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Stocks vs. the Economy: Cramer's 'Mad Money' Recap (Tuesday  9/15/20)

Jim Cramer asks about more stimulus for the economy. Without help, too many small businesses can't wait for a vaccine, and social distancing is deadly to retail.
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The stock market doesn't represent the real economy, Jim Cramer reminded his Mad Money viewers Tuesday. That's why while the stock market is hitting new highs, vast swaths of the real economy are in dire need of additional stimulus.

If you only look at our economy through the lens of the stock market, you'll only see strong earnings from Adobe Systems  (ADBE)  sending shares up 2.1% and blowout earnings from FedEx  (FDX)  signaling that commerce is strong. It's easy to look at data like these and think that our economy is strong and COVID-19 is in the rearview mirror.

But underneath our nation's largest publicly traded companies there is a lot of rot, Cramer said. Nearly two-thirds of our economy is service based, Cramer told viewers, and that means that some 15 million retail and restaurant jobs are at risk as social distancing makes small business unprofitable.

Small businesses don't trade on Wall Street, so they're often out of sight of lawmakers. But the fact remains that until we have a vaccine, social distancing and other pandemic restrictions will strangle many small businesses -- and we won't see the impacts until the banks start seeing loans default. By then, it's already too late.

Cramer and the AAP team are looking at everything from earnings and tariffs to the Federal Reserve. Find out what they're telling their investment club members and get in on the conversation with a free trial subscription to Action Alerts Plus.

Don’t miss Cramer’s best, every day, with fast, actionable strategies: StreetLightning. Today: Cramer has some thoughts on Camping World  (CWH) .

Executive Decision: Union Pacific

In his first "Executive Decision" segment, Cramer spoke with Lance Fritz, chairman, president and CEO of railroad operator Union Pacific  (UNP) . Shares on Union Pacific are up 41% over the past six months, including 7% this week after the company reported another strong quarter.

Fritz started off by saying that Union Pacific is celebrating its 150th anniversary as a publicly traded company on the New York Stock Exchange. Not many companies can boast about that kind of legacy and commitment to their shareholders and employees.

Fritz added that their continued strong results come from operating their railroad for maximum efficiency. They are constantly improving and reducing costs, and lower costs open up new opportunities and new markets that rivals cannot match.

When asked about their business, Fritz explained that Union Pacific is seeing strength in several areas, including e-commerce parcels, intermodal shipments, and chemicals and plastics. They continue to see weakness in energy, mainly oil, gas and coal-related shipments.

Fritz was proud to detail their commitment to double the number of women in their organization by 2020. He said railroading has traditionally not been an industry that attracted many women, but they aim to change that. He also touted the company's commitment to the environment. Trains are far more efficient than trucks and anyone who cares about their carbon footprint should be shipping via rail, he said.

On Real Money, Cramer keys in on the companies and CEOs he knows best. Get more of his insights with a free trial subscription to Real Money.

Executive Decision: Lennar

For his second "Executive Decision" segment, Cramer also spoke with Stuart Miller, executive chairman of homebuilder Lennar  (LEN) , which saw its shares plunge 3.9% despite a better-than-expected quarter that included strong guidance for the rest of 2020.

Miller said there's no doubt that COVID-19 has changed the home market and has caused a recalibration of the industry. Consumers are looking for homes that meet today's needs, and that includes floor plans with room for home offices, home gyms and even home schools for their kids. All of those spaces are made possible by smart technology like wifi throughout the home, without dead spots.

Lennar continues to focus on their strategy of driving gross margins and cash flow, Miller said. That's how they've been able to deleverage their balance sheet and reduce their debt by $2.8 billion so far.

When asked why the home builders are building a ton of new homes to meet surging demand, Miller said everyone learned their lessons in 2008, and both lenders and builders are proceeding with caution. He said Lennar will always take a measured approach to production and sales to ensure they never get ahead of themselves.

Off the Charts

In the "Off The Charts" segment, Cramer checked in with colleague Bob Lang for a technical read on three hot stocks: D.R. Horton  (DHI) , Caterpillar  (CAT)  and home furnishings retailer RH  (RH) .

Lang said he liked D.R. Horton the best of all the home builders, as the stock just rebounded off of its 50-day moving average with a strong relative strength indicator (RSI). Lang felt the next stop for Horton will be in the mid-$80s.

Lang also liked the strength in RH. The stock continues to run higher with few pullbacks and chances to buy. The RSI is signaling the stock is overbought, but Lang felt the stock could stay in overbought territory for a while before the stock needs to consolidate its gains.

Finally, Lang felt that Caterpillar was a gorgeous chart with higher highs and higher lows and a bullish crossover in the MACD momentum indicator. Lang felt the stock was a buy if it falls back to its 10-day moving average.

Cheap Today, Cheaper Tomorrow?

In his No-Huddle Offense segment, Cramer reminded viewers that a cheap stock today can still get cheaper tomorrow. Just because a stock looks cheap, it doesn't mean it should be bought.

Case in point: the banks and the oils, two sectors that can't seem to find their footing. Cramer said he sold shares of Citigroup  (C)  for his charitable trust, Action Alerts PLUS,  because even the bank's bountiful dividend yield isn't enough to shield it from continued losses. It doesn't matter if you're considering Citigroup or First Horizon National  (FHN)  or Wells Fargo  (WFC) , nothing appears to be safe.

Then there are the oil stocks. Cramer said the removal of Exxon Mobil  (XOM)  from the S&P 500 isn't getting enough attention. Exxon used to be the bellwether stock that everyone thought was safe to own. Today, the stock isn't important enough to include in the S&P. From oils to pipelines to natural gas, Cramer said he just can't think of any reason to own these stocks.

Lightning Round

Here's what Jim Cramer had to say about some of the stocks that callers offered up during the Mad Money Lightning Round Tuesday evening:

Jumia Technologies  (JMIA) : "I like Amazon  (AMZN)  and Alibaba  (BABA) , and even Mercadolibre  (MELI) . Let's stick with those. "

Eastman Kodak  (KODK) : "I don't like Kodak. Something doesn't smell right to me."

Zynga  (ZNGA) : "This tidal wave is sweeping up everybody."

Altria  (MO) : "I don't recommend any tobacco stocks."

GoPro  (GPRO) : "This is a commodity. I have nothing good to say about it. Sorry."

Rackspace Technology  (RXT) : "I've got so many good tech stocks, I'm sticking with those."

Workhorse Group  (WKHS) : "This is part of the EV thesis, but it doesn't have what I really want, which is earnings."

Buckle  (BKE) : "I don't like apparel and if I did, I'd want PVH Corp.  (PVH)  or Ralph Lauren  (RL) ."

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At the time of publication, Cramer's Action Alerts PLUS had a position in AMZN.