meantime, don't go anywhere. mad money with jim cramer starts right now. i'm jim cramer. welcome to my world. >> you need to get in the game. >> firms are going to go out of business, and he's nuts. they're nuts. they know nothing. >> i always like to say there's a bull market somewhere. >> "mad money," you can't afford to miss it. hey, i'm cramer. welcome to "mad money." welcome to cramerica. other people want to make friends. i'm just trying to make it so you don't lose a lot of money. my job isn't just to entertain but to educate and teach. call me at 1-800-743-cnbc. on down days like today where the dow gets slammed for 101 points. [ punching bag ] the s&p sinks .89% and the nasdaq lost 1.2% [ sell, sell, sell ] nobody wants to hear about the

opportunity to make money by owning stocks. oh, they want to wallow in the new negative outlooks for germany, the netherlands and luxembourg. they want to focus on the losses europe gives us every morning. they could care less that this might be the moment to buy the all american petsmart. they don't want to use the sell-off caused by spanish bond yields to get into ross stores even though it isn't even in this country let alone nothing in europe. it feels like you were taking your life into your hands. can you take a shot at colgate let alone invest in it. tomorrow might bring a story about sicily or catalonia. check your maps. google them. is it too early to buy j & j with restructuring ahead, coca-cola though they are only down 15 cents today?

no. if you let your screen drenched in red and the action of spain take over your brain renting space telling you to stay the heck away from all stocks because the world is ending, you aren't thinking about buying petsmart, johnson & johnson, colgate, ross stores or coke. no. you could care less. it's a recipe for panic, not opportunity. uh used to turn my screen off days like today and just pick stocks. people don't do it anymore. what do they do? pass on the lows of the day europe generated once again, too scared to take advantage of the sale. but if uh you look at what's happened since the crisis in europe began, what's worked over and over and over again, if you look at what happens as the market came back from the abyss this afternoon, the right move has been to wade into the recession resistent names and higher yielding stocks to take advantage of declines. i'm sorry.

it's empirical. moments like this you get a chance to buy discounted merchandise that refuses to go on sale because it doesn't deserve to go on sale. people are recognizing this. after europe closed at 11:00 which is why the market did rebound into the close. as investors are compressing the cycle and anticipating what used to happen over the course of three days, to some degree we are used to sell-offs. this is the eighth straight monday down in a uh row. by that point someone has to know what to do. people buy and sell stocks rarely think about what's happening away from stocks. they are in their own stock world. the s&p or the futures are down, woe is me. without that perspective you will be led astray and miss the opportunities that were plentiful early today. do you know what's the single most important thing you need to know about stocks? do you know what it is? nothing having to do with stocks. out's the price of bonds. competition. right now we have the ten-year treasury yielding very little. the 30-year treasury paying

2.5%. that's a long-term asset to treasury. not unlike the long-term asset that's equities. giving you a pew any return. you must be drawn to the higher yielding stocks if only as a place to park your money. the fact that companies with high yields might be doing well is an added bonus. what i'm saying is if you know where bonds are, you should be drawn to the stock market. most people who trade stocks don't know there is a relationship with bonds. let's go back to j & j. quarter reported. wasn't terrific. company got it down. there is a new ceo in town who's motivated to get something done including possible streamlining of this company that's been so mismanaged. listen to the call. hey. well, wait a second. what do i do in the interim while he turns it around? he's paying you 3.6% until he fixes it. that's the dividend. full percentage point better than 30-year treasuries and we haven't looked at the tax favored status of dividends. j & j is ugly enough to give you

a discount. in fact, i see entry points galore on mornings like this. i'm on "squawk on the street" saying, wow. i wondered when to get into verizon. the wireless business has been strong. tons of spectrum. able to slow capital spending. no european exposure and yield is 4.5%. we'd rather wait for it to be 5. when it gets to 7, wake me. that's unrealistic. it doesn't get there because of the bond market. consider the oil service companies. they have been horrendous. natural gas plummeted though the world is drilling particularly in the middle east. now the rigs are moved to the oil shales. at the same time mexico came on strong, has earnings. stocks clearly want to go higher but are constrained by the dog eat dog market. that won't be the case in a couple of days. meanwhile we see you get a takeover, a nice premium from china. sure, it's canadian.

so what? tons of oil companies we can own. and if u.s. companies can't be bought by chinese companies can still do joint ventures to raise the value of stocks. how about the industrials? on wednesday i had dave cote, ceo of honeywell. oodles of cash. recognizes europe will have no growth for five years but he's taking it into account and honeywell is doing terrifically. now you're getting lucky because of europe. you can get honeywell at a decent price because of europe. i'm not saying to pick up disappointers like johnson controls or cummins. but i had a friend who bought cummins. the action in eaton suggests that it might not be a bad bet. of course eaton yields 3.75%. yes, it's hard to buy when the sellers are shooting to kill at the opening.

yes, you have to worry europe will be horribletomorrow. every time germany's market is hit -- and it will because of the moody's change to the negative, the iron cannes lor austerity merkel rises to the occasion and buys time, allowing the stocks you are buying to recover losses. there are so many companies with high yields and no exposure to europe or minimal economic sensitivity. the only reason you run away rather than toward when you get a sell-off is panic. i never get tired of it. panic is not a strategy. bottom line, buy high, sell low. has that worked? not in my years in wall street. this could be different. it could work. you never know. the weight of the evidence doesn't favor money being made with that particular investment style. that is if you can bother to call it a style at all a. jason in ohio, please. jason. >> caller: b-b-boo-yah! >> nice stuttering boo-yah to open the show. what's on your mind? >> caller: my company is rpm

international. >> i know it well. >> caller: they boosted the dividend again as they have done year after year. it tooks like they came out ahead on earnings. what's your outlook for the future for them? >> i'll tell you the background. i wanted to recommend the stock at 24, 25. it's at 27 now. because of the 3% yield. my problem is that it is so thin i was afraid it would move. here's the deal with rpm. the raw costs weren't great. the business is strong. it's been a wonderful stock. it reminds me of snap-on tools. great american stock that you can indeed own. congratulations for owning it. ray in florida. ray. >> caller: mr. cramer, god bless you and your staff. >> thank you. my staff is brilliant. makes me look good every day, particularly regina who looks good today. >> caller: should i buy stocks like eog or chevron or wait for oil to drop more? >> i think the group has a little bit to go. i think the stocks have had a

really good run when oil bottomed off of the $80 level. now they are in retreat. give them a couple of days and buy them. why not wait? unless they have a good yield, okay, you don't have the support uh i'm looking for for companies that you can just come in and buy. good yield or in the case of the oil service stocks, i think those have bottomed. they're down much more than oil stocks. down day? i need you to employ a lemons to lemonade corollary, please. when the market moves down on europe, dig for bargains. go for blue chips. think j & j. maybe that will jar your mind. "mad money" will be back. >> announcer: coming up, feel the power? searching your screen for green after today's plunge? look no further than eaton. after topping estimates this industrial defied the sell-off by powering higher. but is there still room to run? cramer's earnings exclusive with the ceo is next. and later, bean counting.

investors chop down chipotle by nearly 25% last week after the burrito maker failed to satisfy the hunger for growth. is the stock too appetizing to ignore or is it too hot to handle? cramer gives you the wrap just ahead. plus, healthy horizon? shares of regional bank first horizon fell after reporting last week. is an improved housing market laying the foundation for future growth? jim's deciding if it is time to make a deposit when he talks with the ceo, all coming up on "mad money." >> announcer: don't miss a second of "mad money." follow @jimcramer on twitter. have a question? tweet cramer, #madtweets. send jim an e-mail to madmoney@cnbc.com or give us a call at 1-800-743-cnbc. miss something? head to madmoney.cnbc.com.

you know, terrible, horrible, no good very bad day like this one you can still find

winners. take eaton, the terrific industrial manufacturer makes everything from electrical products, power management systems, hydraulics and truck transmissions. like most industrials they have been hammered in recent months to the point there was nowhere for it to go but up. today was a textbook example of how stocks bottom. this morning eaton reported what many would call a mixed quarter. i saw it and said, oh, boirks this is it. company delivered a six cent earnings beet. i knew it was an all-time record but revenues were right. the company cut the guidance based on the global economy. that was the headline everywhere. what happened? what was the response? eaton soared 1.52 or 3.89% on an ugly day. how does a stock rally like that? going to the quarter the expectations were so low and the stock was hit so hard when they reported and it wasn't bad, actually a lot of it was good. a lot of positives in the conference call about the

impending transformational merger with cooper the stock worked. that's why i recommended them a month ago. it's given us a juicy 9% gain. and great management. sandy cutler recognizes he can't stand still. he recognizes this is a shaw shank redemption environment where you have to get busy living or diagnose. after today's move 3.75% yield. let's check in with the bankable chairman and ceo to find out more about where the company is headed. welcome back to "mad money." >> thanks, jim. good to talk with you this afternoon. >> i have to go with the positives. the stock was up today. i was shocked at your gross margins which were better than i was looking for. how sit you can have weaker end markets and make more money on each sale? >> you're right. we hit an all-time record this quarter. profits up some 15%. earnings on an operating per share up 19%. each of the businesses you're seeing higher margin delivery

coming from better new products that are really starting to solve the power management problems for customers. we're pleased. we expected the margins to be increase this year. we expect them at a record level again this year. >> you had positive things to say about something you have had negative things to say on the show many times. nonresidential construction. you were actually constructive about this. >> yeah. we felt since the beginning of last year we felt the nonresidential market in the u.s. start to increase. we made the call in the middle of 2010 because we have good visibility, six to nine months looking forward. again, this quarter we saw the markets move up short of 4% and a broad-based increase. we think there are a couple of years to run. as we see bookings now, our quotations looking forward are equally as strong. >> now there were spot that is took my breath away. we got weaker markets here. can you tell me what happened in brazil, one of the great growth markets of all time?

>> since really the comeback after the 2008 recession we saw brazil pop back up. now we are seeing a market, a gdp that's growing more on the order of just a couple percent. very high wage inflation over the last couple of years reduced the ability to export strongly in some of the vehicle markets. they had strong prebuy last year. in 2012 they are paying the price. it's much the same as we have seen in many emerging nations where people had to raise interest rates, slowed down growth. we are still bullish on the economy. it will be a more challenging year in brazil in 2012. >> you pushed out the recovery for where you see china coming. not until 2013. the chinese stimulus just not coming into play yet, huh? >> both in china and europe. you may recall at the end of the last quarter we thought there were reasons to believe in the fourth quarter we seed see stabilization and perhaps recovery. we pushed both areas into 13. it's not a story so much that it's decreasing further in 2012. we don't see the footing for

increasing. we are bullish on china longer term. we believe the economy will be a strong growth economy again. it's not going to happen in 2012. that's why we reduced the market growth outside of the u.s. and that led to the slight tuning of the full-year guidance after a record quarter in the second quarter. >> we have spoken on "mad money" and the rest of the network about the fiscal cliff. you brought it up directly when talking about the buying of new trucks you say there are people who are pausing because of worries a about the fiscal cliff. >> we think whether it is a consumer or capital goods purchaser. the closer we get to year end the reality of potential real problem from the fiscal cliff is becoming very immediate to people. we are concerned about it. we have spoken about it publically. we think this is a time when we need real leadership to deal with the expense and revenue side. this is more of a political problem than an economic problem. this needs to be solved to set the framework for more certainty to get on to growth and growing jobs in this country.

>> at the same time you're positive about north america. we have automotive, very strong just the plain old electrical business is good which brings me to cooper. to me it seems like you are going to double down on the strong part of eaton with cooper. if anything, people are worried about europe which can turn one day, you will be less european centric by the time the deal closes. >> that's right, jim. we were delighted to announce the acquisition of cooper at the end of may. they have less international exposure than eaton does at this time. clearly looking at our results in the first and second quarter and the electrical america business you get an impression of how strong the markets are and cooper enlarges the size of the play for shareholders. we expect to close the acquisition in the second half of the year. we had a couple good pieces of progress in terms of the anti-trust review in the u.s. our ability to do interim financing. we are moving along on the schedule to get closed in the second half. >> let's talk residential.

people are starting to see some pick-up. you didn't see pick-up. is this a second half issue? could we see something going on because of a shortage of apartmen apartments, office, home? >> we did see pick-up. it's not an enormous portion of eaton but we think you are beginning to rebuild the housing market, not to the levels we saw when it got out of control in the mid 2000s, but we are seeing pricing stabilize or at least bottom. we are seeing permits up. we're more bullish on residential housing in the u.s. than we were six months ago. >> you seem sanguine about the aerospace situation. not bad. >> we're in the midst of a mini boom particularly on the commercial side. all of the large commercial booming. the military side is weaker. we saw weaker after market in the quarter. still, very strong.

the hydraulics market you mentioned before, very strong in north america. auto strong in north america. really it's a story of strength in america's markets, particularly north america. weakness in europe and asia. >> just if you had to kind of -- we want to go back to the best thing i felt on the call. what's behind the 200 basis point increase in north american electrical margin forecast. >> a couple of things. we have good market strength. we have a number of really industry-setting energy efficient pieces of equipment that are solving problems for customers. as a result we're able to increase margins. then i think the team has done a fine job of continuing to drive lean and productivity in the business. you have seen us strengthen the margins almost every year over the last five to six. it's a winning story. that's what we'll build on with the cooper acquisition. >> no wonder why the stock was up. sandy, thanks for coming on "mad money." >> thanks, jim. good to talk with uh you. >> inexpensive stock. you believe in a turn like i do.

eventually you are paid to wait 3.7. this company and this merger, cooper, transformational. they are not saying, hey, look, the world is bad. this is the bottom. eaton. stay with cramer. >> coming up, bean counting. investors chop down chipotle by 25% last week after the burrito maker failed to satisfy the street's hunger for growth. is the stock too appetizing to ignore or is it too hot to handle? cramer gives you the rap just ahead. so uh this is my friend frank and his, uh, retirement plan.

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solve this conundrum. what should we be willing to pay for the new chipotle? before last week's melt down we knew several things. we knew it was a rapid grower with earnings per share increasing to the mid 30s, revenue growth around 20%. same store sales were terrific, rising by 12% every quarter. the highest of any restaurant chain. easy to know what to pay for the old chipotle. it was a premium which was why it was selling for 44 times 2012 earnings. i have to get in your head. the estimates for nine bucks a share. the multiple seemed high but the valuation turned out to be cheap in retrospect when they reported. to times past earnings. but they earned 5.64 the next year. it was only selling at 15 times earnings. it was cheaper than the market. in other words going into thursday's report it wasn't that expensive in the p.e.g. ratio,

price to earnings multiple divided by the growth rate. growth oriented money managers might have been willing to pay 60 times future earnings which were nine bucks. since the stock was only at 400 they were only paying 44 times earnings. it peaked at 47 times earnings. believe it or not, in the mind of the managers that trade the old one wasn't that pricy. we thought there was immunity to the economy because of the healthier food. people were willing to pay in good times and bad. this put the stock in the same league as whole foods which sells for 34 times earnings even with growing revenue at less than half the pace of chipotle. now after thursday's report, chipotle is out the window. new growth rate but it's a growth rate we're not sure of. we don't know the same store sales growth, where it will be. it's down shifted from 12 to 8%. chipotle no longer has the

fastest same store grower. worse than the conference call, management talked about being harmed by the weak econom something i'm not used to hearing. they have economic sensitivity. that could mean people are no longer willing to pay for healthier food or maybe the company is mature. we don't know. neither explanation makes me happy. given the vast sea change we now have to search for a new price to earnings multiple for chipotle which is the essence of what every portfolio manager is struggling with at this moment. here's the rub. the reason they lost 87 points on friday and may not be done going down, i will explain. only certain funds would ever think of buying a ho tim40 ti n earning burrito. these guys only pay for accelerated revenue growth and stick with stocks that are consistent in revenue growth. now chipotle has neither.

so i they dump it like a hot burrito. that's what happened friday. the momentum sellers don't care about stock. they can't own the stock anymore. their charters won't allow it. after all that selling chipotle still trades at 34 times earnings, the same multiple whole foods gets. they fit the momentum play book because of consistent revenue growth even if the overall growth level is slower. this is a ceiling. they will own whole foods but won't touch chipotle which means it shouldn't get a higher multiple. this is the puzzle. this is the uh why we try to figure it out. what about the slow down? is chipotle being hurt by the economy? people trading to cheaper food. when you consider the strength of taco bell it's clear what's happening. when yum brands reported last week same store sales at taco

bell increased by 13%. that's fabulous. the old chipotle was 12%. and the trade down is in force for mention cap food as it is for other restaurants and retailers. should we give up on chipotle despite the huge decline? things could get better. the problems could be one off. doesn't this company which has done so well for years deserve some benefit of the doubt? hard to say. on the conference call they said the next quarter is trending similarly to the last one. how about the long-term growth? doesn't it matter? they have the asian kitchen chop house. it's got to be worth something. many kinks, not ready for primetime. chipotle has high standards. harder to think they can expand like starbucks did. how do we solve for the m or the multiple for the new chipotle

which is what this is about. we can play parameters. we know panera has slower growth. same store sales have been 5 to 7%. it sells 25 times earnings. i call that a floor. 25 times earnings for chipotle. how far should they be from the floor? panera is growing at a # 12% clip. chipotle is more than double. this is a puzzle. on the one hand we have parameters that show it growing faster than most. then we have newfound skepticism, suspicion about the numbers and momentum funds that may not be done dumping the stock. ultimately chipotle seems fairly valued. that's a hold. not overvalued as it was at 44 times earnings and not undervalued because business is slowing. do we buy the stock? all i can say is -- why? if they are slowing it's now disappointing. so we have to wait until it's

undervalued. this stock was trading at 300 last fall and we thought they could earn 9 a share and the business was accelerating without economic sensitivity. it's now decelerating and vulnerable to the economy. should it stop at a 300? we need a discount to where the old chipotle sold based on new numbers. wait for the stock to sell at 30 times earnings. that's my solving for m. one time the growth rate. so it is not a steal until 270 dollars a share. to the question of how can cramer like it at 400 and not 300, the answer is simple. the company that's axcceleratin with no economic sensitivity is worth more than a company with increased economic sensitivity even if it is the same company. before this quarter chipotle was the former. now the latter. different company. the bottom line when the facts change, you have to change your mind with them. the chipotle of today is not the chipotle of old.

the business is more economically sensitive than ever before which is why all the momentum managers have been dumping it hand over fist and why it won't be a real bargain until 270. until then bet on a quick turn around which i don't think is possible to make money owning cmg. rick in florida, rick. >> caller: hey, how you doing, cramer? boo-yah to you from orlando. >> all right, chief. what's going on? >> caller: i'm calling to talk to you about darden restaurants. i called before the earnings. i heard about the acquisition of yardhouse bar & grille and how if yardhouse went public it would have been the biggest restaurant ipo of the year. can darden cash in on some of the synergy or will the stock be stuck in the low 50s? or the low 49s? >> i think the stock will be in the high 40s. they have food inflation problems. but that was a smart, smart buy.

now the stock yields 4%. you are being paid to wait for the turn. i like the acquisition. you've got horse sense bringing it to our attention. i like the stock in the high 40s. i want to go to ken in illinois. >> caller: big chicago boo-yah, jim. >> rick santos boo-yah. ron santos boo-yah. >> caller: you commented the split of sara lee could create value. i bought it around 21 prior to the break up. with a split for each share i had i now own a share of dembf, a fifth of a share of hsh and i collected the one-time dividend. i'm still down a little bit, but it may take time for creative value to be apparent what should i do with hill shire and natural blenders is? >> european stock is hard to opine on. you got stung by what i regard as being the great drought, the

worst we have had in years. what's happened is that hill shire is a big beef buyer. what happens is every single one of the grain complex is going higher. that's hurting your stock. i want you to hold on. this, too, shall pass. in this market the spice of life isn't changed. it's growth. cmg slowed down. it's not cheap until it goes to 270. look, i know -- you know how much i want to tell you to buy it. this thing is just too expensive right now. stay with cramer. >> announcer: coming up, ride the lightning. take a nonstop thrill ride as cramer goes stock after stock. all your calls taken rapid fire on the lightning round. and later, healthy horizon? shares of regional bank first ho uh rye zon fell after reporting

last week. but is an improved u.s. housing market laying the foundation for future growth? jim's deciding if it's time to make a deposit when he talks with its ceo. all coming up on "mad money."

>> announcer: lightning round is sponsored by td ameritrade. [ bell ringing ] >> it is time. it is time for the lightning round. you say the name of the stock. i don't know the calls or the name of the stock ahead of time. i tell you whether to buy or sell. when you hear this sound -- [ buzzer ] -- then the lightning round is over. are you ready, skee-daddy? it's time for the lightning round on cramer's "mad money." i want to start with todd in south carolina. todd. >> caller: boo-yah, jim. >> boo-yah! >> caller: what do you think of thermo fisher, tmo. >> i like the insurance business. it's inexpensive and i want to buy it. [ buy, buy, buy ] joel in pennsylvania. joel. >> caller: hey, jim. greetings from downtown andulusia outside of philly. frontier. >> no, no.

[ sell, sell, sell ] you want to own century link, ctl, which is by far the best performer and yields 7%. it's down there in -- remember, it's in louisiana. okay. jared in pennsylvania. jared. >> caller: hey, jim. a big boo-yah from shipley energy in your home state. >> gotcha. >> caller: hes. what do you think? >> too poorly managed. i have to tell you [ sell, sell, sell ] we owned it for the charitable trust and got out. it could have smoked us. i like the oils. marjorie in georgia. marjorie. >> caller: what about netflix, sell, hold or buy? >> oh, man. you cut me to the quick. that's the hardest stock in the world to understand. you know what, oh, my, i'm going to do this. i'm going to punt. i am going to tell you i don't know what netflix will do next.

i said it. sometimes you have to own that. i think the subscriptions are good, but the cost side is bad. so therefore it's hard for me to figure out what it will do. peter in connecticut, please. peter. >> caller: hi, jim. boo-yah. >> boo-yah! >> caller: mnst long. whether you think i should do it. every momentum stock is no longer ownable after chipotle. monster, i think the business is good, but i do believe no one is going to want to pay the higher multiple. i said this for chipotle. we'll say it here. i think if you want to own monster beverage you have to do it in deep in the money calls and be willing to lose all that call premium like i told you with chipotle to buy deep in the money calls. you got wiped out but you got stopped out. that, ladies and gentlemen, is the conclusion of the lightning

round. [ buzzer ] >> announcer: the lightning round is sponsored by td ameritrade. on december 21st polar shifts will reverse the earth's gravitational pull and hurtle us all into space. which would render retirement planning unnecessary. but say the sun rises on december 22nd, and you still need to retire. td ameritrade's investment consultants can help you build a plan that fits your life. we'll even throw in up to $600 when you open a new account or roll over an old 401(k). so who's in control now, mayans? you know what i love about this country?

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what are we speesed supposed to do with regional banks?

i like the group. goldman sachs upgraded housing today which is good but there are other worries from a slowing economy to the continued low interest rate environment to concerns about new capital requirements to make things harder. first horizon national, tennessee based regional bank, 200 branches in the southeastern united states. the company reported on friday and the stock got slammed falling 5%. it's been having one of the cheapest valuations of the group. first horizon missed the street's consensus estimate. increases reserves to deal with the mortgage put-back issue. at the same time the net interest margin increased. that's how banks make money, just by turning on the lights in the morning. the difference between the rate paid for deposits and what they charge on loans. the credit quality improved dramatically. there are real issues which is why we have to talk to brian jordan, chairman and ceo of first horizon to learn about the quarter and the prospects of the bank.

welcome back to "mad money." >> thank you, jimment good to be back. >> i was puzzled. i saw the number and i look at the things driving bank down. i saw it declining 9%. other real estate down 17%. you have a nonperforming loans lowest since 2007. i thought that's why we buy banks when we have those metrics. do they cheap changing the goal posts? >> there are a number of things affecting bank valuations today. i would argue this is a hard time to value the banks. if you look at the core fundamentals of the business that's margin improve, loan growth year over year was up 10%. deposits up 13%. our capital markets business continued to be very strong. you've got extraneous factors like basil three and how it impacts capital going forward and a continued overhang we've got in dealing with the mortgage repurchase risks that make it harder.

the core fundamentals are the things that are going to drive valuations for the long term and that's where i would encourage investors to look. what are the core fundamentals doing? sp. >> you made it clear you think this is not the beginning of the end but the end of the mortgage problem. >> yeah, absolutely. we booked an increase of $250 million to our reserve for gse repurchases. we think that's adequate to cover current and future exposure to those purchases or repurchases. we think we are on the back side of that at this point. so we are encouraged by the progress we have made. it's been expensive. we think we have it largely behind us at this point. >> fannie mae and freddie mac. >> yeah. >> david faber on the morning show, "squawk on the street," we have been laughing frankly about how tangible book value which to us is cash is now so out of

whack with stocks. we have a tangible book value next time at this time of 9.87. i don't understand it. it's not like you haven't taken losses. >> absolutely. we have taken losses, built significant reserves for repurchases. about 360 million at the end of the quarter. we still have 2% area loan loss reserve. we have some of the stronger capital ratios in the industry. so i think it's a solid number. i think in terms of valuation it's an important reference point for figuring out how to value a first horizon. >> maybe the issue is countries kfsz poor, cash rich. where is demand since we last spoke? >> it's fairly modest, consistent with growing in the 1% to 2% range. we saw good growth.

some of it is organic growth you expe expect. >> if you had to look at what needs to occur, do we need to get through the election, have housing get stronger? do we need nonresidential construction? what are the keys to figuring out when we get genuine earnings reports or are people liking regionals more than they do? >> i think the election will be important in dealing with the fiscal cliff, however it's dealt with will have an impact on business and investor sentiment. the housing recovery seems to be under way. sales are picking up. prices are stabilizing. the builders are improving. i think some of the fund mentals are in place. i think between now and the end of the year probably the two big drivers are likely to be the

european headlines and what happens from a d.c. perspective as it relates to the election and then ultimately the fiscal cliff between now and january 1. >> that's discouraging. it's everything that you have nothing to do with and no control over. >> that's right. we talk about it every time we get a chance. we're focused on controlling what we can control which is winning new market share, taking care of existing customers, really differentiating our service and providing a value-added service to our customer base. if we do, the fundamentals take care of us in the long run. our valuation will improve over time. >> couldn't agree more. your stock is too cheap. makes no sense to me, sir. brian jordan is the chairman, president and ceo. thank you very much for coming on the show. >> thank you, jim. >> i always admit when i'm baffled. $7.91 i'm baffled. it doesn't make any sense to me.

this is fiscal cliff. but spain is driving the price of a tennessee bank. no. it's not right. it's a buy. stay with cramer. man, i'm glad aflac pays cash. aflac! ha! isn't major medical enough? huh! no! who's gonna help cover the holes in their plans? aflac! quack! like medical bills they don't pay for? aflac! or help pay the mortgage? quack! or child care? quack! aflaaac!

and everyday expenses? huh?! blurlbrlblrlbr!!! [ thlurp! ] aflac! [ male announcer ] help your family stay afloat at aflac.com. plegh!

chinese oil coloss sus buys an oil concern. short line railroad picks up

rail america. nrg purchases genoan. satellite kingpin digital globe gets goi. all deals announced this morning. i know. needles in a hay stack, drops in the bucket. irrelevant versus spain. a waste of time unless you own one of them and made money. then you think, to heck with spain. companies are eager to extend the reach. you may want to dismiss the take overs. most do. let's break them down. the chinese need natural resources. a terrific canadian company. so many other companies fit the description. seanook has so much money you have to wonder if it's a one-off.

heaven knows the targets have come down enough to be bought while these acquirers are trying to get their hands on the resources they need and they are using the stock market's gloom to take advantage of it. make their moves. it's expensive going into the session for 35 times earnings and now more so after the bid. the acquirer knows these expensive coffee house companies are hard to create. geoy. nrg barely has growth. it got robust growth for 1.7 billion. something that caused the share price to spike. you know the deal makes sense when the stock for the eye quirer pops. now combining with rail america goes from an irrelevant short line player to a mini major rail in an environment when everybody likes rails. the takeaway is simple. we may not like stocks. we may marvel at anyone stupid

and foolish enough to buy stocks, but how about companies? when whole companies are involved a different story. the dploom with the market doesn't pervade companies that want stocks to go higher by meeting the resources. the more investors abandon the asset class the more companies step up to take advantage of the bargains out there. are they really needles in a hay stack? i think the businesses are worth a great deal not to the market but to other companies even if they are not worth much to you. the problem with the conventional wisdom is anything good must be like a needle in a hay stack but if you put your hand in that hay stack it got ripped to shreds by the needles. that should give you pause if you are considering leaving the game altogether. stay with cramer.

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