Mad Money w/ Jim Cramer 1/10/25
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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. My friends, I'm just trying to save you a little money here. My job is not just to explain, but to put in some sort of context so you can understand it. So call me at 1-800-743-CBC. We'll be with Jim Kramer.

When I first heard the idea that stocks could actually go down in response to great job growth, I thought it was absurd. Who hopes for weak job growth? Who hopes for higher unemployment? The answer? People who own stocks, that's who. At least when they're worried about interest rates. And that's how you get a day like today where the Labor Report showed we created way more jobs than expected in December. And then for the market to roll over.

Dow tumbling 697 points, S&P plunging 1.5%, NASDAQ plummeting 1.63%. Now, there are two sides to this story. Given that I was worried about a hard landing in recession just six months ago, when I saw strong job growth, you know what? I was grateful. But we're in a moment where my gratitude means nothing. The majority of investors were looking for slower job growth, lower long-term interest rates, and some rate cuts from the Fed.

For them, the disappointment was palpable. So the stocks, they sold them hand over fist, as you can see. Now, this isn't unusual. Always remember that the bond market is a lot bigger than the stock market. And the bond market gods are more powerful. So when rates go up, stocks tend to go down. And that's what happened today. The stock market won't improve until interest rates go down.

we might get some better stocks, but not a better stock market, which is why so many investors are rooting for a weaker economy. Makes the Fed look better, makes you feel better that rates aren't going to be such big competition to stocks, which they're getting to be. So what happens now? Let's take a look at their game plan for next week with an eye towards seeing something positive to find that bull market somewhere.

First of Monday, we hope to get some good news out of the wildfire situation. It's always disconcerting to hear that there could be anything good coming out of the fires. But like any natural disaster, our various governments and our insurance companies try to get things on a better footing. Usually that means an expanded economy in the areas that are hit. And I think you're going to start hearing about that thing pretty soon.

I don't like profiteering off tragedy, but it's undeniable that retailers do better in this environment because people have to rebuild, meaning they need plumbing, kitchen supplies, washers, dryers, dishwashers, ovens, TVs, all the stuff of modern life. Sure, some of these retailers already went up, but they can go up further. So look for the possibilities because when the insurance checks come in and the government starts spending some money, they're going to go toward rebuilding.

How about the other side of the trade? Here I'm talking about earnings. Can great earnings triumph over a sour bond market? We're going to find out for certain because this is a week we associate with bank earnings, and there's a lot of misconceptions about the banks. We know that when they make the wrong bets on the bond market, like two years ago, their stocks can take some real nasty hits. But when their bond portfolios are good,

like they are today, they can withstand or even profit from higher rates. So let's not write these stocks off. Before we get to the bank stuff, we need to talk about KB Homes. This is a home builder with a significant presence in California. When so many houses get burned down, you think that it might be good for the home builders, particularly KB Homes.

But there is a real mismatch here. Many of these homes are very expensive. That's not KB's niche. It makes the kind of homes where higher mortgage rates really hurt sales. Plus, the possibility of a draconian immigration policy from the Trump administration will hurt the homebuilders in two ways. First, they're going to have to pay higher wages, and then they're going to have fewer customers. So even though KB Homes have put up some consistently good numbers all during this big, great period for housing, I fear that this stock could end up on the canvas.

I hope to dispel the gloom a bit when I take a trip out west to the fabled J.P. Morgan Health Care Conference. This is where we hear from almost every drug and health care company, and I'm going to do my best to bring you a highlight reel of the most important presenters. Get ready to be dazzled with some really terrific stories, regardless of the economy. But remember, the drug stocks are indeed still hostage to interest rates, which are a more powerful force than their pipelines or even their earnings in many cases.

Tuesday, we have the producer price index along with the consumer price index on Wednesday. It needs to come in cooler if there's any hope that interest rates could reverse and the Fed can regain some of its lost credibility, stemming from cutting in a hurry when we now know there was no need to do so. I think it's possible that these numbers are going to be cooler than the labor report, but not enough to justify our appeal of today's losses.

Wednesday, well, here it comes, a host of bank earnings, and they'll get an initial boost from higher rates in the form of offering you rate-based products like CDs that offer much lower rates than the banks can earn by sticking your money in the bond market. It's a short-term windfall, but it could make these stocks worth owning. On Wednesday, we're going to hear from JPMorgan, Goldman Sachs, Wells Fargo, and Citigroup. I think they're all going to be pretty darn good. Plus, given the environment has improved for mergers and acquisitions, as we've seen already this year, we can have some excellent forecasts.

I like these stocks, and they're well off their highs with very low price journeys multiples. Could it be a real opportunity? I think so. We've been buying a bunch of them for the Charitable Trust because a robust economy often produces the best results for these companies. Regardless of the bond market or the Fed, we have fewer credit problems. Thursday, we have more of the same. This time, Bank of America, U.S. Bancorp, Morgan Stanley, and PNC Financial. I actually expect all these to be good, too, but the best one, the most admirable, likely PNC. You know, PNC has become kind of a cult.

a cult bank stock. The biggest health insurer, United Health Group, reports, too. Now, we know this company has been in the news, sadly, after one of its highest level executives was murdered.

This group's had strong earnings of late, including really, I mean, terrific. They just got some good news from Medicare, too, this very evening. So they're no longer dealing with a post-COVID hangover. They're getting better return from the government. And you know what? I suspect UNH is going to have an excellent quarter. So what can I say? These stocks are probably going to work.

At the close, we get results from one of my favorite companies, J.B. Hunt. He's the giant trucker. I see this company as more of a barometer of business because it does such a tremendous job of breaking down the strong and weak parts of the economy line by line by line. These days, the transports everyone wants, though, are the airlines. Just look at the positive reaction to Delta's numbers this morning. I think we need to keep in mind that when you get really strong earnings like the ones from Delta, they can indeed transcend the market's negative gravitational pull. Stock looked good today. Finished up 9%.

Finally on Friday, I'm watching out for SLB. That's the old slumber jay. They don't call it that anymore. As we've seen in a few weeks of rising oil prices, I know that's not enough to turn around SLB's fortunes. It's been down in the dumps for a year and four months. A few weeks of good oil news won't change that. But I think that the company might give us a more positive forecast, given that there's certainly more drilling optimism around, even as SLB's a very international company. Bottom line, if you're a bull or at least trying to make sense of this market, well,

You know, a market that goes down on seemingly good news. All I can say is that the stock market that gets surprised may seem like it's reacting inappropriately until you see its master, the bond market, explain everything by the direction of interest rates. For now, that's the key determinant of the entire stock market, even as there are pockets of positivity that can escape the bond market's tyranny. Mark and Iowa, Mark.

Hi, Jim. Well, I'll tell you, with the way the markets are these days, I'm sure glad I'm an investing club member. Thanks for all that you do. Thank you. And, you know, I feel for any of the losses that come about, and I do make some mistakes. I own the mistakes, and most importantly, I do the best I can. How can I help you? Well, I'm calling today about a utility stock that sold a minority stake in some of its transmission lines businesses.

It's in a couple of states they sold that. It's valued at $2.82 billion, and it's going to go a long ways towards offsetting about $5.5 billion in equity financing until 2029. As an investor, how should we look at this move by AEP?

OK, well, I think AP, you look at that, that's a consistent way to be able to judge your business. This fellow, Bill Furman, we had him on. I think he's very, very smart. I will say this, though. It only yields 4 percent. It is indeed hostage to the bond market. I think it has more downside at 16 times earnings. Let's go to Manal in Georgia. Manal. Booyah, Jim. Booyah.

Thank you so much for guidance with effective investing strategies, which are in turn profitable as of now. You are very, very kind. Thank you so much. It is in the news that Nucor is going to build a new production facility of $200 million in Utah, which will generate about 200 full-time jobs.

And it is about to complete similar production facilities in several other places. So new core stock had gone as high as around $160, and now it has fallen about $118.

Yeah, well, it did go up to $200. Now, I'll tell you, ma'am, what happened here is very interesting. They bought back a ton of stock much higher. That was ill-advised. Then the Mexican, let's say China, used what's known as transshipments, dumping stock—

Dumping steel through Mexico into our country, depressing our prices. And that's what's hurt Nucor. And I've got to tell you, that may not be done until President-elect Trump comes in and says, no more Chinese steel from anywhere. And then Nucor stocks are going to take off like a rocket.

Right now, interest rates are what's controlling the stock market, and we don't want their control because rates are going higher. Our job is to find some inflation-proof pockets of positivity to escape the bond market's tyranny, and it's not easy, although we will have some charts later on that gives you a nice place to look. On May Money Tonight, I'm circling back to those charts to see whether we can have a tech

rebound. Now, after this week's market action, I'm also going to break down the thesis. See how much of it still stands. Then, ahead of the NFL playoffs, could DraftKings be a touchdown buy at these levels? Anytime. I'm kicking you off the weekend by giving you my anytime take. Plus, Constellation Brands sank 17% on its earnings. I took this very personally because my travel trusts own it. Let's speak to the CEO to see if there's any turnaround, let's say, on tap. So stay with us.

Don't miss a second of Mad Money. Follow at Jim Cramer on X. Have a question? Tweet Cramer. 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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Earlier this week, we ran an off-the-chart segment highlighting work from Jessica Inskip. She's the first woman on the active trader desk at Fidelity, now director of investor research at StockBrokers.com. She's co-host and founder of the Market Make Her podcast. Now, she's had a good track record, right?

really pounded the table in mid-October right before the whole market caught fire. Even though we didn't know Trump would win the election and spark a monster rally at that point, the charts were signaling to her that something very positive could be on the horizon, made everybody a lot of money. Now, when we spoke to her earlier this week, she said it looked like we were headed for another narrow tech-led rally, much like what we experienced for a big chunk of last year. But, and a very big but,

Inskeep was also worried. She warned us that this rally thesis was only on the table if the averages could hold above some key levels on the weekly chart, meaning the S&P and the Nasdaq had to clear certain prices as of today's close, or else her whole outlook would become a lot more negative. And that's why tonight, you know what I had to do? In order to get you to be up to date on this, I had to circle back to her.

Because this morning we got that red hot labor report with lots of data signifying that inflation remains a real problem. And as anyone can see, it took a lot of positive charts and turn them upside down. Now it makes sense. A strong job market, a strong number makes it harder for the federal reserve to keep cutting rates. Uh,

It tells us that the bond market traders have been right to sell treasuries, pushing up long-term interest rates. And it's the reason why the averages got obliterated today. These key support levels InSkip mentioned earlier this week, we broke down below almost all of

So I had to go back to her because I know you want to hear what we have to say about the breakdowns that she feared. Put simply, you bet we did. We are worried and it changes almost everything and not in a good way.

So let's go over. Let's go back. How exactly do the charts read? Why don't we start with the weekly chart of the XLK, the Technology Select Spider Fund, because tech remains the most important group in this market. It's the largest. Now, ISKIP was hoping that the XLK was going to hold above 237.

That was the plan. Or even 233, which is where the 13-week moving average currently stands. Remember, she likes to watch the 13-week, 26-week, 40-week moving averages because those correspond to one, two, and three-quarters worth of action. And in this business, the quarter is the basic unit of measurement.

But now the XLK, it's broken down below both those key supports. It's now a 228. We don't want to see that. Very, very negative. Worse, a few days ago, it looked like the XLK could make a bullish crossover down here at its MACD line.

the moving average convergence divergence indicator. That's where the black line crosses above the red line down at the bottom. Well, guess what? These MACD crossovers are incredibly reliable buyer sell signals. And unfortunately, with today's beatdown, this thing has now made a bearish crossover. This is a sell signal, people. And Skip worries that the XLK could be headed to 225. That's the next floor support. That's the 26-week or purple line crossover.

In other words, happy days are not here again for tech as a whole. So we went from hopefully bullish to definitely bearish. OK, how about the daily chart of the border S&P 500? Now, that picture got a little worse this week, too. The post-election gap actually

had been acting as a key support level for this chart. And that was great. We were still basically hanging on in there at the upper end of the gap. However, InSkip was hoping we'd remain above 5850, okay? 5850 was our key level.

That was the weekly high before the post-election gap up. We failed to do so, closing the week at 5.827. Next level support, according to InSkips, 5.783. That's down about 44 points. 5.783, you can see, all right? Down about 44 points from today's close. When you add in the fact that the S&P also didn't make a bullish crossover with the MACD line right down here, it's a lot less encouraging picture than it was on Tuesday.

And Skip also doesn't like that the S&P has fallen below the Ichimoku cloud. Okay.

Right there. This is a technical tool that combines a bunch of moving averages to give you a one glance read of the situation right now. And that one glance read has turned very negative. Long story short, the S&P 500 is now not looking great, especially when you remember that tech has a huge weighting here and the XLK is looking ugly. If we fail to defend a key support level this week, InSkip thinks it's possible that we roll back the whole post-election rally, which would take us down to, yes, 5, 7, 8, 3.

How about the S&P 500 weekly chart? Unfortunately for the bulls, the S&P 2 broke down and is now below 5.931. That happened to be the floor support created by the 13-week moving average. InSkip's discipline tells her that when something breaks the 13-week, you've got to start becoming more bearish. For the S&P, equal weight 5.931 is the new ceiling of resistance, especially after we just fell through InSkip's next level support of 5.850.

What can I say? I know it's beleaguering, but I got to show you these because they've changed from Tuesday. We also like to look at the S&P equal weight because it values every component of the index equally. Give us a great read on the index outside of tech because there are a bunch of big tech stocks with enormous market capitalizations. They get huge weighties in the regular S&P 500 and they distort things. But when you look at the S&P equal weight, you can see, oh,

No, no. A total house of pain. Earlier this week, InScoop was hoping that we'd hold above its floor support at the 26th week. Well, look at that. It's broken below that. Next level support is 7015. And if the S&P equal weight breaks down below the 40-week movie average at 6988, InScoop says we've got a huge problem. That's another bad news chart.

However, there are some groups that she still believes in. For example, OK, what is everybody in? The Magnificent Seven. Take a look at the chart of the Magnificent Seven versus the yield on the 10-year Treasury and Green. The 10-year obliterated the whole market today, but InSkip says some groups are much more resilient versus higher rates today.

than others. And you can see from this chart, the MAG-7, what a great example. Yes, that's why she's so confident that they can survive higher rates. Sure, the MAG-7 will sell off in sympathy with the rest of the market whenever long rates spike. That's what we saw today. But Nisket points out that these stocks consistently bounce back faster than the rest of the market. I will also tell you they bounce back

first, okay? And they can still put up some great earnings in a high interest rate environment. Once we have some earnings follow through, Inscapably's MAG7 will be back in rally mode. As you see it, the Magnificent Seven, taken as a whole, have about a 5% downside cushion before they start brushing up against their 13-week. Okay? So we've got some room here. The group is nowhere near breaking through this key support level. I think that that shows you that you should be focused on these. Okay?

I totally agree on the possibility that the MAG7 is going to be good. We've had so many inflation scares in bond market durations during the ascent, and we always hear these obituaries for the group whenever they occur. But those are the moments that you want to buy, not sell these stocks. And this time, I don't think it will be any different.

So the bottom line, the charges interpreted by Jessica Inskips suggest that things have gotten more difficult for the S&P 500 this week, including the tech component of the S&P, although the non-tech component is doing worse. Everything about the stock market deteriorates when Treasury yields rocket higher. But Inskips also shows that some groups can adapt to higher rates. Then you should be thinking about the MAG-7, which tend to sell off along with everything else and then bounce right back first. And when we get to earnings season, I think they'll be good. If she's right, we can still have...

A rally, but it's going to be a narrow tech-led rally. Just that it'll be even more narrow than we thought just a few days ago. No sugarcoating it, people. The charts turned negative this week. Maybe earnings reports next week can turn things around. But as of now, it seems a little unlikely, doesn't it? All I can say is that I am glad we checked back because I didn't want to leave you hanging. This decline did some real damage, and the charts that were bullish are now... Mad Money's back after the break.

Coming up, with the NFL playoffs kicking off, should investors get off the sidelines when it comes to DraftKings? Kramer's coaching you through the moves. Next. Let's say your small business has a problem. Like maybe...

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If you're anything like me, you're looking forward to the NFL playoffs. If this year's playoffs are anything like last year, it could be very exciting. Whether your team's in it or not, and luckily mine is, go birds, chances are a lot of you will be watching at least one of the games this weekend. More important, I think it's a way to make money off this, which brings me to the stock of Kraft Kicks. No, I'm not planning to give you gambling advice. I'm giving you a stock pick.

I think there's a good case to buy DraftKings down here. But first, you need to understand what's been happening with this one. Stock underperformed last year up 5% for 2024, but really it was doing great until the stock sold off hard in December.

While DraftKings posted solid results in November, there was one glaring issue. All you people betting at home, you're winning too much. As CEO Jason Robbins said in the conference, quote, we experienced the most customer-friendly stretch of NFL sports outcomes we had seen early in the fourth quarter. Ever, ever seen early in the fourth quarter. Can you imagine? That caused the company to take a $250 million revenue hit. Boy, is that bad news for shareholders. And these customer-friendly outcomes in the NFL have kept on coming.

Basically, the favorites are winning at a higher rate than they normally do, and because more people bet on the favorites, it's costing DraftKings money. They've just had a real bad run of luck here. Can it last? While we haven't heard from these guys directly, earlier this week, Flutter, a competitor, the owner of FanDuel, noted that, quote,

The 2024-2025 NFL season to date has been the most customer friendly since the launch of online sports betting with the highest rate of favorites winning in nearly 20 years. There we go. It's not just DraftKings. As a result, things got real ugly for Flutter from December 12th to the end of the year. You better believe DraftKings is having the same problem.

So now we know why this thing's been pulling back. Is there any advantage to buying it as we go through the playoffs and start hearing headlines about all the ridiculous bets you can put money on, like the color of the championship-winning Gatorade shower or length of the national anthem? The answer's a clear yes.

Just look at how DraftKings has done from the end of the year through the Super Bowl historically. In 2021, it rallied 37% from New Year's Eve to the last close before the big game. In 2022, it fell 15%, but that was a terrible period for all stocks, especially growth stocks. Fed was getting ready to lower the boom on the entire market. In 2023, DraftKings shot up 4%.

40% from New Year's Eve through the Super Bowl. And the stock rallied another 28.5% in the week after the Super Bowl. Finally, last year, it gained 23% from New Year's Eve through the Super Bowl. I admit, small sample size. But three out of four? That ain't bad. And this trade worked out great when I recommended it last year. And I don't care about the customer-friendly. This is about the

future still favorable odds are not enough i wouldn't be recommending trafficking stock here unless i like the fundamentals unfortunately the fundamentals they're pretty darn good right now many states still don't allow sports gambling including california texas and florida which makes up more than a quarter of the country the november elections told missouri legalized sports gambling among i know not as big as these three states missouri's two percent of the country plus the st louis and kansas city metro areas are great markets

I bet those Chief fans are feeling pretty confident enough that I wouldn't be surprised if they scramble more than their 2% share. I also like that DraftKings has done a good job of increasing parlay utilization. Now, these bets tend to be much more profitable bets for the sportsbooks, even though the payoff on that 10-leg parlay your buddy sent you is a lot higher than just a straight bet. But I'm going to tell you, you'll probably lose. You ever notice on the four bet, you win three and you lose four? I mean, that's pretty much the way it goes. Last quarter, DraftKings disclosed that the NFL parlay mix was...

was tracking at more than 500 basis points for the previous year. I love to see that because it helps the company hold rate or the amount of money that the house retains on any given bet. As a better, it might have frustrated you to see that the money line for both Penn State and Notre Dame was minus 100 and changed last night. But as an investor, it means the company's making money on those bets regardless of who wins.

So while the sports based outcomes haven't been on their side recently, the company's in a great position to accelerate profits once favorites stop winning at such abnormally high rates, which should happen naturally over time. Look, it can keep up. Absolutely. But I'm saying that it's unlikely.

DraftKings is constantly looking for new ways to increase parlay utilization, including quietly launching a $20 per month subscription service on December 28th for select customers in New York that offers participants up to 100% profit boost on winning parlays. Sounds interesting, right? Good for bettors who want the boost. Good for shareholders because parlays so rarely pay off.

No matter how much of a payout you get, if you win, your odds of winning are so microscopic that your bookies basically pick in your pocket as far as I'm concerned. Additionally, Ed Bastian, the CEO of Delta Airlines, announced a partnership between the Kings and CES this week. Details not clear. It could relate to Delta's rewards program, or maybe they've got some sort of plan to lobby for legalized in-flight gambling. Either way, it can't hurt.

Outside of the sports book, DraftKings is also making waves in the iGaming industry where users can play traditional casino games for real money. Who doesn't want to play some blackjack on the subway? Last quarter, this business saw a 14 percent uptick in customer count year over year. Not bad. And there's a lot more room for expansion in terms of gambling legalization. Right now, iGaming is only legal in five states. Well, the company's optimistic that they're seeing some legislative momentum in New York and Illinois.

Now, on the last conference call, CEO Jason Robbins said he believes his previous outlook for industry growth will prove to be too conservative. At a conference in early December, he noted that the legalized sports betting industry is still in the early innings here in the U.S., but he wouldn't be surprised if it becomes as ingrained into the culture as it is in, say, the U.K. How do you think it is? Apparently it's a nation of degenerate gamblers.

We're Americans, though. We lead in every other category of entertainment spending. I bet we can catch up with sports betting. It's hard to listen to any sports commentary without hearing about the betting lines these days. So I bet Robbins ends up being right about this. In short, TripKings already has a lot going for it. And when you consider how the stock tends to run during the NFL playoffs, you got my blessing to put on a position. Remember, it is down a lot in sympathy with with Flutter.

I don't mind that. And while we got the disclosure about the customer-friendly sports outcomes impacting their number one competitor, we haven't yet gotten the same disclosure from DraftKings. Potential announcement could cause the stock to sell off again, even if a lot of that, I think, is already baked in. So the bottom line here, whether you like to bet or not, enjoy the games this weekend. But if you do like to bet, feel free to add an extra leg on that parlay, if only for the shareholders.

Cory in New York. Cory. Booyah, Jim. Booyah. Long-time club member, first-time caller. Oh, thank you. Thank you for being a member. What's up? Thank you. I know you liked Airbnb in the past, but after an up-and-down 2024, do you think it is a buy for 2025 and beyond? Very much so. Look, I think that the customers traveling...

I'm surprised the stock has not done as well. I know that a stock like Marriott has been red hot. I think it's only a matter of time because I do believe these guys have international footprint and they're doing quite well. They're just not doing well enough to move the stock. That is going to happen. I do believe that the number is going to be very big. And I really, really think you should buy Airbnb. Let's go to Navid, New Jersey. Navid. Hi, Jim. This is Navid from Jersey. How are you? Thank you for taking my call. Of course. I'm watching your show.

I've been dabbling with Nike, and I wanted to get your thoughts on, do you think it's got some growth there for this year? This is one of the hard ones. Going over with my trainers today, Jim, we were talking about how during this period that Nike's falling down, we got Hokus come on, Verge on-ons coming on, New Balance has come back, Adidas has come back.

I think Nike has a tough road ahead. I know it seems cheap, but I think it's going to take several quarters in order to be able to get all that great work that Elliott Hill is going to do. Elliott Hill is a winner. I would not bet against the stock, but at 71, I just can't be convinced that you haven't seen, let's say, dead money for the next three to six months.

All right, Tramp Kings already has a lot going for it. And when you consider how the stock tends to run during the NFL playoffs that's coming up, I mean, you got my blessing here to put on a position. I know that fundamentals aren't great, but I'm talking about the future. Much more Mad Money, including my Constellation interview. This is a tough one, STZ, because you saw how badly it did today. And later, has the market lost faith in the Fed? I'm eyeing the macro data fresh off the lay reports. And of course, all your calls rapid fire tonight's edition of The Lightning Round. So stay with Kramer.

Holy cow. I mean, maybe there's no place to hide in this alcohol category. We know the industry is facing multiple headwinds, some from the rise of the GOP-1 drugs that cut cravings for everything, including booze, slow-rolling cannabis legislation, to a general disinterest in drinking, particularly among health-conscious young people.

But I still thought the best of these companies could thrive in spite of these challenges. Come visit Constellation Brands, STZ, the beer, wine, and spirits place you may know for its popular beers at Corona, Modelo, Pacifico. That's why we stuck with Constellation for the charitable trust, even as the stock got hit by tariff worries and fears of mass deportations, which could do real damage to the customer base. However, this morning, Constellation reported the numbers were not good.

They missed expectations on almost every key line, including for the beer business. They cut their four-year sales and earnings forecast, caused the stock to plunge 70% today, calling into question my judgment about whether its ability to excel in this environment can still be the case. So is there any hope here, or is the stock a lost cause? Let's check in with Bill Newlands, the president and CEO of Constellation Brands, who I have to commend for coming on in good and bad times. Mr. Newlands, welcome back to Mad Money.

Thanks, Jim. Good to be here. Okay, Mr. Nunes, I've got to tell you, this one shook me to the core. You did cut your depletion growth. You missed your net sales, operating income below estimates. Why should I buy this stock?

I think there's still a long runway to be bullish on our business. When you think about Modelo, Modelo continues to be the number one growth driver in this category. We continue to outperform the category. We continue to outperform the CPG business.

Importantly, what we've seen is some real softness with the Hispanic customer. And as you know, that represents roughly half our business. But there's also a lot of really good things to talk about. You know, Pacifico was up double digits this particular period. And one that I'm particularly excited about, which goes right to your opening, is that our proportion of business coming from the 21 to 24 year old range.

was the biggest it's ever been this past year, which means we're attracting new, younger consumers into our business. Yes, but Bill, at the same time, you have $1.9 billion to be able to brought back. Why did you not announce an accelerated share repurchase today? Give us hope. Give us some reason to stay in the stock. Give people like me who own the stock from my travel trust some sense that we're not just completely adrift here.

Well, as you point out, we have 1.9 billion authorization today. And as you've seen, we bought 220 million this quarter. It was 670 for the year. And we're going to continue to be aggressive on that score. Obviously, we believe the stock is way undervalued at this point.

Right. And I felt that way before the quarter. But I'm trying to figure out whether you're not missing some sort of structural thing. I know you say it's not structural, but has something happened in this industry that has made it so that alcohol itself is not just on a some sort of cyclical decline, but actual secular decline of which you now are a part of?

I don't really think that's the case. I think when you look at our percentage of the consumer basket, it remains the same, even though the basket has been a bit smaller, particularly with consumers that make less income. So I don't think you're going to see this being some kind of an ongoing challenge for the industry. We're certainly, relative to our business, we have some challenges with the Hispanic consumer market.

the unemployment rate is up with that consumer. But we expect that this is going to be short-term in its nature and is not structural. But first of all, the unemployment rate today was, the big reason why the market fell so much is that the unemployment rate was much better than people thought. And at the same time, we did get a slight increase in employment up for the Hispanic population this quarter. So I'm not understanding what you just said, frankly.

Sure. Well, if you look at the overall unemployment rate, we had 31 states in this past quarter that had a higher unemployment rate than the prior quarter, even though overall it was no different than the prior quarter. So, look, I think we came out of a trough. We saw a

better depletion rate in this quarter than we had in the prior quarter, some of which because we spent more money against our brands than we had anticipated. So I think we're seeing ourselves come out of some of the challenges that we've seen and that there's plenty of good still to come. Now, I mean, Needham, which has been a supporter, came out today and said,

This is I'm sorry, came out December 20th and said for the quarter we are modeling for depletion growth of four point five percent, which is broadly in line with the buy side expectation. Flexion acceleration on both the one and two and on two year long numbers here. And they said they expected a clean quarter. You did not deliver what they thought. Now, this was December 20th. How could people be so awry? Just I don't know. Three weeks ago.

Again, I think a lot of it relates specifically to the challenge with the Hispanic consumer. When you look deeper under the numbers, you see that the CERCANA data, as an example, looks better than the C-Stores and then some of the independent outlets, which disproportionately are represented with the Hispanic community. We think

This is bound to come around and we'll be in good shape and ready to take advantage of it as it happens. Well, I mean, don't you think at a certain point what people are saying, Bill, is that you guys can't get the return that you used to be able to get on a dollar. And so therefore, we're going to pay a lower multiple. Again, I'm asking in a constructive way what exactly is happening, because the decline in the stock was, quite frankly, Bill, shocking.

It was shocking. It was disillusioning. It made me feel that perhaps Constellation does not have control of the situation.

I certainly don't think that's the case in the least. I think when you think about the tailwinds that we have from a demographic standpoint over time, you look at the strength of our brands, the growth of Modelo, the growth of Pacifico, the growth of Victoria. We're bringing out a product under Corona called Sunbrew this coming March, which we believe, again, opens up for a younger audience that will be very attractive.

all of which time we are continuing to beat the competition and to beat the cpg sector so i don't lose faith jim i would like to not lose faith but with the i think the stocks stock made a severe judgment today bill and the severe judgment just says basically uh that if you give

that Constellation's had a series of write-offs. They had a $4 billion write-off in cannabis. You had a write-off in a brewery. You had a $2 billion write-off in wine and spirits. That there are just too many write-offs. There's too many opportunities missed. There's a sense that Constellation Brands was not able to sell the wine and spirit when they had a chance at a higher price. It's now written down big. But...

It's still not happening. And that overall, perhaps there is a sense that you are now just another one of the beer companies that's not doing as well, even though you're doing slightly better.

My opinion is that's not correct. And I think if you watch our profile going forward, I think you'll be quite pleased with the results we're able to put up. You saw this today. We announced the sale of Svetka, again, continuing to focus our attention in that sector of the business toward the high end. But beer net sales growth of four to seven was below the previous outlook of six to eight.

Yes, correct. Part of what we are acknowledging is we have certain areas that are still open to question. We don't know where the tariff situation is going to land. And our view was we had better expand the range of what we expected to see to reflect that potential risk. Do you think there'll be a cancer label put on alcohol?

Frankly, I don't. I think, as you may have seen this week, was an interesting editorial in The Wall Street Journal, which notes a very different perspective on that. But I don't believe that will be the case. OK. And one last question. When you look at the tariff situation, do you think that there is any possibility that beer will be excluded because it is not it? It is not something that I would regard as being essential to the defense of our nation.

I mean, we're hopeful on that. It's tough to predict. Obviously, we've done a lot of scenarios for ourselves, depending on what happens. But we're optimistic that it will be short-lived if it occurs at all. But it's very hard to predict, to be frank. All right. Well, look, thank you, Bill. I know, again, I have to be as tough because the stock is

rendered a decree today that was quite different from what I expected. But I appreciate you coming on the show, Bill Newlands, president and CEO of Constellation Brands. Thank you, Bill. May I buy you a package? It is time. And then the lightning round is over. Are you ready? I'm going to start with Paul in North Carolina. Paul.

Mr. Kramer, thank you for taking my call. Of course. I got a question about after their acquisition of Blue Halo and given President-elect Trump's apparent unwillingness to continue to support Ukraine, what is your recommendation on aero environment? Oh, boy, I really like it. It really is the solution, I think, in a lot of ways to a Pentagon budget that may be too bloated but needs to be more effective. I like ABAV, and I got to tell you,

Waheed Nawabi's been on the show, and every time he's been a star. Let's go to Gary in Nevada. Gary. Hi, Jim. I'm calling about a mining company that's currently at a 52-week low and down 20% from its high and has a 7.4% yield. Is it time to load up on or back away from Rio Tinto? Rio Tinto is really a play on the Chinese economy, and I think the Chinese economy is. Let's go to Tom in Florida. Tom.

Booyah, Jim, from Northwest Florida. How you doing? Excellent. I lived in Tallahassee, so the answer is I was doing great. Big Ben, what's happening? Tell me about ticker symbol K-T-O-S. Modern military, modern defense. I like the story very much. I think you're in good shape. I need to go to Kumar in Georgia. Kumar. Hi, greetings from Atlanta, Jim. Excellent. What's going on? Your opinion about Verizon.

I don't like to buy a stock just for the yield when it doesn't have growth. And that happens to be Verizon. And that, ladies and gentlemen, is the conclusion of the Lightning Round. The Lightning Round is sponsored by Charles Schwab. Coming up, does today's jobs report signal trouble ahead for the economy? Kramer is giving you his take next.

Is it really so bad that the U.S. economy created far more jobs than expected? If you look at the average today, as I said at the top of the show, you'd think it's the end of the world, wouldn't you? Listen, as long as I've been in this business, the answer is yes. It's really bad to get a strong labor report when Wall Street's worried about inflation. If we're worried about a recession, these numbers would have been great. We would have cheered. But nobody's worried about that now. We're concerned that the Fed may have started cutting rates too soon.

before it had truly beaten inflation. I mean, what the heck was their hurry in retrospect? Yet we have a Federal Reserve that seemingly misjudged the strength of the economy that chose to cut rates by 100 basis points in three months when it's not obvious that it was necessary. And now the Fed's faced with a credibility problem. At the same time, the Fed has to deal with a new administration coming in with a plan to cut taxes and make up

the difference with inflationary tariffs. It has a country that's racked up $36 trillion in debt with no real hope of getting the national balance sheet under control anytime soon. And it has to deal with bond auctions all the time to finance that debt. Lately, those bond auctions have always driven stocks lower.

I do know of a silver lining, though. We're definitely not going into recession. Given that a recession means layoffs and lower profits, that's great. Those two things are far worse than slightly higher inflation like we have now. I say slightly higher inflation because wages really are up about 10 cents an hour month over month. Not a calamity. In other words, we're better off with strong employment than weak employment.

We have to tolerate higher interest rates for many reasons. That's just a given. That's why I think we will survive this scare together, and you've got to stay the course. But only if you own solid companies with good balance sheets. Sell those trash specs. I've been saying that for weeks, but now it is crunch time.

Wall Street hates it when the Fed's wrong. We lose faith in anything financial and we lose faith in the Fed, which is why almost every stock was down today. I have, though, seen this movie before. We had much higher interest rates than we do now, both in the 1990s and the 1980s. And we still made a ton of money in the stock market because we had strong employment and good profits. We lost a lot of money between 2007 and 2009 because we had horrendous employment and no profits to speak of.

Maybe it is as simple as that. We're in a time of transition. We have to accept some inflation as part of the deal, and we have to find stocks that can outrun that inflation and thrive in this environment. The problem, of course, is there just aren't that many of them. But we must keep a lot of cash, not lose sight that stocks represent better value than bonds, and accept that this is not one of those times we're going to make a ton of money in equities. There is no saviour out there, people.

No savior. We just have to reset, readjust and be grateful that there are plenty of companies that can make decent money in these situations, especially retailers because the consumer is flush and non-spec tech because it can outrun any negatives. It can continue to generate long-term profitability.

But I'm not excusing a suboptimal situation. We have a set of cards that amounts to a worse hand than we thought even just a few days ago, but not as bad as the alternative to something where you need to fold out of the financial crisis. Higher yields and lower faith in the Fed, partially offset by higher profits. That's the story. It's not a great story, but it could be a lot worse. What else is there really to say?

I like to say there's always a bull market somewhere. I promise I'll find it just for you right here on Mad Money. I'm Jim Cramer. See you Monday from the J.P. Morgan Healthcare Conference in San Francisco. All opinions expressed by Jim Cramer on this podcast are solely Cramer's opinions and do not reflect the opinions of CNBC, NBCUniversal, or their parent company or affiliates, and may have been previously disseminated by Cramer on television, radio, internet, or another medium.

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