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NEW YORK ( TheStreet) -- Consumer confidence is high and holiday shopping is strong, but the fiscal cliff still looms ever larger. That's quite a conundrum for the stock market, Jim Cramer told "Mad Money" viewers Tuesday as he tried to explain why most of America seems so blissfully ignorant of the gigantic tax increases and recession that's just around the corner. Cramer said there are a few reasons he can think of as to why most consumers seem to be spending away this holiday season. The first is that what really matters to consumers is the price of their homes and those prices are up 3% based on the most recent data. When home prices are on the rise, consumers feel that maybe, just maybe, all is not lost after all. But perhaps the most logical reason for the confidence paradox is that most Americans are totally oblivious to the dangers of the fiscal cliff, said Cramer. He questioned the value of "consumer confidence" surveys overall, noting that they were also high right before the Great Depression. It may be that these surveys poll many of the 47% of Americans that don't pay a lot in federal taxes, or that those polled do not have a lot of capital gains or dividend income, which is most at risk from the fiscal cliff. While the cliff will have an impact on many people, said Cramer, it won't affect everyone and certainly not equally. Some may not care at all, while others, notably in the defense industry, will need to care a great deal. Cramer said he grows less confident by the day that a budget agreement will be reached, and others do as well, which explains why just a few negative comments from Washington today were enough to send the market into a tailspin. But for those not in the know, or those not invested in the stock market, they seem to just be whistling past the graveyard.
Executive DecisionIn the "Executive Decision" segment, Cramer once again sat down with Manny Chirico, chairman and CEO of PVH ( PVH), who last appeared on "Mad Money" on Oct. 31 after his company announced the acquisition of Warnaco ( WRC).
Chirico attributed PVH's strong quarterly results to both the Warnaco acquisition as well as improvements in gross margins and tax rates. He said many of PVH's brands, including Heritage, IZOD and Tommy Hilfiger, are performing well, as is Calvin Klein. Chirico even called out the new store designs at JC Penney ( JCP) as an area of strength. Chirico noted that PVH was affected by Hurricane Sandy in the Northeast, that area of the country representing about 35% to 40% of sales this time of year. But even with store closures, Chirico said PVH was able to compensate in other areas. When asked about the Warnaco acquisition, Chirico once again reiterated the deal will be accretive to PVH's earnings in year one but will really start to deliver for the company in years two and three. He said now is a great time to invest and acquisitions like Warnaco allow PVH to grow its brands into global powerhouses. When asked about international growth, Chirico was bullish in his outlook for Asia and Latin America as well as in South America. He said that when you have great brands, they drive consumers into your stores no matter what the economy is doing, and that is certainly the case for many of PVH's world-renowned brands. Cramer remains bullish on PVH.
Food for ThoughtIn his second "Executive Decision" segment, Cramer checked in with Gary Rodkin, CEO of ConAgra Foods ( CAG), which on Tuesday announced the $6.8 billion acquisition of private-label food maker Ralcorp ( RAH). Rodkin explained that one key aspect of ConAgra's growth strategy is private-label foods, and with the Ralcorp acquisition his company is now the largest player in that space. He said ConAgra already sells almost $1 billion worth of private-label products annually, so they are coming to the private label business with considerable experience. The goal is not to compete with ourselves, said Rodkin. One of the things Ralcorp does for ConAgra is give it more access into channels such as Costco ( COST) and Target ( TGT) as well as with specialty supermarkets like the privately held Trader Joe's. Many private-label goods are in different segments and channels, he said, which means more sales for both categories.
Ralcorp also gives ConAgra a bigger presence in restaurants, noted Rodkin. His company already provides McDonald's ( MCD) with potato products but now gets to add griddle items. In all, Rodkin expects $225 million a year in synergies from the acquisition, much of that in procurement costs. When asked about the health of the consumer, Rodkin said that, overall, consumers are still looking for quality products that represent good value, which is what ConAgra's branded products, and now Ralcorp's private-label products, provide for customers. Cramer said plainly that ConAgra's stock is heading higher.