The markets may still be fretting over tariffs, trade and Turkey, but Jim Cramer told his Mad Money viewers Tuesday that he's more worried about a shift in consumer spending that no one seems to be talking about.
If the stock movements in Home Depot (HD) - Get Report and Advanced Auto Parts (AAP) - Get Report are to be believed, today's consumers are spending their money in different ways than they have in the past. Owning a home and buying a new cars appears to be rapidly going out of fashion.
Cramer said Home Depot reported a solid quarter, but saw shares slide half a percent on the company's grim outlook. The cautious guidance was reason for concern, Cramer said, especially after real estate services company RedFin (RDFN) - Get Report , also told us the home sales are slowing.
Housing appears to be hitting a wall, even though the economy and job growth is booming.
Then there's the auto sector. We already know from CarMax (KMX) - Get Report that new car sales are falling, while used cars are booming. This coincides with the 7.7% rise in Advanced Auto Parts. Consumers are keeping their cars longer and spending money on parts to keep them on the road.
Cramer said he's not sounding the alarm quite yet, as the economy can survive and the market can rally, at least for awhile, without the homebuilders and automakers. But eventually, these shifting trends will be cause for concern.
Cramer and the AAP team have an update on their bullpen: Palo Alto Networks (PANW) - Get Report , Disney (DIS) - Get Report and more. 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.
Moves in the Drugstore Space
When the Federal Trade Commission blocked the merger between Walgreens Boots Alliance (WBA) - Get Report and Rite-Aid (RAD) - Get Report , they inadvertently laid the groundwork for less competition in the drugstore space, Cramer told viewers, leaving CVS Health (CVS) - Get Report to dominate.
Walgreens and Rite-Aid initially agreed to merge back in 2015, Cramer explained. But after regulators balked at the deal over antitrust concerns, Rite-Aid chose to pursue the merger, eventually spending two years on a deal that ultimately gave Walgreens just 1,932 locations for $4.4 billion. During those two years, business at Rite-Aid only worsened, leaving it far weaker than it was originally.
Rite-Aid was quick to find another suitor however, agreeing to be sold to Albertsons in February.
But in the meantime, rival CVS Health as entered into a merger agreement of its own, acquiring Aetna (AET) , a deal that if approved, would create an even bigger colossus in the industry.
Executive Decision: Tapestry
For his "Executive Decision" segment, Cramer sat down with Victor Luis, CEO of accessory maker Tapestry (TPR) - Get Report , formerly known as Coach, which today posted a three-cents-a-share earnings beat that sent shares up a quick 12% by the close.
Luis said that the acquisition of Kate Spade and Stuart Weitzman have been big drivers for growth at Tapestry, as has sales in China, where Coach has risen from $50 million in sales to over $600 million today. The men's market is another huge opportunity for Tapestry. Luis said "men have discovered bags" and men could become the next billion-dollar-market for the company.
When asked about the other side of China, mainly tariffs and trade, Luis reassured investors that Tapestry has a global supply chain and China only represents about 3% to 4% of their product line. He doesn't expect and immediate risks from tariffs.
Finally, when asked about slowing growth at Stuart Weitzman, Luis acknowledged some execution issues at the brand and said they expect a return to growth later this year.
Off the Charts
In the "Off The Charts" segment, Cramer checked in with colleague Carley Garner over the direction of the bond markets in a rising-interest-rate environment.
Garner first looked at a weekly chart of 10-year Treasury futures, along with the commitment of traders, or COT, report. She noted that large speculators have become insanely negative on bonds, more bearish than they've ever been before. Seemingly everyone is betting that prices will fall and rates will rise, leading to what Cramer called the perfect "overcrowded" setup for a rebound.
Garner next looked at the historical seasonal patterns for bonds, noting that late July through October is when bond prices tend to rally, a pattern that is difficult to break.
While interest rates have risen from their lows, Cramer said they're still historically very low, and U.S. Treasuries are still practically the only game in town. As investors flee Turkey, U.S. bonds are likely where they'll go.
Cramer said those betting against Tesla based on CEO Elon Musk's tweets last week simply don't understand how the world works. The Securities and Exchange Commission may indeed be looking into Musk's tweets about taking the company private, but then again, the SEC looks into everything and they're not in the business of taking down CEOs. It took nearly five years to get rid of Elizabeth Holmes, CEO of Theranos.
Cramer likened the short sellers in Tesla to Wile E. Coyote of Roadrunner fame. He said they just keep trying and trying to catch Musk, but they never can.
Over on Real Money, Cramer says any potential inquiry into Tesla would take a long time. Get more of his insights with a free trial subscription to Real Money.
In the Lightning Round, Cramer was bullish on Johnson & Johnson (JNJ) - Get Report , Aspen Technology (AZPN) - Get Report , 3D Systems (DDD) - Get Report , HP (HPQ) - Get Report , Southwest Airlines (LUV) - Get Report and United Continental (UAL) - Get Report .
Cramer was bearish on Scotts Miracle-Gro (SMG) - Get Report , Stratasys (SSYS) - Get Report , Laredo Petroleum (LPI) - Get Report , JetBlue Airways (JBLU) - Get Report , Tesaro (TSRO) - Get Report and Lumber Liquidators (LL) - Get Report .
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At the time of publication, Cramer's Action Alerts PLUS had no position in the stocks mentioned.