Jim Cramer's 'Mad Money' Recap: Stocks vs. Bonds

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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.

Shop Elsewhere

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.

Ross Stores (ROST), once terrific, now seems to have all the wrong merchandise while rival TJX Stores (TJX) is hitting it out of the park with its HomeGoods stores.

JCPenney (JCP) reported a strong October but then a slumping November, while downgrades at Sears Holdings (SHLD) and Gap Stores (GPS) sent those stocks lower.

Even GameStop (GME) and Best Buy (BBY) seem to have run out of gas, Cramer noted, while strong home sales didn't send Home Depot (HD) higher but lower.

With all this confusion, Cramer said good riddance to the whole group until we get some stability.

Oh, Canada

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.

Lightning Round

In the Lightning Round, Cramer was bullish on General Motors (GM), KeyCorp (KEY), Magnum Hunter Resources (MHR), New York Community Bancorp (NYCB) and Sirius XM Radio (SIRI).

Cramer was bearish on Ford Motor (F), NXP Semiconductors (NXPI), Superior Industries (SUP), WPX Energy (WPX) and Cumulus Media (CMLS).

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.

The second portfolio's top holdings included Phillip Morris (PM), McDonald's (MCD), Boeing (BA), Johnson & Johnson (JNJ) and Cemex (CX).

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.

To sign up for Jim Cramer's free Booyah! newsletter with all of his latest articles and videos please click here.

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

To email Scott about this article, click here: Scott Rutt

Follow Scott on Twitter @ScottRutt or get updates on Facebook, ScottRuttDC

At the time of publication, Cramer's Action Alerts PLUS had a position in JNJ, KEY and TJX.

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."

None of the information contained in "Mad Money" constitutes a recommendation by Mr. Cramer, TheStreet.com or CNBC that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. You must make your own independent decisions regarding any security, portfolio of securities, transaction, or investment strategy mentioned on the program. Mr. Cramer's past results are not necessarily indicative of future performance. Neither Mr. Cramer, nor TheStreet.com, nor CNBC guarantees any specific outcome or profit, and you should be aware of the real risk of loss in following any strategy or investments discussed on the program. The strategy or investments discussed may fluctuate in price or value and you may get back less than you invested. Before acting on any information contained in the program, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from your own financial or investment adviser.

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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