm Drew Kramer and I will 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. Growing a business can feel impossible.

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