Transcripts For CNBC Mad Money 20130717

Dow dropping 32 points. S p giving up. 37 . Nasdaq declining. 25 . And we seem to fold in angst to run from stocks as if theyre toxic instruments doomed to ruin our Bank Accounts the house of pain. So perhaps its a good moment to ask do we fret too much . Do we let our fears take hold when the market reverses . Do we let a small drift, you know, one of these ones like today, define us after the s p been up eight days straight. Or as stocks decline, do we recognize we sometimes get too worried when events or earnings or trends go against us . Just think of what has really happened in the last two months alone. How much do we fret . We fretted endlessly that one day, one day we would, indeed, have a dramatic rise in Interest Rates. So what happened . We got one. A huge percentage increase, a whopper of one. What does the market do . Well, how about giving the s p 500 the longest winning streak in nine years, how about the nasdaq 100 going up 14 straight days, best since 1990. We were supposed to be frightened out of our shorts by the decline of 100 basis points. We were supposed to be scared, we were supposed to sell, sell, sell. But as bonds overshot their mark, there was no reason for rates to move up that dramatically, and then came back in. What happened . It became the ultimate buying opportunity for stocks. Thats right, something so negative, so horrible, somehow transformed into an honest to goodness buying opportunity. This one without a doubt had to be the bears Worst Nightmare an event so profound, so obviously toxic for stocks and turns out to be a terrific chance to get in and start buy, buy, buy catch the next leg of the onesided bullfight . How about gasoline . I was supposed to be frightened about that one. Were flirting with 4 a gallon. 4 a gallon. How does that have an impact . Well, its a tax, right . Its a direct tax that takes disposable income and flushes it down the toilet of exxon. How could that not hurt . Why not short all of retail . Hey, and a couple of analysts are suggesting, why not bet against six flags, cedar fair, disney, people have to go in the car to get to those things. Lone ranger was a bomb. What happens . You sell them, you short them, maybe you make a couple of bucks. Thats what happened during the big Interest Rate scare. You can do it again. I dont really think its worth the risk to make those couple of bucks. It certainly wasnt in retrospect although im sure more people are trying to do it now betting against stocks that dont seem to reflect the pain of the price youre paying at the pump. To me, all those stocks take a hit on some price at the pump pain, are buys. Cars use less gasoline, use a lot less than they used to. More important, though, other than darden, no one has belly ached about the higher gas prices that ive heard. The bears really cant get the big down days they need to make money by shorting and then covering or buying. How about the banks . Remember we were supposed to be taking profits hand over fist in this group before they reported . I know it. My Charitable Trust has a huge position in wells fargo and were we ever tempted to sell it when not one, but two fabulous analysts downgraded the darn thing right before the quarter. Turns out those analysts were wrong. The quarter had upside in every metric where it was supposed to have downside. From Net Interest Margin to expenses, both of which going the wrong way. Even as the company admitted higher rates could impact mortgages, a huge part of their business, jpmorgan and citigroup were cautious too, but the market detected the positives. They didnt let the negatives get them down. Today the market extrapolated a weak quarter and Bank Investors decided that after initially liking the headline numbers from Goldman Sachs upon further review of the conference call, looks like a lot of those great gains might not be replicated and therefore the stock got sold. And i have to tell you, again with true worry in sight, if bank of america disappoints tomorrow, the whole group will be crushed, which would be a textbook case of people fretting too much. And after a couple of days you know whats going to happen . Theyre going to come back to these stocks, especially since ultimately Interest Rates while not going up right now, are going to go higher. How about all the worry over the personal computer plays thats been going on, the component plays for months now. The semiconductor stocks. All i heard lately were these were among the most vulnerable stocks in the universe. Ones that very smart short sellers had pounded and pounded. And yesterday, what happened . Seagate and Western Digital hit 52week highs. Up 52 and 59 respectively, thats not supposed to happen. Supposed to be at the lows. And while they can go down in the earnings report, turns out they were horrendous shorts. Hewlettpackard advancing more than 85 for the year. Microns back in the win column where it belongs as it was up 110 this year. Those shorts didnt work. Do you want some serious fretting going spoiled . Remember the egyptian riots . They were supposed to have a tremendously negative impact on the market. Instead, a much more marketfriendly regime took over and egypts calmed down considerably. How about the protests in brazil . You know what they did . They marked the bottom in brazilian stocks. That seemesd to be going up since then. Im going to be addressing that later in the show. How about three months ago when starbucks and 3m announced earnings. I remember it well because we were at villanova when they reported and 3m dropped a quick 5 points from 108 to 103. What was that about . It was a buying opportunity. The stock astonishingly rallied. It was a buying opportunity. I still cant figure out what people initially disliked about starbucks, but i remember thinking a chance to buy the stock below 60 where it was at nova. Well, it was better than fine with terrific numbers from china and the united states, starbucks never looked back and a tenpoint rally in a straight line. Perhaps the best trade of all came from the highest Growth Stocks when the Interest Rate rally when the Interest Rate soared. Now, these highGrowth Stocks are the ones youre never supposed to buy in an era where rates are skyrocketing. And after that move, i dont know how you can say rates werent doing just that. Youre supposed to blow out and then short the most richly valued stocks in the market as the rates rise signaling an oncoming inflation rush and a concomitant erosion of what you should be willing to pay for companys future earnings. Thats the proverbial hedge fund playbook. Thats what youre supposed to do. Celgene and gilead have been downright unstoppable, taking out the old highs. I get that with celgene. They announced they would be able to reapply in europe. But gilead, nothing special at all. When we were all fretting and worrying, the two stocks are regarded as the most expensive large cap equities in the universe. Amazon and netflix. Now, when i was starting my old hedge fund, i used to go after these kinds of stocks. Every time we had an Interest Rate spike, i shortened them with abandon, betting the price earned multiple id be coining money. But once rates stabilized, you were history and the shorts that did these trades this time around, they are, indeed, history. Amazon, netflix, 52week highs today. Good shorts spoiled of course, there are some stocks that havent come back. Housing stocks havent, they need Mortgage Rates down to get them back. But if rates go down, they will go up. Blackberry, united parcel, cocacola, more on that later. Theyre disappointed where they are right now. Theyre in, yes, indeed, the bow wow chateau. But for the bottom line, what are we thinking here . Looking at recent history, we fretted too much. We worried too much. We were scared too much. We let whats known as the down tape impact our feelings to the point of acting on them. Perhaps this time, this selloff will use the weakness to buy the good stocks that have just reported and not dump them. You know what weve been doing . Weve been doing the rational thing, the rational thing to do. And in the end, doing whats rational does make you the most money. Can i go to john in california, please . John . Caller booyah, jim, from out here in sacramento, california. Sacramento, oh, i miss it hows it going out there . Caller its about 80 degrees and i hear you guys got our hot weather. Weve traded off. Thats a pretty good thing. True. Excellent weather report. Caller we got involved with qualcomm a while back, they couldnt keep up with demand. We hear today they downgraded and the stocks going up. Whats your opinion . Not my favorite. Not my favorite. I like the kind of oldfashioned retro paleozoic tech stocks. I like Texas Instruments more than i like qualcomm. There, i said it. I like cypress semi more. I like micron, symbol moo, more. Lets go to yasha in new york. Yasha . Caller i have a question about baidu, i rode it down to the mid80s and rode it up until yesterday and unfortunately i pulled the trigger perhaps too early. In light of the fact theyve made two multibillion dollar acquisitions of late, should i get back in . No no. I mean, look, i think china has bottomed. I think the news out of china will be bumping along. But i dont want you to own any chinese stocks. I understand they executed a guy for doing what madoff did the other day, you think that should concentrate their minds. I do not trust their equivalent of the s. E. C. I dont trust their stock market at all. And thats been a good thing not to trust. You dont need to dig too far into your memory to realize that worry is not an investable option. You know what . Lets go for fortitude next time because history says we should use the weakness to buy. Mad money will be right back. Coming up, up up and away. Oils on the rise and were all being pinched at the pump. But cramers giving you the tools to fight back. Dont miss two slick ways to play the move in black gold. And later soda wars, the glass was half empty for cocacola today as its earnings shortfall took the fizz out of its stock and its rival, as well. But with pepsico reporting next week, is this your chance to grab some pop . Or could it leave you with an awful aftertaste . Dont miss cramers take, all coming up on mad money. Dont miss a second of mad money. Follow jimcramer on twitter. Have a question . Tweet cramer madtweets. Send jim an email to madmoney cnbc. Com or give us a call at 1800743cnbc. Miss something . Head to madmoney. Cnbc. Com. Vo traveling you definitely end up meeting a lot more people but a friend under water is something completely different. I met a turtle friend today so, you dont get that very often. It seemed like it was more than happy to have us in his home. So beautiful. Avo more travel. More options. More personal. Whatever youre looking for expedia has more ways to help you find yours. Announcer where can an investor be a name and not a number . Scottrade. Ron im never alone with scottrade. I can always call or stop by my local office. Theyre nearby and ready to help. So when i have questions, i can talk to someone who knows exactly how i trade. Because i dont trade like everybody. I trade like me. Thats why im with scottrade. Announcer scottrade proud to be ranked best overall client experience. Well, a not so hot day, at least in the market where the averages have pulled back so slightly from the highs, how do you find stocks well off the highs, still have a lot of room to run. Stocks where the easy money has yet to be made. You know what i do . One way is i turn to the charts, which is what were doing with the help of tim collins, my colleague at realmoney. Com. In a market where virtually everything has been roaring, sometimes you have to start by looking at the losers and the laggards. You want a stock that isnt tapped out, thats not exploited. Find one thats been on a downward trajectory and could be ready to turn things around. Especially a stock that is down when it should be going up for other reasons. Collins points out that even though both equities and oils have been on fire, there are still stocks like petrobras, pbr, the big Brazilian Oil firm. Theyre actually down 30 yeartodate, and get this one, down 82 from its alltime high. And no, im not talking about a Brazilian Company only as an excuse to run gratuitous giselle footage, although that is an added bonus. Based on the charts, collins thinks that pbr, the stock could give you a 10 to 20 pop by the end of the year and maybe even more. Why does collins believe the pbr can be transforming from loser to leader . Take a look at this. This is the daily chart. Now it doesnt take a Rocket Scientist to recognize pbr has been in a serious down trend since the beginning of the year if not since 2008 when it peaked, but you dont see that because this is a shorter length of time chart. Its improved aggressively from the upper left hand corner of the chart to the righthand corner. Its begun to turn higher, as you can see. And collins thinks we could be looking at a genuine bounce here, something that has been antithetical to my view. Why . I swore off this pbr back when it traded in the 40s, now its at 13, although i never swore off the other pbr, pabst blue ribbon. Hence this convenient albeit totally gratuitous beeramid they dont stack well, by the way. Its not like miller 64. The reason collins is actually saying buy what looks to be a real dog . This same chart which shows pbr getting pasted shows the stock can stage shortterm rallies amidst the carnage. Weve got two terrific moves. One at the beginning of march and another that started in mid april. And together nearly erased all of petrobras losses for the year before the stock gave back all those gains and then some. And every time we have one of these shortterm rallies, collins points out theyve been led by pbrs tenday moving average. A very shortterm measure of the stocks trajectory. The tenday moving average has been trending lower. If you bought pbr when this flattened or started to head higher, youve racked up solid gains as long as you treated it as a trade and got out before the profits evaporated. You can see the tenday move, boom, that signaled that. That signaled that. Theres really obvious trading, people. There it is, okay. And as long as petrobras stays above 12. 60, 62 cents below where the stock is right now, then collins thinks its going higher, so youve got a nice stop out, 62 cents below. He sees it heading to 15 based on the past in terms of the tenday moving average, and that would represent a 12 gain from these levels. Im going more toward the investment here. Thats not all. Collins sees more things that he likes here. Check out this version of pbrs daily chart. Looking at the action in the stock here, collins think petrobras is forming a rounding bottom pattern here. This rounding bottom is just now breaking through the ceiling of resistance that could propel the stock into a terrific rebound. Once pbr launches out of the rounding bottom rocking pad, two more important ceilings of resistance, another at 14. 50. Collins believes pbr can blow through these obstacles and the reason is at the top of the chart where you have the two big momentum indicators we follow. The rsi and the sto. These are both different ways of detecting changes in the stocks trajectory ahead of time as well as whether the stock is too overbought or oversold. What are they saying about petrobras . Were seeing what chartists call a bullish divergence. Each making new highs, relative to where theyve been a few weeks ago, theyve taken off. Meanwhile, the stock itself isnt really doing that. Oh, boy, for collins thats an incredibly bullish sign. The fact that the rsi, the relative strength and the stochastics moving higher where the stock is going lower, tells collins and all the other chart watchers that the turn is very likely at hand. You get a bullish indicator, you get them in both, its a major wakeup call to the technical traders and bottom fishers out there. Based on whats happening in this daily chart, he feels they shouldnt have any problem making it above where it is now. Although pbr could break out above 14. 50, were going to make a pbramid. For those of you worried that the run in oil may be overdone and a that pullback in crude could weigh on petrobras, collins says youre really wrong, looking at the wrong place. The correlation doesnt hold up. Take a look at this chart. It shows the action in pbr, those are the candles, okay. And the correlation between pbr and west texas intermediate crude oil. You might think this chart pretty much trades together, right. It shows a strong relationship between the performance of pbr and the price of crude. This black line does not represent the price of west texas crude. It represents the correlation between west texas crude and petrobras. Its all over the map. There are points where the correlation is over 75 , you want to see a line like that if you wanted to see lock step. You also have points where it is negative 75. And now its about 50 . In short, theres surprisingly little correlation between how petrobras trades and how oil trades. There is a milder or even inverse correlation. It just doesnt configure that way. Stop looking at oil, because collins did find something that petrobras has a strong correlation with and its not oil, its right here at the top of the chart, the ewz. The ishares brazil etf. And right now it correlates 98 with the pbr stock. Petrobras trades with brazil, thats why the stock got hammered last month. This suggests that even though oil has had a monster move higher, it doesnt reflect any of that because its been held down by brazilian worries. I thought this was brilliant when i saw it. I said its brazil, its not oil it can roar heres the bottom line, the charts say petrobras is a laggard that could be ready to catch up. This is a Good Oil Company finding crude oil all over the place both on offshore, onshore brazil, and what the stock is levered to, what seems to be making it a bottom is brazil. This, i dont know, is just a really good beer. After the break, ill try to make you more money. Coming up, refiner reversal. One big oil play reported a downside surprise, but stunningly, its stock powered higher. Cramer finds out whats behind the move. Plus, is it time to slide in, or is the slope too slippery . And later, soda wars, the glass was half empty for cocacola today as its earnings shortfall took the fizz out of its stock and its rival, as well. But with pepsico reporting next week, is this your chance to grab some pop . Or could it leave you with an awful aftertaste . Dont miss cramers take. All coming up on mad money. Every day were working to be an Even Better Company and to keep our commitments. And weve made a big commitment to america. Bp supports nearly 250,000 jobs here. Through all of our energy operations, we invest more in the u. S. Than any other place in the world. In fact, weve invested over 55 billion here in the last five years making bp americas Largest Energy investor. Our commitment has never been stronger. Since aflac is helping with his expenses while he cant work, he can focus on his recovery. He doesnt have to worry so much about his mortgage, groceries, or even gas bills. Kick kick. Feel it feel it feel it nice work you got it you got it yes aflacs gonna help take care of his expenses. And us. Were gonna get him back in fighting shape. [ male announcer ] see whats happening behind the scenes at aflac. Com. [ male announcer ] you wait all year for summer. This summer was definitely worth the wait. Summers best event from cadillac. Let summer try and pass you by. Lease this cadillac srx for around 369 per month or purchase for 0 apr for 60 months. Come in now for the best offers of the model year. When a company thats been in a rut reports a bad number and does not go down when it, in fact, goes higher on news thats supposed to be terrible, you know what, that is a fabulous tell, one that indicates a turn around could be at hand. And its exactly what we saw last week when valero, the huge refiner preannounced to the downside. But if you only looked at the stock, you would have thought nothing had happened. Let me give you some context. Last thursday, valero comes out with this hideous update. They expect to earn 91 cents to 1. 01 when the analysts were looking for 1. 29. We get the shortfall and after reading the release i predict the stock will get hammered. There were just a host of negatives, narrow price differential between light and heavy crude, refiners like valero get to capture that differential. Actual gas prices were higher, thats bad for the refining business. Higher Identification Number costs, refiners sometimes have to pay up for the credits and show the epa that theyre blending enough ethanol into the gasoline. They blame turn around and Maintenance Activity in four of their refineries for the weaknesses, as well as seasonal issues. In short, it was bad, it was very bad. And i predicted valero would go down on the preannouncement and i turned out to be wrong. Dead wrong. The stock opened down 82 cents. Once it started trading, the stock shot back up immediately it closed up 1. 32 for the day, 35. 86. Thats a 3. 8 gain. What the heck is going on here . A shortfall is a shortfall is a shortfall, right . I wondered if friday was opposite day and nobody told me. Maybe we have some sort of alternate bizzaro universe and everybody buys stocks on bad news instead of selling them, but no, it was not opposite day and a bizzaro world, i still have a full head of hair. How was i so wrong about valero . Simple, sometimes the shortfall is not a shortfall. Or at least not just a shortfall. The refiners, including valero have been getting beat up since april now. I mean the group practically became the wall streets redheaded stepchild and for good reason. For years american refiners benefitted from the wider than usual spread between west texas and the higher price of brent crude, the global Oil Benchmark that pretty much all of our gasoline is priced off of. Refining is a margin game. Its all what they paid for oil versus what they can charge you for products like gasoline. The spread between brent and west texas crude was wide as it was for years, these Companies Made a bundle. That situation was never going to last forever. Nothing lasts forever. The huge spread was caused by a glut of oil at the big hub in cushing, oklahoma. We had a bottleneck in Pipeline Capacity that was keeping the cost of west texas oil artificially low. In recent months, the spread has been narrowing, the pipe is filled and the fact has caused the refiners to get hammered. The price of west texas crude has been rising faster than brent from 91 a barrel at the end of may, and why isnt anyone else talking about this . To 105 a barrel as of today. And its been crushed the spread and the refiners needed to make all that kind of money which brings me back to valero. When the company gave its interim update last thursday, this stock was already down ten points from its march highs. A lot of people on wall street were shorting the stock because they knew the spread had tightened, valeros numbers would be bad. No matter how grim the outlook is, eventually it gets baked into the share price, sometimes before the news comes out and thats what happened to valero. The company preannounced a heinous number and the stock went higher, which tells me everybody who was going to sell or short valero based on the weakness has already done so. And after the big bad shortfall was out, well, the bulls were free to focus on all the ways which this company can can and does create value internally away from just the gross margin. Sure the spread between west texas and brent crude is tightening and thats not good for american refiners. But if you want to short a stock based on the fact that its tightening, valero is the last one you should pick. They were never ever able to benefit that much as other refiners because the whole reason behind the relative cheapness was this oil was basically landlocked. We didnt have the Pipeline Capacity to take much down to the gulf coast where the major refineries are. And now that the price of west texas crude is rising so rapidly, its the middle of the continent that are going to be most affected. Valero simply wont get hurt as badly as those. Plus, the company has a lot of things going for it internally. A shareholder friendly company. It yields 2. 3 , not insignificant. Second, valero seems to be slowly breaking itself up. In may, the company spun off 80 interest in nearly 2,000 of their gas stations. Management talked about potentially spinning off some of the midstream assets, think pipelines, terminals, rail facilities as a Master Limited partnership by early next year. According to bank of america, a spinoff could be worth 5 to 9 per share of hidden value. Lets go with the 7 midpoint. That would give you a 20 gain right there. Third, valero has been building two big hydro crackers taking advantage of our natural gas liquids prices in this country to make more distillates like diesel and jet fuel. These are going to provide a big boost to the companys cash flow as they get up and running. Plus the stock trading at 6. 4 times next years earnings, 8. 6 longterm growth rate. Thats ridiculously cheap. In difficult circumstances preannounces an ugly number and the stock goes higher, thats a classic tell indicating everybody who was going to sell has sold and it might be time to start buying. I got valero wrong last friday because i assumed the shortfall would crush the stock but itd been crushed enough. This stock is real cheap. I dont blame anyone for wanting to buy it, especially since when it acts this well on horrendous news, what happens if the news actually gets better . How about mike in california. Please, mike . Booyah, jim cramer. Booyah, mike. Caller thank you for your help over the last several years. Youre quite welcome. Caller i read that in 2006 canada began taxing mlps at or near that of other corporations. I also found that the good old usa is evaluating doing the same. How likely is this tax change . And what well, i dont know, i do not know that thats the case. I have not seen that about to happen in america. I do not recommend the canadians because of that particular difference. But i dont i have not seen that legislation nor have i heard anybody else who thinks its going to happen. So im not going to change my view. Lets go to john in oregon, please. John . Caller hey, jimmy, big western oregon upper case booyah to ya. Thats a nice one. Caller thats a nice one. Yeah. Hey, im holding nuvara, that is heckmann, and i want you to tell me its going to start doing really, really good since theyve had the reorganization and joining up with halliburton and everything like that. Can you do that . You know what, i let the facts lets have mr. Heckman on. Now that they did the reorganization, id like to see some earnings momentum. We know from neighbors which is actually somewhat of an analog that things still arent that good. Im not going to get ahead of this one again. I do believe its a longterm hold. But i cant tell you its about to get better right now. Theres nothing in domestic drilling situation that tells me thats going to happen. All right, pinched at the pump, dont get mad, get even. Refiner valero is moving again. Dont move, the lightning round is next. It is time, it is time for the lightning round on cramers mad money. Play until this sound and then the lightning round is over. Are you ready, skeedaddy . Lets start with eric in new york. Eric . Caller booyah skeedaddy. Booyah, chief. Caller all right, im a type i diabetic, whats your thoughts on mankind . Its a speculative stock. Ive not been behind it, ive seen the run it had, congratulations to those who own it. Lets go to john in florida. John . Hi, jim. Jim, a couple of months back, you mentioned a speculative stock exel. Yes. Caller what do you think of it . I think its okay. I like the ones that are doing treatment of cancer work. And this is a spec. And i like it. Lets go to josh in california. Josh . Caller jim, booyah, imd, the question is as follows, given the combination of the refocus into the tablet market and the processes are currently in the wii u, will be in the xbox, the play station, could amd turn around the Balance Sheet . Yeah, ive been recommending it. Buy, buy, buy lets go to mike in florida. Mike . Mike . Caller jim. Mike. Caller booyah from florida state. This is mike. Fsu noles rock. Caller gators stink. Exactly. So its summertime here and everybodys playing video games. So my question is activision and video games stuff. No, i think they should get off their butts and go to work. Its finally doing all right. And you know what, ive been recommending microsoft on the xbox and thats actually been much better. Lets go to juan in florida. Juan . Caller booyah, mr. Cramer. Booyah. Caller my thing is accomplished a great deal through tesla. Goldman put out a really bad note today which basically said even in a bull case it doesnt deserve to trade above the teens. Ive been saying, you know, first i kept you out of tesla for the first few years, that was good, when it started rallying, i liked it, but i said its a cult stock, it remains a cult stock and i dont opine on cult stocks. Lets go to bob in new jersey. Bob . Bob, come on, home state. Caller yes . Hello. Youre up, bob. Caller im up. Yeah, youre on tv right now. Caller booyah, jim. Booyah. Caller your opinion on new york exchange, thousands of shares of it, i sold some at 40, the mid40s. A friend of mine advised me to sell it at 18 and naturally its gone up ever since. Deluxe is a good company, just doesnt have the growth i used to like. Im not going to recommend the stock. I used to recommend it on a yield basis, and im not going there. Michael in florida, please. Michael. Caller this is mike from florida saying booyah to ya mr. Cramer. Weve got a lot of sunshiners. Whats up . Caller hey, ive been surfing the waves down here high and low. Should i continue to surf or go fishing . Expensive stuff, not bad. Not bad. Im willing to go with gigamon. Lets go to ken in wisconsin, please. Ken . Caller jim, a big appleton, wisconsin, booyah to ya. Youre like a paper factory up there. Whats going on . Caller first off, i want to say thank you. Your advice made me money. I love making money ive got a question about Canadian Solar which ironically is a Chinese Company masquerading as canadian. Yes, it is. Yes, it is. Ive got to tell you something, i hate to end the lightning round on this note but i do not know Canadian Solar, which means ive got to come back on it. What can i tell you . And that, ladies and gentlemen, is the conclusion of the lightning round. The lightning round is sponsored by td ameritrade. [ indistinct shouting ] [ male announcer ] time and sales data. Splitsecond stats. [ indistinct shouting ] its so close to the options floor. [ indistinct shouting, bell dinging ]. Youll bust your brain box. All on thinkorswim from td ameritrade. A talking car. But ill tell you what impresses me. A talking train. This ge locomotive can tell you exactly where it is, what its carrying, while using less fuel. Delivering whatever the world needs, when it needs it. After all, whats the point of talking if you dont have something important to say . Could save you fifteen percent or more on car insurance. Yep, Everybody Knows that. Well, did you know some owls arent that wise . Dont forget im having brunch with meghan tomorrow. Who . Meghan, my coworker. Who . Seriously . Youve met her like three times. Who . sighs geico. Fifteen minutes could save you. Well, you know. Has oats that can help lower cholesterol . And it tastes good . Sure does wow. Its the honey, it makes it taste so. Well, would you look at the time. Whats the rush . Be happy. Be healthy. No, not buying it at all. Im talking about cocacolas outlines for a disappointing quarter. Our Second Quarter volume results came in below expectations reflecting ongoing challenging global macroeconomic environment and unusually poor weather conditions in the quarter. Huh . Challenging global macro conditions . Does it suddenly cost as much to buy a can of coke as it does a car . A dishwasher maybe . Sure cocacolas a global company, we all know theres turmoil in the emerging markets, but in china, for example, domestic economy is pretty decent. To buy a Record Number of bmws. Im not hearing a lot of complaints in other Consumer Companies about chinese sales for goods that are a lot more expensive than a can of coke. Far from it. Weather . Do we stop drinking coke if its cooler or rainier in some places . And that didnt hold a lot of water either. Granted i like the company didnt pretend it was a good quarter and accepted that it was disappointed with itself. I expected better from a company that sells one of the least expensive, noncyclical products, a good record of being like the post office where neither rain, snow, heat nor gloom of night would stop their appointed sales. You substitute cool for heat. In short, i expect better from cocacola. Meanwhile, yesterday, pepsico hit an alltime high and i do not expect similar hand wringing in alibi when it reports next week. In fact, what this release of cocacola may verify that pepsico has the better model as some think it makes sense to split it in two with a drink company and snack company. To me the combination frito lay and drinks is what makes pep the standard out here and not cocacola and why the stock is up double what cocacola was up the beginning of the year. The consistency of the models along with the leadership of indra nooyi who has taken pepsico more global has made it the goto name in this space. Evenly valued, very similar priced to earnings multiples and very similar yields. Tomorrow at cnbcs delivering alpha conference, Andrew Rosssorkin will be interviewing a fabulous investor, one i urge you to mimic. Including big stakes in the Fastest Growing snack and beverage company. There have been rumors he favored merging the two companies because he might not have been all that happy with the performance at the time. May i suggest, mr. Peltz, that youd be better off taking a stake in cocacola and suggest they merge in the stake that pepsico already has. Perhaps diversification from the model so dependent on carbonated soda could be as good for cocacola as it clearly is for pepsico. This quarter shows that pepsico is the better because they favored splitting it into two. You dont just want to be just a drink company anymore. Not only because theres a challenging economic environment as cocacola told us this very morning. Mad money is back after the break. Honey, is he too into this car thing . [ mumbling ] definitely the quattro. Honey . Huh . A5. What . [ sighs ] did you Say Something . Did you Say Something . Every day were working to and to keep our commitments. And weve made a big commitment to america. Bp supports nearly 250,000 jobs here. Through all of our energy operations, we invest more in the u. S. Than any other place in the world. In fact, weve invested over 55 billion here in the last five years making bp americas Largest Energy investor. Our commitment has never been stronger. You may not believe it when i tell you that the u. S. Economy is doing better than pretty much anywhere else on earth. Im telling the truth. Heres a great tale, florida. Six years ago when the stock market peaked and the financial crisis was waiting in the wings, floridas Housing Market was the canary in the coal mine. Florida was one of the hardest hit areas in the whole country. Places like miami, many home prices were literally cut in half. Fast forward to today. Floridas witnessing a major turn around with an Unemployment Rate lower than the national average, Housing Market in terrific shape. I bet you wish you bought at least until the Interest Rate spiked. Thats why we want to talk to rick scott, the progrowth, antiregulation republican governor of florida. He had a better sense of how the Sunshine State is doing. Welcome to mad money. Its great to be here. Thank you so much, governor. When are you moving to florida . Well, ive already lived there. I lived in tallahassee, where you live, and it was the Sunshine State. We need you back. Well, thank you. One day i still i go to florida every single year. Good. Lets before we get to the business side, your states been in the white hot spotlight because of nothing to do with Florida Business which is the George Zimmerman trial. And i know that the Service Business matters, tourism matters, this was considered something to be people are unhappy about with the outcome. How do you deal with it as governor . First thing you do is mourn for the family. They lost a 17yearold son. I met with the parents. I introduced them to law enforcement. I told them about this special prosecutor. You know, you mourn for them. I want to thank the jurors, six women, but as the Martin Family said, they accepted the verdict. And a Service Economy like florida, its just something that is separate from that . People will not link the two. Tourism wont go down . We are having record tourism, 91 million tourists last year, two record years in a row. I think were about 4 up this year. So were headed in the right direction. 42year low on our crime rate, i want to make sure the state stays safe. Get more tourists to our state, sell more homes, get people jobs. Lets talk about housing. You saw it coming. Your state got hit very hard. How sustainable is the housing recovery in florida given the fact that we know that Mortgage Rates just jumped a full well, 100 basis points. Well, i think heres the reason why it is. Housing prices have come back about 30 in two years. Okay. Were the gateway to latin america. All right. And latin america is growing. Got the expansion of the panama canal, weve got 15 sea ports in our state. Do you have enough money to do that dredging today . Its not clear, are you up to the challenge of 2014 . We put up the money. The federal government didnt put up the money so we did, 78 million. Okay. The tunnels almost done. The dredging will be done by the end of next year. Okay. Before the panama canal, thats already 25,000 jobs, and should be another 33,000 jobs. So the Housing Markets coming back because of jobs and, plus, people want to live there. How many of those houses bought are for cash . I think over 50 . That means Mortgage Rates may not be as much of a factor in florida as it is in the rest of the country . Yeah, probably not. I think theyll stay up because business is coming back. Moving the Corporate Office yeah, i wanted to talk about how that happened. How many of these houses are owned by hedge funds and how much by individuals . I dont know how many. But in some markets, theres a lot they purchased a lot of them and theyre going to stay there. Dont we have to worry they dump them if rates go high . I dont think theyre going to dump them. Theyre there for the long run if they need to be. This is a great state. No income tax, right to work state, low business tax. Weve got the panama canal expansion, the latin american economies, all of this going for us. Hertz moved to your state. Why . Its a nice place to live. Great workforce, no income tax, right to work state. Were lower cost than new jersey. All right. Weve got a low business tax and were the tourism capital of the world. Well, lets talk about the tourism capital, that means you need a lot of service jobs. There are a lot of people on a lot of people who are very worried about the Affordable Care act. I know you know Health Care Better than any other governor. Its bad. Do we not have to worry that parttime is the new fulltime because its just much easier to not have to pay the 50 . Absolutely. Whats going to happen . I think obama care is a disaster for our country. But you are on record saying youre willing to go with the new medicaid. Well, lets take the pieces of it. All right. In 2009, i organized a group called conservatives for patients rights. Theres a better way to fix this. We need to have more competition, let people buy the insurance they want to buy, give people the same tax breaks as employees and reward people for eating right, exercising, that would be the right thing. This is going to hurt jobs, hurt your access to health care, all these things. Well, it is going to do that, but you dont think people are going to cut back on hiring . Absolutely, theyre going to put people on parttime to get out. Well have more parttime jobs, unfortunately. If i go through, look at new york, other than a couple of places in brooklyn. If i were to fly over florida, commercial real estate isnt making a comeback. Its behind residential. Residentials coming back first. I was hoping you would tell me its coming. Your construction has been a huge creator of jobs. Well, were a big infrastructure state. Ive got the biggest transportation budget in the history of the state, 8. 5 billion. Were building roads all around the state. So commercials coming back but not as fast as residential. Its about a year, year and a half behind. So if you tried to figure out what would cause commercial to get better, do you need more Government Spending . Why arent companies why arent companies coming down and just building with the Growth Market that you have . Building Office Towers . You know what i think happened, people got more conservative. I think they thats what we think. I think people got more conservative. I was at a Housing Development the other day, doing very well, theyre going to sell 1,000 homes this year. They said they were talking about some franchises. They said four years ago they were lined up to buy. Now theyre waiting for the the houses to sell. So people are just being more cautious. Right, they dont borrow as much money. Theyre being more cautious. But its happening. You can see everybodys getting busier and our state housings coming back. Commercials slower. Okay. Well, governor, i know that the state has made a major comeback and i believe a lot of it is your policies and i want to congratulate you for the turn. I went to florida, it was an opportunity area, it wasnt for a while, i think its coming back. Rick scott, thank you. [ male announcer ] you wait all year for summer. This summer was definitely worth the wait. Summers best event from cadillac. Let summer try and pass you by. Lease this allnew cadillac ats for around 299 per month or purchase for 0 apr for 60 months. Come in now for the best offers of the model year. A friend under water is something completely different. I met a turtle friend today so, you dont get that very often. It seemed like it was more than happy to have us in his home. So beautiful. Avo more travel. More options. More personal. Whatever youre looking for expedia has more ways to help you find yours. Dont forget to watch my interview tomorrow. He happens to be the u. S. Attorney for the Southern District of new york. I always like to say theres a bull market somewhere, and i promise to try to find it for you here on mad money. Im jim cramer and ill see you tomorrow. Bradley birkenfeld spent most of the last decade living in switzerland helping wealthy americans hide their money. Youll hear how he did it and how he touched off an investigation that would shake 300 years of banking secrecy to the foundation of its underground vaults. How unusual is it for a swiss banker to come forward and say, this is how it works . Its never happened before in history. Im the first one. [watch ticking] many of the deals that helped create the current financial crisis would have been illegal during most of the 20th century, in violation am