There are two stock universes, Jim Cramer told his Mad Money viewers Wednesday. In one universe, the economy is booming. In the other, the economy is faltering. Which universe should you belong to? Depends on your outlook on tariffs.
If you're in the bull camp, you're taking your cues from retailers like Lowe's (LOW) - Get Report and Target (TGT) - Get Report , which posted strong earnings that confirmed those of Walmart (WMT) - Get Report and Home Depot (HD) - Get Report . At all of these retailers, the consumer is alive and well and only getting stronger.
But if you're in the bear camp, the only thing you can see are tariffs and an inverted yield curve. You can't fathom that the only reason bonds are inverted is because U.S. are the best in the world at the moment and investors, particularly from Europe, are buying them like crazy, and depressing yields.
The bears also forget that the pain from tariffs will likely to be short-term until a deal can be reached. So far, tariffs have hurt China more than they've hurt the U.S., which makes now the perfect time to wage such a battle to level the playing field once and for all, Cramer said.
Cramer said he's siding with the bulls, as these recession fears are pretty groundless. Panic is never an investing strategy, he reminded viewers, and you can't make good investments based on fear.
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Executive Decision: Paycom Software
For his "Executive Decision" segment, Cramer spoke with Chad Richison, founder and CEO of Paycom Software (PAYC) - Get Report , the cloud-based human capital management software provider with a stock that's up over 1,600% since its 2014 IPO.
Richison explained that Paycom helps companies and employees better interact with each other in our new digital world. What was once multiple systems is now a single database that employees can manage directly, eliminating the need for their HR department to make updates manually. Using Paycom, HR departments can get back to the business of planning and running their business instead of processing day-to-day updates.
Paycom's platform also manages things like performance metrics and perpetual learning initiatives, helping to ensure employees are as efficient at their job as possible.
When asked about the economy, Richison said he's not seeing any deterioration of the economy from their client base.
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Executive Decision: Equinix
Meyers said the underlying demand for data centers remains strong as more and more companies are adopting the cloud as their primary infrastructure. Even for large companies, which typically have their own infrastructure, much of that infrastructure is moving to facilities like Equinix. The hybrid-cloud model, which utilizes both public and private clouds working together, is gaining momentum.
When asked about the economic environment, Meyers said they're not seeing any impact from tariffs, trade or the yield curve. He said there is strength in all segments, especially in retail.
Top Cloud Computing Stocks
Too many people are missing out on the great gains in the cloud computing stocks, Cramer told viewers. That's why he listed 10 of his favorite companies in this growing sector.
Cramer started off with Splunk (SPLK) - Get Report , which helps provide analytics for machine-generated data. He was a fan of Alteryx (AYX) - Get Report , another data processing and cloud analytics provider that he recently featured on the show. ServiceNow (NOW) - Get Report and Twilio (TWLO) - Get Report also are among Cramer's favorites. Twilio is even an Action Alerts PLUS holding.
Atlassian (TEAM) - Get Report helps software companies develop software, while HubSpot (HUBS) - Get Report offers customer relations software. Cramer said both of these stocks have run up big and should only be bought on weakness.
Continuing down the list was network monitoring company, New Relic (NEWR) - Get Report , Five9 (FIVN) - Get Report , Ring Central (RING) - Get Report , ZenDesk (ZEN) - Get Report and Appian (APPN) - Get Report , a company that helps developers build applications with less coding.
Cramer said all of these are great stocks, even during a recession. The only challenge is not buying them at their highs.
Explaining Those Big Moves
In his "No-Huddle Offense" segment, Cramer explained how a stock like Target could soar 20% in a single day, how Lowe's could pop 10% in a single day and how Nvidia (NVDA) - Get Report can tack on over 14% over the past week.
Cramer said massive moves like these happen when short sellers make huge bets that go in the other direction. Last quarter, the narrative was that Home Depot (HD) - Get Report was on fire while Lowe's floundered. So naturally, when Home Depot reported strong results this quarter, the assumption was Lowe's must still be losing. It turns out, this was not the case.
As for Target, investors assumed tariffs would take a big bite out of profits. But Target also blew away the earnings, even with tariffs. Investors also underestimated Nvidia, a stock Cramer said has a lot more room to run.
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At the time of publication, Cramer's Action Alerts PLUS had a position in HD, TWLO, SLB, NVDA.