Cramer's 'Mad Money' Recap: Oct. 29

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"Interest rate cuts do matter," Jim Cramer told the viewers of his "Mad Money" TV show.

He said that no matter what the nay-sayers may say, rates cuts are exactly what the markets need.

Cramer said there are only two types of people who feel interest rate cuts are insignificant: the academics, who are grossly behind the curve, and those who short the market and profit handsomely from a panicky market.

These people, he said, have no sense of history and don't remember 2003, when extremely low interest rates supercharged the U.S. economy out of a recession and crisis.

The Federal Reserve is on board at last, said Cramer, although it came "a year too late."

He said the Fed's statement that it's no longer worried about inflation should give the Chinese and European central banks the fuel they need to follow suit and further juice up the U.S. economy.

Cramer said the rally in stocks will be sustainable if the rest of the world cuts rates. If they don't, all bets are off.

Cramer noted today's rate cut means individuals and businesses will find it cheaper to borrow money because the federal funds rate is tied to the banks' prime rate.

The lower rates also allow the banks to make more money on what they lend. And with savings and money markets earning less, more money will eventually flow back into stocks.

Cramer said it would also be huge news for the housing market and the economy if the federal government were to buy 3 million residential mortgages.

The move, part of his plan for fixing the economy, would finally allow the housing market to stabilize and stop the relentless home price depreciation spiral, he said.

Cramer: Retailers That Worry Me

Safe Dividends

Cramer's made it no secret that he's a fan of high-yielding dividend stocks with his recent recommendations of Nucor ( NUE), Verizon ( VZ), BB&T ( BBT) and Watsco ( WSO).

But he warned that all dividends are not created equal.

Cramer said there are several things investors must consider when evaluating the health of a company's dividend: the company's earnings, its cash flow and its balance sheet, and the consistency in which it pays its dividends over time.`

Stockpickr

Cramer used this criteria to analyze the recent dividend boosts by Verizon and building products maker Masco ( MAS).

Verizon's 46-cent-a share dividend is higher than its earnings. Cramer generally looks for earnings to exceed twice that of its dividend. In this case, Verizon's earnings doesn't meet that standard but he says the company gets a reprieve because its cash flow is 60% higher than its earnings. The company's balance sheet is also quite healthy, with much of its debt rated "A" or better.

Masco is a different story. While the company does have a 50-year history of paying its dividend, its recent boost of 23.5 cents a share does not even reach the company's projected quarterly earnings.

Cramer also said the company's free cash flow also does not seem sustainable, and while it has $1 billion of cash, its $4 billion worth of debt also makes it suspect.

Banking on Wind Power

Cramer welcomed Timothy Wallace, chairman, president and CEO of Trinity Industries ( TRN), to the show to see if this railcar and wind tower maker is still on track for a great year.

BankingMyWay

Wallace said that business at Trinity is still going strong, despite the company's recent decision to suspend its earnings guidance. He said the decision to suspend guidance was made because the company could not reliably forecast its long-term earnings and not because of any immediate earnings shortfall.

Wallace said the demand for Trinity's railcar and construction products are seeing some gaps, but the company's barge and wind tower businesses are solid.

When pressed about wind power, Wallace said the company has not seen order cancellations, but has seen some delays in orders due to credit and financing concerns.

Cramer reserved judgement on Trinity, as he expressed concerns that the company may suffer from both financing issues and lower oil prices. However, he said that he doesn't expect big losses ahead for the company.

Am I Diversified?

Cramer played "Am I Diversified" with callers to see if their portfolios have what it takes. The first caller's portfolio included: Kohl's ( KSS), Harley Davidson ( HOG), Dish Network ( DISH), BCE ( BCE) and Microsoft ( MSFT).

Cramer called this non-traditional portfolio diversified, but advised selling Harley, Dish and BCE.

The second caller's top holdings included Disney ( DIS), ExxonMobil ( XOM), Johnson & Johnson ( JNJ), 3M ( MMM) and Norfolk Southern ( NSC).

Cramer said this portfolio was a "well played game" and was the greatest portfolio he's seen in a long time.

The third caller had Bank of America ( BAC), Duke Energy ( DUK), Kinder Morgan Partners ( KMP), Eli Lily ( LLY) and Unilever ( UL) as their top five stocks.

Cramer said this portfolio had too many energy stocks with Kinder Morgan and Duke, and advised selling one in favor of transport stock.

Lightning Round

Cramer was bullish on Cubist Pharmaceuticals ( CBST), Duke Energy ( DUK) and Telefonica ( TEF).

He was bearish on The Bank of Ireland ( IRE), MDU Resources Group ( MDU)and Allied Capital ( ALD).

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At the time of publication, Cramer was long Johnson & Johnson and Unilever.

Jim Cramer, host of the CNBC television program "Mad Money," is a Markets Commentator for TheStreet.com, Inc., and CNBC, and a director and co-founder of TheStreet.com. All opinions expressed by Mr. Cramer on "Mad Money" are his own and do not reflect the opinions of TheStreet.com or its affiliates, or CNBC, NBC UNIVERSAL or their parent company or affiliates. Mr. Cramer's opinions are based upon information he considers to be reliable, but neither TheStreet.com, nor CNBC, nor either of their affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Mr. Cramer's statements are based on his opinions at the time statements are made, and are subject to change without notice. No part of Mr. Cramer's compensation from CNBC or TheStreet.com is related to the specific opinions expressed by him on "Mad Money."

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Some of the stocks mentioned by Mr. Cramer on "Mad Money" are held in Mr. Cramer's Action Alerts PLUS Portfolio. When that is the case, appropriate disclosure is made on the program and in the "Mad Money" recap available on TheStreet.com. The Action Alerts PLUS Portfolio contains all of Mr. Cramer's personal investments in publicly-traded equity securities only, and does not include any mutual fund holdings or other institutionally managed assets, private equity investments, or his holdings in TheStreet.com, Inc. Since March 2005, the Action Alerts PLUS Portfolio has been held by a Trust, the realized profits from which have been pledged to charity. Mr. Cramer retains full investment discretion with respect to all securities contained in the Trust. Mr. Cramer is subject to certain trading restrictions, and must hold all securities in the Action Alerts PLUS Portfolio for at least one month, and is not permitted to buy or sell any security he has spoken about on television or on his radio program for five days following the broadcast.

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