Cramer's 'Mad Money' Recap: USA On, China Off (Final)

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(Story updated to add Cramer's Lightning Round picks, his interview with the CEO of Western Gas Partners and his concluding remarks on sticking with Lions Gate Entertainment.)

NEW YORK ( TheStreet) -- With the Chinese economy slow, it's time to buy American, Jim Cramer told his "Mad Money" TV show viewers Tuesday.

He said the stock market is no longer following China's every whim, but rather solid growth right here at home.

Cramer said the "USA on, China off" sentiments could clearly be seen in today's trading action. With the Chinese economy still slowing, stocks like BHP Billiton ( BHP), the Australian mining company that supplies China with tons of coal, saw its shares slump, taking mining equipment maker Joy Global ( JOY) down with it. Steelmaker Nucor ( NUE) also saw its shares shed $1 a share today. Likewise with engine maker Cummins ( CMI), which also has Chinese exposure.

Meanwhile here at home, Cramer said regional banks like SunTrust Banks ( STI) or banking giant Wells Fargo ( WFC), saw no such decline. Cramer said American restaurants like Panera Bread ( PNRA) and Darden Restaurants ( DRI) saw shares rally nicely today.

Cramer was also still bullish on the home improvement stocks, mainly Home Depot ( HD) and rival Lowes ( LOW), as well as American retailers like Ross Stores ( ROST) and Amazon.com ( AMZN).

Cramer said with U.S. hiring on the rise, along with commercial construction and the rebuilding of U.S. company inventories, the USA trade is one that will likely be with us for some time to come.

Off the Charts

In this segment, Cramer went head to head with colleague Mark Sebastian over the chart of CBOE Volatility Index ( VIX), more commonly known as "the VIX." The VIX is often seen as a fear index for the markets, denoting investor confidence. The VIX currently trades at $15.58, well below its historic average of $20. But what's in an average? Cramer said it depends on the context.

Sebastian looked at the VIX over various periods of time. Between 1992 and 1997, a period of market growth, the VIX hovered tightly around $15, only breaking $20 five times over the entire period. But in 1997, the VIX began to build and between 1998 and 2003, the index saw constant volatility as the markets endured the dot-com crash and the Enron bankruptcy. During this period, a spike in the VIX to $40 was not uncommon.

But the Vix again settled to $15 between 2003 and 2008, as the markets once again enjoyed a period of growth and prosperity. Only with the financial panic of 2008, did the VIX again begin to spike, this time upwards of $70 during the markets' darkest hours. According to Sebastian's assessment, the VIX moves in stages averaging around five years. Our latest period of volatility, from 2008 through 2012, is nearing a close, and we should once again enjoy several years of stability and growth.

Cramer concurred.

Yield and Growth Play

In the "Executive Decision" segment, Cramer spoke with Joseph Carrabba, chairman, president and CEO of Cliffs Natural Resources ( CLF), a mining company that recently raised its dividend to 3.5% and left its growth outlook unchanged, despite bearish comments from its rivals regarding slowing growth in China.

Carrabba said that he's still bullish on the outlook for Cliffs Natural Resources, which is why the company decided to give back some of its cash to shareholders by raising its dividend. He said while things are indeed slowing in China, the coal market remains at 680 million tons a year. Carrabba said even single-digit growth in a market that large provides for a healthy coal industry.

Where Cliffs differs from its rival however is in its diversification. Carrabba said that Cliffs operates where the markets are, not just where the mines are located. He said that allows the company to build a great client base all over the world and gives it the ability to shift recources where needed.

When asked where Cliffs prefers to do business, Carrabba citied its $5 billion investment in Canada. He said that Canada has a proactive government that not only likes mining operations but also mines its resources in a responsible manner.

Turning to emerging markets, Carrabba said "the genie is out of the bottle" in emerging markets, with people excited about the wealth they're creating and about having a better lifestyle. Carrabba said once people experience nicer things, they want to stick with them, and many of those nice things rely on steel.

Cramer said that investors looking for yield and growth, as well as exposure to both China and the red-hot U.S. market, need to consider Cliffs Natural Resources.

Third-Party Deals

In his second "Executive Decision" segment, Cramer sat down with Don Sinclair, president and CEO of Western Gas Partners ( WES), an oil and natural gas master limited partnership that offers both a 14% growth rate and a 4% dividend yield.

Sinclair explained that 70% of Western's gross margins come from its fee-based businesses that do not rely on the price of the underlying commodity flowing through their pipelines. Of the remaining 30%, all but 5% is hedged to prevent downside risk and keep earnings as stable as possible.

Turning to the company's growth, Sinclair said that Western expands both by purchasing third-party assets and through what's known as "drop down," where Western's parent company, Anadarko Petroleum ( APC), provides assets for Western to buy.

He said that Western actively looks at all third-party deals, but any deal it decides to do must meet the company's metrics and cannot put Western's business model at risk.

When asked where that growth might occur, Sinclair said that Western is looking to broaden it's footprint outside of the Rocky Mountains, primarily in south Texas at the moment.

Cramer said he likes what Sinclair has done for shareholders and continued to recommend the stock.

Lightning Round

Cramer was bullish on Linn Energy ( LINE), Intuitive Surgical ( ISRG), Lufkin Industries ( LUFK), Merck ( MRK) and Littelfuse ( LFUS).

Cramer was bearish on Corning ( GLW).

Closing Comments

In his "No Huddle Offense" segment, Cramer pondered whether the failed Walt Disney ( DIS) movie "John Carter" should have any impact on his Feb. 14 recommendation of Lions Gate Entertainment ( LGF) based on the upcoming release of "The Hunger Games," which opens this weekend.

Cramer said investors are already up 34% based on his recommendation, but with speculation running rampant that Lion's Gate could also have a colossal flop on heir hands, this stock may not be for the squeamish investor. Cramer said he would continue to own Lion's Gate for the long-term and not worry about how big or small opening weekend for "The Hunger Games" turns out to be.

--Written by Scott Rutt in Washington, D.C.

To contact the writer of this article, click here: Scott Rutt.

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At the time of publication, Cramer was not long any stock mentioned.

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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