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Where is all the money going? That was the question Jim Cramer posited to his Mad Money viewers Wednesday, after Macy's (M) - Get Report reported abysmal earnings that sent shares plunging 14%. Consumers should be flush with cash, Cramer continued, as employment is improving and gas and heating costs remain low. Find out where those extra consumer dollars are going, and you'll find profits.
The problems in the retail industry extend far beyond just Macy's, as American consumers are changing their shopping habits right before our eyes. Gone are day-long trips to the mall, replaced by a few taps on our smartphones. That means that Amazon.com (AMZN) - Get Report will be the retailer to buy for the foreseeable future.
Consumers are also not spending on things like jewelry and apparel right now; they're busy spending to fix up their homes, which is good news for the likes of Home Depot (HD) - Get Report . Americans also continue to spend on mini-vacations like cruises and theme parks, making those stocks a buy as well.
This shift to in consumer behavior is happening at lightning speed, Cramer concluded, and unfortunately, that's really bad news for mall-based retailers like Macy's.
Executive Decision: Niraj Shah
For his "Executive Decision" segment, Cramer spoke with Niraj Shah, co-chairman, CEO and co-founder of Wayfair (W) - Get Report , the online home goods retailer that has seen its shares surge 109% for the year despite nearly 50% of its shares currently being sold short.
Shah said that Wayfair now has 4.6 million customers and sales were up 90% in their most recent quarter. Better still, repeat customers continue to grow, and Shah said that's the best sign that customers value what you're offering.
Cramer wanted to know how Wayfair can compete with the likes of Amazon, and Shah explained that home goods and furnishings aren't bought with a simple keyword search. Wayfair excels in visual browsing with environmental photos, he said, so customers can see how the item will look in their home.
When asked about Wayfair's exposure to flooring tainted with formaldehyde, Shah said that they sold just 10 orders before the products were recalled and there is currently zero exposure.
Cramer added that it's important for investors to know both the bull and the bear case for Wayfair.
China: The Force of Consumption
The Chinese economy is changing, Cramer told viewers, but not all U.S. companies will be losers, there are still plenty that can be winners.
Sure, the things that the old China needed, mainly steel, coal and aluminum, are now in decline. There just isn't as much demand for the things made by United Technologies , Caterpillar (CAT) - Get Report and Cummins (CMI) - Get Report .
But there is a lot of demand for Apple (AAPL) - Get Report products in China, and that's why Cramer owns Apple for his charitable trust, Action Alerts PLUS. There's also high demand for Nike (NKE) - Get Report and Starbucks (SBUX) - Get Report in China, as the Chinese consumer is apparently alive and well.
Cramer said he thinks that the U.S. will ultimately be a winner in the new China, because what's good for Nike and Starbucks today could ultimately be great for the likes of Home Depot, CVS Health (CVS) - Get Report and countless other U.S. companies tomorrow.
Executive Decision: Anders Gustafsson
In his second "Executive Decision" segment, Cramer sat down with Anders Gustafsson, CEO of Zebra Technologies (ZBRA) - Get Report , the printing and barcode company that beat earnings by 16 cents a share yesterday only to see shares fall by 8.7% on weak guidance ahead.
Gustafsson admitted that the integration of Motorola Solutions, which Zebra acquired, is proving to be more complex than initially anticipated and has incurred additional costs, but the $150 million in synergies and the 4% to 5% revenue growth in 2016 that Zebra forecasted for the combined company remains intact.
Ultimately, Gustafsson said he feels the markets will "come around" to the Zebra story, where the company remains a market leader in three categories with little competition.
Gustafsson also noted that Zebra continues to clean up its balance sheet, paying off $150 million in debt this year, $300 million next year and an estimated $650 million in the two years following.
Cramer said he can't understand why shares of Zebra trade at just 12-times earnings, especially since by this time next year, the integration issues will be behind them.
In the Lightning Round, Cramer was bullish on Berkshire Hathaway (BRK.B) - Get Report , Delta Air Lines (DAL) - Get Report , Southwest Airlines (LUV) - Get Report and Synchrony Financial (SYF) - Get Report .
Am I Diversified?
In the "Am I Diversified" segment, Cramer spoke with callers and responded to tweets sent via Twitter to @JimCramer to see if investors' portfolios have what it takes for today's markets. The first portfolio included Apple, Intel (INTC) - Get Report , Twitter (TWTR) - Get Report , Sonic (SONC) and AT&T (T) - Get Report .
Cramer said this portfolio cannot have Apple, Intel and Twitter, so he advised keeping Apple and adding Bristol-Myers Squibb (BMY) - Get Report and Raytheon (RTN) - Get Report to be properly diversified.
Cramer said this portfolio can't have both Apple and Microsoft, and recommended swapping Bristol-Myers for Microsoft.
Cramer said this portfolio works and was well-played.
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At the time of publication, Cramer's Action Alerts PLUS had a position in AAPL, COST, ETP and TWTR.