to the european stock. >> i like that piggy bank up there. josh brown? >> energy was one of the best groups today. we really like the ieo, all the names in the basket or you can buy the here tomorrow at 5:00 for more "fast." meantime, "mad money" starts right now. my mission is simple. to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere. and i promise to help you find it. "mad money" starts now. hey, i'm cramer. welcome to "mad money." welcome to cramerica. other people want to make friends. i'm just trying to save you money. my job is not just to entertain you but to teach and coach you about what happens on days like today. so call me at 1-800-743-cnbc. how could something that's been so good for the stock market suddenly be so bad for it? i mean, come on. federal reserve's been buying bonds for ages to keep interest rates down.

and we keep hearing that that whole process has been responsible for the bulk of this record-breaking move in the averages. so if ben bernanke says he's going to keep buying bonds as he did today, what the heck is the deal with the stock market, which got absolutely crushed, pummeled, dow plummeting 206 points, s&p nose diving 1.39%, nasdaq plunging 1.12%? if bernanke's staying the course and the course is allegedly moved the stock market up by thousands of dow points, how can the averages get crushed if he continues to do what the bulls want him to? shouldn't the bulls be cheering instead of fearing? no. sorry. it could work for a long time. the stock market loved bernanke's bond buying program for a while. the market loved it because it kept the competition. the interest rates paid by bonds low asand not as attractive as stocks. but ever since last month, may 22nd to be exact about it, the bond market itself and not the fed chief has been calling the tune here.

despite bernanke's best efforts interest rates have gone higher. today they lurched to levels where we haven't seen them since march of last year. it was a staggering increase to watch. i was watching it all day. not watching the stock market. i was watching interest rates. and this one was so big that i bet mortgage rates go up. perhaps as soon as tomorrow. which is why the housing-related stocks were among today's biggest losers. how did all this happen? how could something be so bad that was so good? put simply, the owners of bonds are no longer soothed by ben's words about how the economy is still a bit dicey and jobs aren't being created fast enough. now they're thinking he just wants to put everybody to work, he's not worried about the bonds. bondholders are saying to heck with this, you're not going to protect us, economy is way too strong for bernanke to keep buying bonds, he can't keep rates down, he shouldn't even try. the owners of bonds aren't as worried about the ongoing drag of the federal government that berng kooes fretting about and talked about today. they aren't worried about higher taxes, sequester spending cuts or any lack of any serious attempt by elected officials to get hiring going. they are selling their bonds right now before things get so

much better that those bonds will be worth even less! to understand how bonds work i've got to do something different because i know a lot of people can't tell the difference between a stock and a bond. so i'm going to -- i'm going to do a little fictional analysis here. imagine that the united states is a publicly traded company. and it's got this really counterintuitive stock that goes down when the country's strong and goes up when the country's weak. that's what bonds are! that's how they trade. today bernanke said the country's getting stronger. under this scenario that means the stock of the u.s. is going down. so if you sell now you'd be getting out at a higher level than later when the economy's really starting to roar and the stock really goes down. remember, the people who own this imaginary stock in the u.s., they don't want good news. they want bad news about the economy. not good news. i know that's hard to wrap your head around. who could believe that anyone would actually want our economy to be weak? who would want people thrown out of work? that's how bonds work. people want to bid them up on bad news and sell them on good news. normally, you wouldn't have to worry about any of this.

these are not normal times. again, imagine the united states is a stock that pays an okay dividend. we know that as stocks go down the yield goes higher. that's because the dividend stays the same but when you divide it by the share price the declining stock, well, the yield grows. right? i mean, pays $4 dividend. it's at 100. and then the stock goes to 80. well, obviously the dividend's yield is higher. so when sellers knock this country's stock down, it gets a bigger yield. suddenly the stock of the united states, continuing the fictional analogy-s once again competitive with the stocks of individual companies that people are hiding in on a yield basis. remember that tent, the hiders and capital appreciation people? yeah, that's right. the price of the u.s. fell so hard today off bernanke's happier outlook that its yield is now large enough to make people sell the stock so higher yielding companies or buy the higher yielding government stock, aka long-term treasury bonds. why do investors do? because many of the people who've been buying stocks to get yield don't actually want the risk that comes with stocks of corporation or they've

underestimate those risks. and same thing with the bond funds, underestimated the risk of those. they know the stock of the u.s. government is a heck of a lot safer than the stock of an individual company now. they see that now. you at least get your money back if you buy the stock of the country plus some interest. but the stock of verizon or duke or procter, hchl, might go down so much that it wipes out all the money you made from the dividend and then some. the risk reward of owning the stock of high yielding companies just got far worse in the last month and particularly today versus the stock of the united states. okay, you say, but how about all the stocks that don't have high yields, the stocks that you buy because the underlying businesses will do better as the economy improves? a-ha. how about those? they don't compete with the fictional stock of the united states. why did they go down too? why the heck would anyone sell the stock of a company with a paltry or no dividend in order to go buy treasury bonds, which don't have any real chance of going higher? they're bonds. and that is the issue at the crux of what's going to happen in the future. all right? as is so often the case when something bad happens to the stock market because interest rates go higher, all stocks end up getting hit.

remember today the fed dropped the bomb we mentioned yesterday, the blast zone? this was the blast zone today. the one that says, well, wait a second, things are getting better, again, counterintuitive. good news is bad news for the stock of the united states. the huge part of the stock market trades on its yield. so you can pretty much assume that everything goes down when those particular stocks, that big cohort falls out of favor. only later, when we sort through the rubble of the blast zone and figure out what shouldn't have gone down will there be an opportunity. or that's right, first everything gets crushed, as i said would hatch last night because bernanke couldn't please those who wanted to hear only the bad news that's good for the stock of the united states. then maybe as soon as tomorrow we'll that the machine gunning from the s&p futures mowed down both the deserve's and the undeserving alike and that not frg should have been sold because seriously, lots of companies will have higher profits in this more positive environment and that means the stock should go higher, not lower. so first everything gets dragged down. that's what happened today between 2:00 and 4:00. along with the stock that deserves to go lower when interest rates rise, only then do we sort through the rubble

and start buying the stocks that shouldn't have fallen and maybe could go higher. here's the way i want you to look at this sea change. for many years now stocks with good yields haven't had to worry about competition from interest rates, from treasuries. those stocks were just too attractive versus the super low rates that ben bernanke gave us. that's over now. okay? that's over. that's done. that whole appeal is now past. people should no longer be buying stocks simply for their high dividends. okay? because these high yielders have stopped offering the protection from declines that they once did that i talked about for years on the show. all sthad, if you want to make money in this market, i think it's time to start thinking about buying a whole set of other stocks, industrials, banks, techs, which have done poorly ever since our country got sick. as the country gets better the stocks of these companies get more attractive, unlike the high yielders. so people sell the newly unattractive safer stocks and swap into the more economically sensitive names as the year goes on. as of today if things are going to get better in this economy then bernanke's going to stop keeping interest rates down or

recognize that he can't anymore. remember, because the federal government isn't spending as much as bernanke would like, he's not really sure that things will stay better. but lots of other people think so. and they're taking action right now. ahead of the moment when the economy really gets strong. by selling bonds and high-yielding stocks. tomorrow we're going to buy the stocks that were never attractive versus bonds. we will buy the stocks that -- of companies that make more money if the economy's better, not the ones that make the same amount of money either way. so here's the bottom line. buying stocks just for large dividends, the way so many people have done for the last four years, and buying bond funds like so many have, it's over. it's over until at least those stocks and funds drop much more than they have to date. but buying stocks of companies with improving profits because the economy's getting better, i believe those are now after today the investments that will work the best for the rest of 2013. john in new york. john. >> caller: hey, jim. how are you doing? >> real good. how about you, john? >> caller: good. so in honor of the great --

myself being a bucknell alum, giving you a big bucknell boo-yah. >> bill gruber boo-yah. professor at bucknell who had me speak there for their big fund-raiser. what's up? >> caller: terrific. my question is there's been a lot of going on, making several acquisitions in the past few months and speculation of more this week. may be an ipo in the next future. do you think yahoo is a good long-term investment? >> yahoo the parts are worth more than the whole. therefore, yes. it's not hostage to the whims or the slings and arrows of the regular economy. i think it is a good situation. i really like that ceo. let's go to scott in georgia. scott. >> caller: hey, jim, i'm trying to understand what's going on with these reits, particularly nly. announcing their dividend today, down 11% but still yielding 12 1/2%. is it safe to go in? >> no. you know, these companies are all -- they declared their dividend. their dividend was cut. i don't know how they're positioned versus what's going on with this rapid world of

interest rates right now. so i can't recommend them because i just think it's happening too quickly. i don't know how these firms are going to adjust. i don't want you in mortgage reits right now. let's go to mark in illinois, please. mark. >> caller: big boo-yah, jim. from the illini state. i'd like your opinion on blackberry. i've owned since the low 13s and i'd like to know your thoughts on the z10 model. the huge shortage and holding into earnings after the recent guidance from bernstein. i know you've got my back. >> i say -- i've been saying you buy it at 12, you sell it at 15, and you do that all da. and just keep doing it over and over again. done pass go, do not collect 200. buy 12, sell 15. the fed giveth, the fed taketh away. a sea change is now upon us. the reign of dividend stocks, which i have loved, i have to admit-s now ending. the throne is being challenged by companies with improving profits. so you know what? we'll just -- we'll find them too. "mad money" will be right back. >> announcer: coming up -- brand power.

iconics is the company behind many big names in the clothing aisle. and the stock's been strutting its stuff on the wall street runway. can it continue to climb, or could it fall out of fashion? cramer's talking to the ceo. and later, well designed? restoration hardware's ipo got investors up off the couch. more than doubling since it made its debut. after reporting it surged 25% in the past week alone. so is it in need of some rest or should you be pounding the table for more? find out in cramer's exclusive. plus, level playing field? when wall street doesn't play fair, cramer's got your back. cnbc's eamon jafers broke the story. >> access for an elite group of traders for a fee a full two seconds before its release. >> and he sits down with jim just ahead. all coming up on "mad money." 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.

on "mad money" we're always searching for under the radar stocks that aren't getting enough respect from the market, maybe even from the analysts who cover it. i want to introduce you to a new one. iconix brand group. that's icon, for all you home gamers. iconix is a house of brands. brands for apparel, footwear, sportswear, accessories, home products and electronics. the company knows a lot you know. joe boxer, london fog, cappedy's, bongo, danskin, rocco wear, the sharper image brand and umbra among many others. the company owns these brands and licenses them out to various retailers and apparel makers who actually make and sell the products, paying iconix a royalty stream for the privilege. these products are at every part of the value spectrum from saks all the way down to walmart. iconix reminds me of long-time

cramer fave pvh which is also partially in the business of licensing products especially calvin klein although lately pvh has been taking over and making a bundle doing it. iconix has rallied 35% since the beginning of the year. stock was recently downgraded based on fears of softness from the low end consumer. but a stock like pvh seltz for 15 times earnings. iconix sells for less than 13 times easternings lower multiple even though it has a higher growth rate 18. maybe it's cheaper. plus iconix doesn't have to worry about inventory or costs. let's talk to neil cole first on "mad money," the chairman and president ceo of iconix brand group, to learn more about this fascinating company and its prospects. mr. cole, welcome to "mad money." >> thanks, jim. thanks for having me. >> we're getting a lot of questions on iconix. a lot of "lightning round" questions. and one of the things that's difficult to understand is looking at all this nothing says iconix on it, but that's by design. right? you don't want -- that's not the

name that wants to be featured. >> yeah. we have 33 different brands. and we're trying to sell umbro and peanuts and candies. we're not selling iconix. we're a holding company. but these are the brands that, you know, average brand over 50 years old. some of them over 100 years old. the consumer knows these brands. and this is where when these brands sell we make a royalty. so these are the brands we're out there promoting. >> let's take london fog. that's a venerable name. how did you get that? why would anyone sell you that? >> actuallyish london fog, it's an interesting story. london fog is been 80, 90-year-old brand. we ended up -- it went into bankruptcy. one of the unique ones. and we bought that in bankruptcy court for about $35 million. we had it all licensed up, $40 million of guaranteed royalty before we bought it, which we do with every acquisition. so we were comfortable we couldn't lose and we had this incredible 80-year-old brand that we can get a royalty on hopefully for the next 10, 20 years. >> okay. is that the case for umbro? nike is a company we really like

on "mad money." but they didn't like umbro. why is there -- i'm going to call it non-treasure, not trash. why is their non-treasure your treasure? >> because nike, incredible company, also one of my favorites growing up and you have to admire one of the best marketing product companies in the world. they were focused on the swoosh. and this was a stepchild. we were -- we saw this gem, 100-year-old company in manchester, england. the best football, soccer company in the world, orange. a and we saw it as a huge opportunity. nike was spending -- 800 employees. we have 20 today. and we shifted all the risk to the licensees. 47 licensees. guarantees of close to $45 million to us. only put about $10 million of marketing behind it. guaranteed 30 million profit. and that's how we look at brands. we run our business model very different than a traditional operating company. >> okay. now, i use the pvh example. in some way it's more -- pvh

licensed to g-3. we've had them on. jarredin. we had mr. franklin on. he has a lot of brands that aren't jarden but they're household names. is it kind of more of a mixture of jarden than it is pure pvh? >> i would say it's similar that neither of those companies, you know, make their living selling their corporate name. >> right. >> so we just have these great consumer brands and this is where what we trade to the consumer as. and we're not so focused -- the only place that's important for us is iconix is the street. and we care about trading -- and we have to focus on wall street more. probably a better job to help sell the security because our names are not known as our -- our names are known but not the stock as much. >> you don't have a lot of analyst coverage. one of the main analysts that follows you, the main house, doesn't seem to like you. seems to be saying that your revenue growth has to slow, perhaps because of retail slowing. that's not been the case so far this year. >> no. we're going to grow.

this year we're at least 20%, 25%. acquired some great brands. we also have an incredible war chest. we've raised a lot of money over the last year. and we're going to acquire more brands. and we have a lot of exciting initiatives. >> are there more brands out there? >> there are so many great brands. >> i know you can't -- i don't want you to give away your game plan. but where are the great brands in the ether? are they owned? are they in bankruptcy? where do you find them? i mean, i want one. why would i sell to you? i know you make more money if i sell it to you. >> right. if you look at the profile of the 30 brands that we've purchased over the last seven years, most of them are incredible consumer names but they don't have great ebidta. they aren't making a lot of money. so the private equity firms are not necessarily interested. because umbro, not making a big profit. but we change the structure of the business, change, it put it in this licensing model. no inventory, no capital expenses. kind of take the risk out of the business. we transform the business into our model. and it works for everybody. >> one last question. this one, which is from a macy's

box, but you somehow caught on in china. what do they know? i mean how do you know what they know? >> what they know is material girl is madonna. and madonna is iconix worldwide. very important for suss international. about a third of our business is outside the u.s. and in my opinion, all our growth is coming outside the u.s. >> right. >> we're focusing on places like brazil, china, india, and we have incredible joint ventures. we believe that the future is in these emerging markets. >> definitely. >> they love american brands. they love american culture. so we're bringing them american brands. and that's an important part of our organic growth. >> i've got to tell you, i love good business models. you've got one. in this environment this is a terrific business model. i wish i had known more about your company before the big run but i think people at home, now you recognize these brands. this is who profits from them. that's neil cole, chairman, president, and ceo of iconix brand group. i wish i could point to some good research. it's really the transcripts themselves because the analysts don't really understand it. "mad money's" back after the break.

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a lot of stocks are crushed today but not the stock of restoration hardware. the high-end home furnishings retailer, which finished up. it was at $72.07. it was up 39 cents for the day just a smidge off its 52-week high. here's a stock that's been downright unstoppable in part because of the rising housing market means people are spending a lot more money on their homes and in part because they have an amazing breadth of merchandise, particularly for the wealthier consumer. i told you about restoration hardware's ipo before the company became public on november was $20 a share. immediately rose 30% in its first day of trading since then the stock has rallied over 127% in the after-market including a 12-point spike since restoration reported a fabulous quarter last week. staggering 41% increase in same-store sales. the largest of any company i follow including some sizable orders from yours truly who basically built two new bathrooms this quarter using everything restoration has from the faucets to the towels and towel racks. this stock hs a gigantic move

but i think it's got more room to run. let's check in carlos aborini the ceo of restoration hartware and gary freeman the company's chairman emeritus and curator to hear more about their business and where it's headed. welcome to mmd pmd. >> hey, jim. >> how are you, sir? terrific to see you. >> good to see you. >> i think we're going to start with a particular question that's going to explain a lot. you're the curator. but this is a retailer. how can that be? >> we say we're not really just a retailer, we curate things. and we curate not only products but people, points of view, ideas and experiences. and put them into a composition that becomes uniquely our own. >> how is it possible that you can be so different from what many people thought restoration hardware was in a very short period of time? >> there has been an incredible transformation of the company. gary has done an amazing job with the team just transforming the entire experience.

we've reconceptualized the store experience. we have created a dominant assortment of product that is completely ahead of everybody in the industry. the spring source book is a great example. 1,600 pages of product. >> but you're breaking every rule with that. you're breaking every rule. every catalog i get, it's got a certain depth. it's not supposed to be like a gigantic "vogue" catalog. everything i see in your stores is different from what everybody else is doing. you're in galleries, not stores. you're in iconic buildings. nothing you're doing is what any other retailer is doing. nothing. >> right. for one, we'd ask you whose rules, right? those are somebody else's rules. so we -- you know, we play by our own ideas and create our own rules. and like you said, we don't have stores, we have galleries. we don't have catalogs, we have sort books. we like to say this is not a company, this is our cause, this is an authentic reflection of who we are and what we believe

in. and we like to lead and p follow. so everything we do comes from a very authentic place. >> and i want to add that there are a lot of things we are doing that may not seem the conventional -- >> right. i mean -- >> but. but there's tremendous logic behind everything we are doing. and we have been proving every one of those initiatives and every one of those moves, and the numbers i think speak very highly of how effective they are. >> up 41%. but even in your conference call you say that necessarily can't continue. you're not -- you're very realistic about what can happen. that's a pretty big number to maintain. >> yes. >> right? you're looking -- well, no. look, here's where i am. okay? i don't want -- 41%'s unsustainable, guys. you can't do it. >> no. well, you know, the 41% is on top of a 26% the year before. but -- and that 26% is also on top of a healthy number the year

before. but definitely, we're not planning -- >> right. >> -- for that type of growth in comp store sales. >> i think the right way to think about this company is -- and the question we usually ask to kind of frame the opportunity is who is the home store for the luxury customer? right. for the neiman marcus saks fifth avenue, barney's bergdorf customer. and when we usually ask that question we usually get the trout look for people. and we believe we can become that company and fill a really -- a void that's in the marketplace today. >> but there is no one. i mean, that's what i've discovered. like when i'm doing my house over. i didn't look at the price because i looked at the quality. okay? the price you could say is expensive. but there's a lot of people in this country who are not looking at the price, looking at the quality. and the only guy who has it is you. i mean, it's kind of true. >> right. we feel we're completely differentiated in today's marketplace. and you know, you talk about -- i mean, obviously, this market is very large. $143 billion market. and it's highly fragmented.

so we have been able to really gain significant market share based on that powerful offering i was referring to. >> how many -- you've got a lot of concepts going. you have very few stores. i'm looking at the research. restoration hardware is a small omni channel luxury home furnishings company. could you end up being a gigantic, much more than luxury home furnishing company? is that the goal? >> we're at the very, very early stages. >> not even the first -- >> no. the way to think about this, right? is we have spent ten years really building an assortment far beyond the four walls of our existing stores and our legacy stores. right? and the value of this company is really trapped in those old stores that were built for an entirely different company. we don't have one product from the original restoration hardware. that's why we built the brand around rh. the key town locking the value is building around a real estate flafrm so that consumers can see what we have today. >> everyone wants you.

we have a lot of real estate investment trusts on and they're trying. they want you as an anchor tenant. and they'll do what's necessary to get you? i mean, is it competitive to get your stores? >> we are seeing tremendous enthusiasm on the landlord community. we just came back from icsc. you know, it's a significant conference in real estate. and there was such an immediate response to what we're doing. everybody wants us in their dominant shopping centers, across the country, anchor tenant type of transactions. significant economic advantages to the deal. >> we really have sales per square foot that are unseen before in the home furnishings industry. >> just give an example. are you up there where apple is in terms of -- >> nobody's up there where apple is. they're in a league of their own. although they're an aspirational example for us. but i'd say today we're in a league of our own. if people can back into our sales per square foot, they're meaningfully higher than anybody else in the industry. >> i said, we have just opened

five full line design galleries. this is a new concept that really we continue to evolve. and we'll talk more about that. but in the first two that have comp now for the first time we are doing over $1,500 a square foot. and these are significantly larger than the legacy -- >> stores that are 20,000 to 25,000 square feet. >> five times what you'd get from a good retailer. >> we have a couple stores that are over $4,000 a square foot. >> wow. that's incredible. >> yeah. >> i've got to ask one question. market's down today. federal reserve talking about a tightening. people feel wealth effect. might be hurt by lower stock prices. do we have to worry about the american consumer in rh? >> well, you know, we try to focus on the things we can control, not things we can't control. so the things we can control is the product, the experience, the presentation, and creating something inspiring that, you know, today i don't think people are just shopping for the home or not shopping for the home. they could be making a decision

between i'm going on vacation or i'm going to redo my bathroom. you know, i'm going to buy a new car or i'm going to redo my living room. you know, the most inspiring choice is going to win. that's how we think about it. >> like a rain room is inspiring to me. no, i mean it. that's not looking at -- that's something that we didn't think of as a retailer. >> correct. well, we started with that, we said look, most of the world is going to think what is a home furnishings retailer doing in the contemporary art world? what are they going to know? and we said we had to earn the respect of the art world and to do that we had to do something the art world has never seen. and the first acquisition we made was the first edition of the rain room. it hadn't even been built yet. we commissioned the first one. and luckily for us, you know, sometimes naivete is good. but the moma decided they wanted to put it on exhibition in new york city. there are six to eight-hour lines. we didn't really understand the significance until the artist told us do you understand the moma is like the holy grail of

art? so you know, we -- again, it comes from an honest place. we love the idea. it was all about the artist's point of view, it's about trust and belief. we wear these believe bracelets. it's all about believing in our values and, you know, how we think. and that piece of art actually represented kind of who we are and what we believe in. and here it is at the moma. >> well, look, i have to -- unfortunately, i have to wrap. i'm trying to learn, like everybody else, because this is a great growth story of our time right now. i hope you'll come back. i hope both of you will come back because it's very hard to get your -- it's like modern art. it's very hard. i'm like a realist. i'm stuck with the four walls. i'm stuck with the photographer. and i'm just trying to understand how you guys are selling for 40 million and the rembrandt's selling for 2 million. but that's the way it is. you got it right right now. ceo carlos alberini and chairman emeritus, curator and creator gary friedman. i'm trying to get my head around it. sometimes you have to own it tha. stay with cramer.

>> announcer: coming up, level playing field? when wall street doesn't play fair, cramer's got your back. cnbc's eamon javers broke the sfoirp. >> access for an elite group of traders for a fee a full two seconds before its official release. >> announcer: and he sits down with jim, just ahead. oh, he's a fighter alright. since aflac is helping with his expenses while he can't work, he can focus on his recovery. he doesn't have to worry so much about his mortgage, groceries, or even gas bills. kick! kick... feel it! feel it! feel it! nice work! ♪ you got it! you got it! yes! aflac's gonna help take care of his expenses. and us...we're gonna get him back in fighting shape. ♪ [ male announcer ] see what's happening behind the scenes at aflac.com.

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it is time! it's time for the "lightning round"! on cramer's "mad money." rapid-fire calls. say the name of the stock ielt tell you whether to buy buy buy or sell sell. my staff prepares the graphics on the fly, play until we hear this sound and then the "lightning round" is over. time for the "lightning round" on cramer's "mad money." start with elizabeth in florida. elizabeth. >> caller: hey there, jim. in light of the federal reserve decision today, do you see home builders such as toll, lennar, and poultee still viable opportunities and if yes which one would you buy? >> i think these are now going to go down because mortgage rates are going to go up very quickly because of how bad the bond market is. and then we're going to listen to the conference calls and see whether they hurt their business. but don't jump the gun. these stocks are now in the penalty box and it's blackhawks versus bruins. alan in california. alan. >> caller: jim, greetings from

balmy escondido. what's your take on aptar group, atr? >> plastics. enclosures. these are all good situations. this is an economically sensitive stock that i like. let's go to phil in florida. phil! >> caller: boo-yah, mr. cramer! thank you for taking my call. thank you, sir. >> no problem. >> caller: my stock is celldex therapeutics. >> great speculation. i recommended it two weeks ago on the show and i stand by my recommendation. art in georgia. art. >> caller: how are you doing, jim cramer? big boo-yah to you. >> thank you. >> caller: love your show. i want to thank you for all the help you give us small investors. >> well, thank you. and thank my staff, too, because they're unbelievable. >> caller: they are. they are. i mean, i watch the show twice a day because i want to make sure i don't miss what i missed the first time. >> got you. >> caller: i wanted to ask you about peabody energy, btu. >> don't like peabody, don't

like the coals. i own the fact that i liked peabody at one point and then i said hate it. and i've hated it now forever. let's lighten up, everybody. peter in texas. peter. >> caller: ba-ba-ba bah-boo-yah, cramer. >> nice. >> caller: i wanted to thank you very much for helping me make all this money. but on mastercard, should i hold what i have or still buy some more? >> mastercard was one of the stocks i said would be the canary in the coalmine. i thought that would rally even in a bad market. the stock did go higher today. it's one of the few that go higher. when the market is better that means it's going to go even higher. i do not want you to sell mastercard. i'm going to dan in rhode island. dan. >> caller: hey, a big rhode island boo-yah to you, jimmy. and a bruins boo-yah as well. >> i like the bruins. >> caller: bruins are going to kick butt tonight. listen, what do you think about

biopharma? they have a lot of -- and they're also affiliated with d astra zeneca and also with onyx who you've had on your show. >> as is often the case with stocks like this, i do not know currently the situation, and i will to do homework and come back rather than just say hey, i think that's terrific. that's not good enough for you. you deserve better. dwayne in my home state of new jersey. dwayne. >> caller: by new jersey boo-yah to you, jim. >> i'm all over that like a cheap suit. what's going on? >> caller: okay. what do you think about regents financial? >> it's the kind of company that analysts are going to downgrade because they're going to say this bond market hurts them. they'll be wrong. let the stock come in. it's got a bad head and shoulders. and then pull the trigger. rf. i need -- oh, and that, ladies and yes, is the conclusion of the "lightning round"!

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used to be that wall street at least tried to maintain the pretense that the stock market had a level playing field. even when the industry and the regulators didn't care much about fairness in reality, they still tried to keep up the appearance of fairness to regular individual investors like you. lately, though, the cheating and albeit perhaps legal behavior has gotten so blatant that i can't blame anyone who feels like this game is rigged. consider the chicanery with thons reuters prereleasing the confidence index to select clients that was unearthed by cnbc's eamon javers. thompson is a respected widely used research platform on wall

street. investors pay them for access to research information you that wouldn't otherwise have. now, what's been known for a while is thompson reuters has a deal with university of michigan that lets their trades have access to the consumer confidence survey five minutes before the general public. you don't have to like the smell of that, but it is legal. the big boys pay to get proprietary information faster all the time. and in the scheme of things it's not that terrible. but javers found out thompson reuters lets high frequency traders pay $2,000 a month to get this information two seconds ahead of their own subscribers. and now at two seconds that's an eternity for these high frequency stock scalpers. that's kind of mind blowing. all these managers that subscribe to thompson anything they have an edge because they get the important michigan survey five minutes before investors. turns out they're getting hosed too because the traders with the best machines are getting it two seconds before them. eamon broke the story last week. you've got to look at this. this is amazing to me. >> cnbc has obtained a document that shows a closely watched consumer confidence number that routinely moves markets is accessed by an elite group of traders for a fee a full two

seconds before its official release. you'll see trading in the spy etf on may 17th. the red line on the right is 9:55 a.m. but you can see that trading exploded two seconds earlier at almost 9:54:58. >> i tried to find this two-second disclosure on the reuters website. it is not easy to find. a lot of the economists i talked to on wall street had no idea. >> i came out here and i was outraged when i heard it. okay? because i thought we all got it at the same time. now, someone from the government has to be as outraged as we are here. >> i've been talking about the danger of these high frequency traders since the flash crash. machines that can do hundreds of millions of trades in the blink of anot eye. but when these firms are also getting key fox before everyone else, forget, it it's not fair. it's like going deer hunting with an ak-47. that's why i want to take a closer look at this issue with eamon javers, who is cnbc's washington correspondent. i usually don't put on our own people. but javers is just breaking through. this is just too amazing. and i've got to have you know about this stuff. and welcome to "mad money."

>> thanks for having me, jim. >> this stuff makes me feel i'm wrong to tell people they should be in the stock market. regular people. >> if you're an individual investor, should you be trying to play some of these releases at all, the jobs report, anything else in this era of high frequency trading? these numbers are moving markets in milliseconds. if you're watching sxrns you're say hey, jobs number is good, i'm feeling bullish i'm going to buy, a lot of the market movement has already happened even before we can report it on our air because the millisecond by millisecond trading is going on. that's even before hampton pearson, who gives that number on our air, can take a breath. >> but we -- the policy of the united states, the policy of the government is to not allow someone to have an edge. everyone's supposed to be -- >> that's right. and the department of labor has gone oust its way to try to make sure everyone is equal. they try to regulate the way people access their high frequency cables, getting into the labor department and all that. but you've got some government data and some non-government data. and this consumer confidence number turns out to be produced by the university of michigan going back to the 1940s and they

came up with a deal where they sell it to thomson reuters for $1 million a year and thomson reuters puts it out on what they call a tiered release. so those ultra high elite clients get it two seconds before everybody else. they know it's going to be a market pop or drop based on that number because traditionally it is and they're trading with two seconds, that's an ocean of time for high frequency traders. they're doing the market moves way before that number becomes public on our air or for other wire services or on the website of the university of michigan or of thomson reuters. >> look, i know it's allegedly legal. but if a prosecutor wanted to build a case and called you up, could you give them the stuff so that they -- i mean, i think this is such a scandal that it may look legal, but a case could be made this is wrong. >> i wouldn't go into the legalities of it but i would say is if you look at what individual investors know about this and even some really smart people on wall street that we talked to had no idea this practice was going on. and the question in my mind it comes down to is what is wall street, these elite high frequency traders, what are they buying when they buy this

consumer confidence number? are they interested in consumer confidence, how consumers feel? if they're really interested in that, they'd hire a polling firm and go out and poll the public and figure out what consumers are saying. what they're buying here is access to a pop or a drop in advance by two seconds that they know is going to happen. they're buying market-moving information. they're buying it first. >> every time i turn on the tv you are on with a new one. this is not isolated. it turns out that there's just -- how many of these are there? how many outrages are there? >> well, there are a lot of different data points that move markets. for example, if you look at the natural gas number that comes out every thursday -- >> someone got that early. >> yeah. that's a weekly number that comes out from the united states government's department of energy number, and we frequently see in working with folks over at nanex, eric hunsader over there has been terrific at recording these things and sending us the data. you see the market move on natural gas a few seconds sometimes before the natural gas number comes out. we have no idea why that's happening. but i reported on cnbc last year that a lot of these firms are banging on the website of the

department of energy with their computers so fast that they're actually slowing down the website and extracting the data for themselves early before the rest of the market can get to it. >> that's outrageous. this is like duke and duke in "trading places." just outrageous. you've got to stay on this. the only guy doing this. eamon javers. doing incredible work for cnbc and for you. i can't believe this stuff. i've got to tell you, i'm still steamed about it. stick with "mad money." mr. javers, fabulous job. >> thank you.

some things are eternal in this racket, regardless of what the fed does, and one of these congresses is the timeless stupidity of trading off the headlines before the full story's out. we saw that exact moronic pattern play out not once but twice today. it makes me sick to think that people continue to throw money away like this every day. first mistake. premarket selling in fedex. here's a stock that's uniquely driven not by the earnings but by the actual tone and discussion on the conference call. we all know that. the headlines are almost always too difficult to decipher. yet at first glance when we got the bottom line numbers during squawk traders reached for fedex paying up a buck from last night's close. then the guidance dribbles out and we get sellers flying in and dumping the stock. $2 below where people were buying just a few seconds before. hey, then we get more chatter about how perhaps fedex is being conservative, which then -- >> buy buy buy! >> -- drives the stock back up. only to have it come down once again when we see in tiny morsels people aren't paying for

express delivery, something we know that hurt the stock last night. bingo, right back down, this time off a dollar. then i go on "squawk on the street" it gets crazy. i suggest people should perhaps do a little homework because even though the stock has run up from the last disappointment these numbers look pretty darn good to me. fedex is in reality 50 cents as i'm talking. then when i finish talking the stock loses 50 cents and goes back to where it was before i started talking. after all that we finally hear from the company. that's right. throughout this whole period of gun jumping we only heard the earnings release. turns out fedex is the most bullish we've ever heard in a long time. 13% profit growth. certainly better than i expected and everybody else. and all their restructuring programs going. at last the stock takes off because it's not trading on innuendo or confusion but on facts. even a down 200-point day couldn't help this stock finish in the black. that's a textbook example of how to lose money from the get-go by trading on incomplete information. the smackdown of tesla from $103 at yesterday's close to $99 in premarket trading on a huge

recall of the model s. the whole viability of the enterprise is going to be in question. oops. turns out the recall only involves 1,228 cars made last month, and it involves the left back seat in the event of a crash. frankly when i read about the details of the recall i didn't even know if i'd bother to get it fixed. but then tesla will pick the car up at a place of your convenience, give you a model s loaner fix the car in a couple hours and bring it back to you. after that i wanted to go buy a tesla immediately after the uft can service they are offering. surely once more once we got information that came out the market reached the same conclusion. the stock resumed its inexorable climb closing up 1.29 five points above where it traded premarket. the first take the incomplete take that indicated tesla might have a fatal flaw disappeared and the decline disappeared too. all that may have happened is the humongous short position just got bigger. apparently it had been going down lately. in short trading on incomplete information before the market opens is a license to lose money. regardless of whatever else is

happening including the aggressively negative reaction to today's fed statement. next time you're tempted to jump the gun before you know the full story remember fedex, remember tesla, then maybe you won't be so eager to throw your money away. stick with cramer! >> message to investors. please don't panic. i'm going to tell you why. neil ferguson says america is overregulated. he'll be on the show. governor rick perry is poaching jobs from other states. he'll be on the show. up next on "kudlow." scottrade. i can always call or stop by my local office. they're nearby and ready to help. so when i have questions, i can talk to someone who knows exactly how i trade. because i don't trade like everybody. i trade like me. that's why i'm with scottrade. announcer: scottrade- proud to be ranked "best overall client experience." since aflac is helping with his expenses while he can't work, he can focus on his recovery.

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all right. bad day. rates going higher. mortgage rates going higher. let the dust settle. there's always a bull market somewhere. i promise to find it for you right here on "mad money." i'm jim cramer. i will see you tomorrow! well, ben's speech and the market weeps. stocks sold off sharply today after the fomc policy director and chairman bernanke's own news conference and bond yields took a big jump higher. but i say don't panic and i'm going to explain why in just a moment coming up. also tonight, is america going down europe's failed path? well, harvard professor niall ferguson's new book says the u.s. is becoming planet government. but not in texas. because joining us live on the set tonight, special guest host, governor rick perry. he's here to talk about his unprecedented tour across the country to personally lure businesses to the lone state. listen up. blue states, you're in trouble. rick perry and f