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NEW YORK (TheStreet) -- The Federal Reserve may be taking center stage right now, but that's about to change, Jim Cramer told his "Mad Money" viewers Wednesday. Cramer said after the first of the year the Fed will start becoming a sideshow, and that's the time investors want to be owning stocks.
The tug-of-war between stocks and bonds was evident again today as the most recent employment and housing data were first received as bad news but then good news by the end of the day. Why the differing opinions? Cramer said it's because a transition is at hand, one where those worried about the Fed, or the "good news for the economy is bad news for stocks" crowd, is making its exit while those who know that good news for the economy is good news for earnings are beginning to pile in.
Today's housing numbers, the strongest in almost three decades, cannot be ignored, Cramer said. The Fed's policy of keeping rates low to spur activity is clearly working. Housing permits are up and banks are more willing to lend, and that can only lead to one thing -- the Fed beginning to tighten.
Cramer said the markets will likely be buoyed by money managers piling into stocks in order to beat the averages before the year ends. When January rolls around, the stock pickers will follow, as they know that all this increased activity will mean better earnings for companies in the first quarter. Bonds, on the other hand, will continue to become increasingly unattractive, as stocks with big yields and bigger earnings will garner all the headlines.
Perhaps the best thing to do with retailers this holiday season is stay away, Cramer told viewers. This group has become wildly inconsistent and offers investors nothing but a total lack of clarity.
That was clearly the case with Express (EXPR), the normally consistent retailer with 630 locations that has seen its stock up 50% for 2013. After results "did not meet expectations," shares of Express plummeted 23% in today's session. Meanwhile, Ascena Retail Group (ASNA), purveyors of Lane Bryant and Justice, had been hit or miss all year but this quarter delivered great earnings.
With all this confusion, Cramer said good riddance to the whole group until we get some stability.
After underperforming for the past three years, the Canadian economy is heating up, Cramer told viewers. That means its stock market will be playing catch-up. Canadian stocks may only be up 7.1% for 2013 compared to 25% for the S&P 500, but Cramer found seven stocks he said would make an excellent addition to a well-diversified portfolio.
The first two on Cramer's list are Shaw Communications (SJR) and Rogers Communications (RCI). Cramer said Shaw has a global television network with 17 channels pumping out content. The stock trades at an 8% discount to its peers. Meanwhile, Rogers is the largest wireless operator in Canada and has media assets and the Toronto Blue Jays baseball team.
Anytime an economy is on the mend, you need banks. That's why the next four stocks on Cramer's list are Bank of Nova Scotia (BNS), a global bank with a 4% yield; Bank of Montreal (BMO), another high-yielding bank; Royal Bank of Canada (RY) and Toronto Dominion (TD). Cramer said any of these banks would make an excellent portfolio stock.
Finally, there is Ritchie Brothers (RBA), the industrial auctioneers that bring invaluable expertise and information to buyers of large industrial equipment and machinery. Ritchie currently trades at 22.8 times earnings with a 15.3% growth rate, making it not expensive at all in Cramer's book.
Off the Tape
In his "Off The Tape" segment, Cramer sat down with Ken Austin, co-founder and chairman of the privately held Tequila Avion, the fastest-growing premium tequila maker.
Austin said in an industry dominated by giants he set out with little more than an entrepreneurial spirit to create the world's best tequila. He said as a privately held company there aren't pressures to cut costs or cut corners, which has helped the company achieve its goal.
While there has always been a dominant number one player in tequila, there's never been a clear number two player, Austin continued. But thanks to regular appearances on the hit TV show "Entourage," which happened by chance, quality met lifestyle and Avion was recently voted the best tequila.
Cramer saluted Austin and his entrepreneurship, saying he embodies some of the best attributes America has to offer.
Am I Diversified?
In the "Am I Diversified?" segment, Cramer spoke with callers and responded to tweets sent via Twitter to @JimCramer to see if investors' portfolios have what it takes for today's markets.
The first portfolio included Netflix (NFLX), Pfizer (PFE), EOG Resources (EOG), Tractor Supply (TSCO) and Spirit Airlines (SAVE).
Cramer said this portfolio was properly diversified.
Cramer said he'd replace Phillip Morris with an industrial like General Electric (GE).
To watch replays of Cramer's video segments, visit the Mad Money page on CNBC.
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-- Written by Scott Rutt in Washington, D.C.
To email Scott about this article, click here: Scott Rutt