and responsive dedicated support meets your needs, and eases your mind. centurylink. your link to what's next. > 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 make you a little money. my job is not just to educate you but to entertain you and teach you. call me at 1-800-743-cnbc. holy cow, we can go down too? we can get hit?

dow dropping 32 points. s&p giving up .37%. nasdaq declining .25%. and we seem to fold in angst to run from stocks as if they're toxic instruments doomed to ruin our bank accounts! >> the house of pain. >> so perhaps it's a good moment to ask do we fret too much? do we let our fears take hold when the market reverses? do we let a small drift, you know, one of these ones like today, define us after the s&p been up eight days straight. or as stocks decline, do we recognize we sometimes get too worried when events or earnings or trends go against us? just think of what has really happened in the last two months alone. how much do we fret? we fretted endlessly that one day, one day we would, indeed, have a dramatic rise in interest rates. so what happened? we got one. a huge percentage increase, a whopper of one.

what does the market do? well, how about giving the s&p 500 the longest winning streak in nine years, how about the nasdaq 100 going up 14 straight days, best since 1990. we were supposed to be frightened out of our shorts by the decline of 100 basis points. we were supposed to be scared, we were supposed to sell, sell, sell. but as bonds overshot their mark, there was no reason for rates to move up that dramatically, and then came back in. what happened? it became the ultimate buying opportunity for stocks. that's right, something so negative, so horrible, somehow transformed into an honest to goodness buying opportunity. this one without a doubt had to be the bears' worst nightmare! an event so profound, so obviously toxic for stocks and turns out to be a terrific chance to get in and start -- >> buy, buy, buy! >> catch the next leg of the one-sided bullfight? how about gasoline? i was supposed to be frightened about that one. we're flirting with $4 a gallon.

$4 a gallon. how does that have an impact? well, it's a tax, right? it's a direct tax that takes disposable income and flushes it down the toilet of exxon. how could that not hurt? why not short all of retail? hey, and a couple of analysts are suggesting, why not bet against six flags, cedar fair, disney, people have to go in the car to get to those things. lone ranger was a bomb. what happens? you sell them, you short them, maybe you make a couple of bucks. that's what happened during the big interest rate scare. you can do it again. i don't really think it's worth the risk to make those couple of bucks. it certainly wasn't in retrospect although i'm sure more people are trying to do it now betting against stocks that don't seem to reflect the pain of the price you're paying at the pump. to me, all those stocks take a hit on some price at the pump pain, are buys. cars use less gasoline, use a lot less than they used to. more important, though, other than darden, no one has belly ached about the higher gas

prices that i've heard. the bears really can't get the big down days they need to make money by shorting and then covering or buying. how about the banks? remember we were supposed to be taking profits hand over fist in this group before they reported? i know it. my charitable trust has a huge position in wells fargo and were we ever tempted to sell it when not one, but two fabulous analysts downgraded the darn thing right before the quarter. turns out those analysts were wrong. the quarter had upside in every metric where it was supposed to have downside. from net interest margin to expenses, both of which going the wrong way. even as the company admitted higher rates could impact mortgages, a huge part of their business, jpmorgan and citigroup were cautious too, but the market detected the positives. they didn't let the negatives get them down.

today the market extrapolated a weak quarter and bank investors decided that after initially liking the headline numbers from goldman sachs upon further review of the conference call, looks like a lot of those great gains might not be replicated and therefore the stock got sold. and i have to tell you, again with true worry in sight, if bank of america disappoints tomorrow, the whole group will be crushed, which would be a textbook case of people fretting too much. and after a couple of days you know what's going to happen? they're going to come back to these stocks, especially since ultimately interest rates while not going up right now, are going to go higher. how about all the worry over the personal computer plays that's been going on, the component plays for months now. the semiconductor stocks. all i heard lately were these were among the most vulnerable stocks in the universe. ones that very smart short sellers had pounded and pounded. and yesterday, what happened? seagate and western digital hit 52-week highs. up 52 and 59% respectively, that's not supposed to happen. supposed to be at the lows. and while they can go down in

the earnings report, turns out they were horrendous shorts. hewlett-packard advancing more than 85% for the year. micron's back in the win column where it belongs as it was up 110% this year. those shorts didn't work. do you want some serious fretting going spoiled? remember the egyptian riots? they were supposed to have a tremendously negative impact on the market. instead, a much more market-friendly regime took over and egypt's calmed down considerably. how about the protests in brazil? you know what they did? they marked the bottom in brazilian stocks. that seemesd to be going up since then. i'm going to be addressing that later in the show. how about three months ago when starbucks and 3m announced earnings. i remember it well because we were at villanova when they reported and 3m dropped a quick 5 points from 108 to 103. what was that about? it was a buying opportunity. the stock astonishingly rallied. it was a buying opportunity. i still can't figure out what people initially disliked about

starbucks, but i remember thinking a chance to buy the stock below $60 where it was at nova. well, it was better than fine with terrific numbers from china and the united states, starbucks never looked back and a ten-point rally in a straight line. perhaps the best trade of all came from the highest growth stocks when the interest rate rally -- when the interest rate soared. now, these high-growth stocks are the ones you're never supposed to buy in an era where rates are skyrocketing. and after that move, i don't know how you can say rates weren't doing just that. you're supposed to blow out and then short the most richly valued stocks in the market as the rates rise signaling an oncoming inflation rush and a concomitant erosion of what you should be willing to pay for company's future earnings. that's the proverbial hedge fund playbook. that's what you're supposed to do. celgene and gilead have been downright unstoppable, taking

out the old highs. i get that with celgene. they announced they would be able to reapply in europe. but gilead, nothing special at all. when we were all fretting and worrying, the two stocks are regarded as the most expensive large cap equities in the universe. amazon and netflix. now, when i was starting my old hedge fund, i used to go after these kinds of stocks. every time we had an interest rate spike, i shortened them with abandon, betting the price earned multiple i'd be coining money. but once rates stabilized, you were history and the shorts that did these trades this time around, they are, indeed, history. amazon, netflix, 52-week highs today. good shorts spoiled! of course, there are some stocks that haven't come back. housing stocks haven't, they need mortgage rates down to get them back. but if rates go down, they will go up. blackberry, united parcel,

coca-cola, more on that later. they're disappointed where they are right now. they're in, yes, indeed, the bow wow chateau. but for the bottom line, what are we thinking here? looking at recent history, we fretted too much. we worried too much. we were scared too much. we let what's known as the down tape impact our feelings to the point of acting on them. perhaps this time, this selloff will use the weakness to buy the good stocks that have just reported and not dump them. you know what we've been doing? we've been doing the rational thing, the rational thing to do. and in the end, doing what's rational does make you the most money. can i go to john in california, please? john? >> caller: boo-yah, jim, from out here in sacramento, california. >> sacramento, oh, i miss it! how's it going out there? >> caller: it's about 80 degrees and i hear you guys got our hot weather. we've traded off. that's a pretty good thing. >> true. excellent weather report. >> caller: we got involved with qualcomm a while back, they

couldn't keep up with demand. we hear today they downgraded and the stock's going up. what's your opinion? >> not my favorite. not my favorite. i like the kind of old-fashioned retro paleozoic tech stocks. i like texas instruments more than i like qualcomm. there, i said it. i like cypress semi more. i like micron, symbol moo, more. let's go to yasha in new york. yasha? >> caller: i have a question about baidu, i rode it down to the mid-80s and rode it up until yesterday and unfortunately i pulled the trigger perhaps too early. in light of the fact they've made two multibillion dollar acquisitions of late, should i get back in? >> no! no. i mean, look, i think china has bottomed. i think the news out of china will be bumping along. but i don't want you to own any chinese stocks. i understand they executed a guy for doing what madoff did the

other day, you think that should concentrate their minds. i do not trust their equivalent of the s.e.c. i don't trust their stock market at all. and that's been a good thing not to trust. you don't need to dig too far into your memory to realize that worry is not an investable option. you know what? let's go for fortitude next time because history says we should use the weakness to buy. "mad money" will be right back. coming up, up up and away. oil's on the rise and we're all being pinched at the pump. but cramer's giving you the tools to fight back. don't miss two slick ways to play the move in black gold. and later -- soda wars, the glass was half empty for coca-cola today as its earnings shortfall took the fizz out of its stock and its rival, as well. but with pepsico reporting next week, is this your chance to grab some pop? or could it leave you with an awful aftertaste?

don't miss cramer's take, 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. vo: traveling you definitely end up meeting a lot more people but a friend under water is something completely different. i met a turtle friend today so, you don't get that very often. it seemed like it was more than happy to have us in his home.

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well, a not so hot day, at least in the market where the averages have pulled back so slightly from the highs, how do you find stocks well off the highs, still have a lot of room to run. stocks where the easy money has yet to be made. you know what i do? one way is i turn to the charts, which is what we're doing with the help of tim collins, my colleague at realmoney.com. in a market where virtually everything has been roaring, sometimes you have to start by looking at the losers and the laggards. you want a stock that isn't tapped out, that's not exploited. find one that's been on a downward trajectory and could be

ready to turn things around. especially a stock that is down when it should be going up for other reasons. collins points out that even though both equities and oils have been on fire, there are still stocks like petrobras, pbr, the big brazilian oil firm. they're actually down 30% year-to-date, and get this one, down 82% from its all-time high. and no, i'm not talking about a brazilian company only as an excuse to run gratuitous giselle footage, although that is an added bonus. based on the charts, collins thinks that pbr, the stock could give you a 10% to 20% pop by the end of the year and maybe even more. why does collins believe the pbr can be transforming from loser to leader? take a look at this. this is the daily chart. now it doesn't take a rocket scientist to recognize pbr has been in a serious down trend since the beginning of the year if not since 2008 when it peaked, but you don't see that because this is a shorter length

of time chart. it's improved aggressively from the upper left hand corner of the chart to the right-hand corner. it's begun to turn higher, as you can see. and collins thinks we could be looking at a genuine bounce here, something that has been antithetical to my view. why? i swore off this pbr back when it traded in the 40s, now it's at 13, although i never swore off the other pbr, pabst blue ribbon. hence this convenient albeit totally gratuitous beer-a-mid! they don't stack well, by the way. it's not like miller 64. the reason collins is actually saying buy what looks to be a real dog? this same chart which shows pbr getting pasted shows the stock can stage short-term rallies amidst the carnage. we've got two terrific moves.

one at the beginning of march and another that started in mid april. and together nearly erased all of petrobras losses for the year before the stock gave back all those gains and then some. and every time we have one of these short-term rallies, collins points out they've been led by pbr's ten-day moving average. a very short-term measure of the stock's trajectory. the ten-day moving average has been trending lower. if you bought pbr when this flattened or started to head higher, you've racked up solid gains as long as you treated it as a trade and got out before the profits evaporated. you can see the ten-day move, boom, that signaled that. that signaled that. there's really obvious trading, people. there it is, okay. and as long as petrobras stays above $12.60, 62 cents below where the stock is right now, then collins thinks it's going higher, so you've got a nice stop out, 62 cents below. he sees it heading to $15 based on the past in terms of the ten-day moving average, and that would represent a 12% gain from

these levels. i'm going more toward the investment here. that's not all. collins sees more things that he likes here. check out this version of pbr's daily chart. looking at the action in the stock here, collins think petrobras is forming a rounding bottom pattern here. this rounding bottom is just now breaking through the ceiling of resistance that could propel the stock into a terrific rebound. once pbr launches out of the rounding bottom rocking pad, two more important ceilings of resistance, another at 14.50. collins believes pbr can blow through these obstacles and the reason is at the top of the chart where you have the two big momentum indicators we follow. the rsi and the sto. these are both different ways of detecting changes in the stock's trajectory ahead of time as well as whether the stock is too overbought or oversold. what are they saying about petrobras?

we're seeing what chartists call a bullish divergence. each making new highs, relative to where they've been a few weeks ago, they've taken off. meanwhile, the stock itself isn't really doing that. oh, boy, for collins that's an incredibly bullish sign. the fact that the rsi, the relative strength and the stochastics moving higher where the stock is going lower, tells collins and all the other chart watchers that the turn is very likely at hand. you get a bullish indicator, you get them in both, it's a major wake-up call to the technical traders and bottom fishers out there. based on what's happening in this daily chart, he feels they shouldn't have any problem making it above where it is now. although pbr could break out above 14.50, we're going to make a pbr-a-mid. for those of you worried that the run in oil may be overdone and a that pullback in crude could weigh on petrobras, collins says you're really

wrong, looking at the wrong place. the correlation doesn't hold up. take a look at this chart. it shows the action in pbr, those are the candles, okay. and the correlation between pbr and west texas intermediate crude oil. you might think this chart pretty much trades together, right. it shows a strong relationship between the performance of pbr and the price of crude. this black line does not represent the price of west texas crude. it represents the correlation between west texas crude and petrobras. it's all over the map. there are points where the correlation is over 75%, you want to see a line like that if you wanted to see lock step. you also have points where it is negative 75. and now it's about 50%. in short, there's surprisingly little correlation between how petrobras trades and how oil trades. there is a milder or even inverse correlation. it just doesn't configure that way. stop looking at oil, because collins did find something that petrobras has a strong correlation with and it's not oil, it's right here at the top

of the chart, the ewz. the ishares brazil etf. and right now it correlates 98% with the pbr stock. petrobras trades with brazil, that's why the stock got hammered last month. this suggests that even though oil has had a monster move higher, it doesn't reflect any of that because it's been held down by brazilian worries. i thought this was brilliant when i saw it. i said it's brazil, it's not oil! it can roar! here's the bottom line, the charts say petrobras is a laggard that could be ready to catch up. this is a good oil company finding crude oil all over the place both on offshore, onshore brazil, and what the stock is levered to, what seems to be making it a bottom is brazil. this, i don't know, is just a really good beer. after the break, i'll try to make you more money. coming up, refiner reversal.

one big oil play reported a downside surprise, but stunningly, its stock powered higher. cramer finds out what's behind the move. plus, is it time to slide in, or is the slope too slippery? and later, soda wars, the glass was half empty for coca-cola today as its earnings shortfall took the fizz out of its stock and its rival, as well. but with pepsico reporting next week, is this your chance to grab some pop? or could it leave you with an awful aftertaste? don't miss cramer's take. all coming up on "mad money." every day we're working to be an even better company -

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when a company that's been in a rut reports a bad number and does not go down when it, in fact, goes higher on news that's supposed to be terrible, you know what, that is a fabulous tell, one that indicates a turn around could be at hand. and it's exactly what we saw last week when valero, the huge refiner preannounced to the downside. but if you only looked at the stock, you would have thought nothing had happened. let me give you some context. last thursday, valero comes out with this hideous update. they expect to earn 91 cents to $1.01 when the analysts were looking for $1.29. we get the shortfall and after reading the release i predict the stock will get hammered. there were just a host of

negatives, narrow price differential between light and heavy crude, refiners like valero get to capture that differential. actual gas prices were higher, that's bad for the refining business. higher identification number costs, refiners sometimes have to pay up for the credits and show the epa that they're blending enough ethanol into the gasoline. they blame turn around and maintenance activity in four of their refineries for the weaknesses, as well as seasonal issues. in short, it was bad, it was very bad. and i predicted valero would go down on the preannouncement and i turned out to be wrong. dead wrong. the stock opened down 82 cents. once it started trading, the stock shot back up immediately! it closed up $1.32 for the day, $35.86. that's a 3.8% gain. what the heck is going on here? a shortfall is a shortfall is a shortfall, right? i wondered if friday was opposite day and nobody told me. maybe we have some sort of

alternate bizzaro universe and everybody buys stocks on bad news instead of selling them, but no, it was not opposite day and a bizzaro world, i still have a full head of hair. how was i so wrong about valero? simple, sometimes the shortfall is not a shortfall. or at least not just a shortfall. the refiners, including valero have been getting beat up since april now. i mean the group practically became the wall street's redheaded stepchild and for good reason. for years american refiners benefitted from the wider than usual spread between west texas and the higher price of brent crude, the global oil benchmark that pretty much all of our gasoline is priced off of. refining is a margin game. it's all what they paid for oil versus what they can charge you for products like gasoline. the spread between brent and west texas crude was wide as it was for years, these companies made a bundle. that situation was never going to last forever. nothing lasts forever. the huge spread was caused by a glut of oil at the big hub in cushing, oklahoma.

we had a bottleneck in pipeline capacity that was keeping the cost of west texas oil artificially low. in recent months, the spread has been narrowing, the pipe is filled and the fact has caused the refiners to get hammered. the price of west texas crude has been rising faster than brent from $91 a barrel at the end of may, and why isn't anyone else talking about this? to $105 a barrel as of today. and it's been crushed the spread and the refiners needed to make all that kind of money which brings me back to valero. when the company gave its interim update last thursday, this stock was already down ten points from its march highs. a lot of people on wall street were shorting the stock because they knew the spread had tightened, valero's numbers would be bad. no matter how grim the outlook is, eventually it gets baked into the share price, sometimes before the news comes out and that's what happened to valero. the company preannounced a heinous number and the stock went higher, which tells me everybody who was going to sell or short valero based on the weakness has already done so. and after the big bad shortfall

was out, well, the bulls were free to focus on all the ways which this company can can and does create value internally away from just the gross margin. sure the spread between west texas and brent crude is tightening and that's not good for american refiners. but if you want to short a stock based on the fact that it's tightening, valero is the last one you should pick. they were never ever able to benefit that much as other refiners because the whole reason behind the relative cheapness was this oil was basically landlocked. we didn't have the pipeline capacity to take much down to the gulf coast where the major refineries are. and now that the price of west texas crude is rising so rapidly, it's the middle of the continent that are going to be most affected. valero simply won't get hurt as badly as those. plus, the company has a lot of things going for it internally. a shareholder friendly company. it yields 2.3%, not insignificant. second, valero seems to be slowly breaking itself up. in may, the company spun off 80% interest in nearly 2,000 of

their gas stations. management talked about potentially spinning off some of the midstream assets, think pipelines, terminals, rail facilities as a master limited partnership by early next year. according to bank of america, a spinoff could be worth $5 to $9 per share of hidden value. let's go with the $7 midpoint. that would give you a 20% gain right there. third, valero has been building two big hydro crackers taking advantage of our natural gas liquids prices in this country to make more distillates like diesel and jet fuel. these are going to provide a big boost to the company's cash flow as they get up and running. plus the stock trading at 6.4 times next year's earnings, 8.6% long-term growth rate. that's ridiculously cheap. in difficult circumstances preannounces an ugly number and the stock goes higher, that's a classic tell indicating everybody who was going to sell has sold and it might be time to start buying. i got valero wrong last friday because i assumed the shortfall

would crush the stock but it'd been crushed enough. this stock is real cheap. i don't blame anyone for wanting to buy it, especially since when it acts this well on horrendous news, what happens if the news actually gets better? how about mike in california. please, mike? >> boo-yah, jim cramer. >> boo-yah, mike. >> caller: thank you for your help over the last several years. >> you're quite welcome. >> caller: i read that in 2006 canada began taxing mlps at or near that of other corporations. i also found that the good old usa is evaluating doing the same. how likely is this tax change? and what -- >> well, i don't know, i do not know that that's the case. i have not seen that about to happen in america. i do not recommend the canadians because of that particular difference. but i don't -- i have not seen that legislation nor have i heard anybody else who thinks it's going to happen. so i'm not going to change my view. let's go to john in oregon,

please. john? >> caller: hey, jimmy, big western oregon upper case boo-yah to ya. >> that's a nice one. >> caller: that's a nice one. yeah. hey, i'm holding nuvara, that is heckmann, and i want you to tell me it's going to start doing really, really good since they've had the reorganization and joining up with halliburton and everything like that. can you do that? >> you know what, i let the facts -- let's have mr. heckman on. now that they did the reorganization, i'd like to see some earnings momentum. we know from neighbors which is actually somewhat of an analog that things still aren't that good. i'm not going to get ahead of this one again. i do believe it's a long-term hold. but i can't tell you it's about to get better right now. there's nothing in domestic drilling situation that tells me that's going to happen. all right, pinched at the pump, don't get mad, get even. refiner valero is moving again. don't move, the "lightning round" is next.

it is time, it is time for the "lightning round" on cramer's "mad money." play until this sound and then the "lightning round" is over. are you ready, skee-daddy? let's start with eric in new york. eric? >> caller: boo-yah skee-daddy. >> boo-yah, chief. >> caller: all right, i'm a type i diabetic, what's your thoughts on mankind? >> it's a speculative stock. i've not been behind it, i've seen the run it had, congratulations to those who own it. let's go to john in florida. john? >> hi, jim. jim, a couple of months back, you mentioned a speculative stock exel. >> yes.

>> caller: what do you think of it? >> i think it's okay. i like the ones that are doing treatment of cancer work. and this is a spec. and i like it. let's go to josh in california. josh? >> caller: jim, boo-yah, imd, the question is as follows, given the combination of the refocus into the tablet market and the processes are currently in the wii u, will be in the xbox, the play station, could amd turn around the balance sheet? >> yeah, i've been recommending it. >> buy, buy, buy! >> let's go to mike in florida. mike? mike? >> caller: jim. >> mike. >> caller: boo-yah from florida state. this is mike. >> fsu! 'noles rock. >> caller: gators stink. exactly. so it's summertime here and everybody's playing video games. so my question is activision and video games stuff. >> no, i think they should get off their butts and go to work.

it's finally doing all right. and you know what, i've been recommending microsoft on the xbox and that's actually been much better. let's go to juan in florida. juan? >> caller: boo-yah, mr. cramer. >> boo-yah. >> caller: my thing is accomplished a great deal through tesla. >> goldman put out a really bad note today which basically said even in a bull case it doesn't deserve to trade above the teens. i've been saying, you know, first i kept you out of tesla for the first few years, that was good, when it started rallying, i liked it, but i said it's a cult stock, it remains a cult stock and i don't opine on cult stocks. let's go to bob in new jersey. bob? bob, come on, home state. >> caller: yes? hello. >> you're up, bob. >> caller: i'm up. >> yeah, you're on tv right now. >> caller: boo-yah, jim. >> boo-yah. >> caller: your opinion on new york exchange, thousands of shares of it, i sold some at 40, the mid-40s.

a friend of mine advised me to sell it at 18 and naturally it's gone up ever since. >> deluxe is a good company, just doesn't have the growth i used to like. i'm not going to recommend the stock. i used to recommend it on a yield basis, and i'm not going there. michael in florida, please. michael. >> caller: this is mike from florida saying boo-yah to ya mr. cramer. >> we've got a lot of sunshiners. what's up? >> caller: hey, i've been surfing the waves down here high and low. should i continue to surf or go fishing? >> expensive stuff, not bad. not bad. i'm willing to go with gigamon. let's go to ken in wisconsin, please. ken? >> caller: jim, a big appleton, wisconsin, boo-yah to ya. >> you're like a paper factory up there. what's going on? >> caller: first off, i want to say thank you. your advice made me money. i love making money! i've got a question about canadian solar which ironically is a chinese company masquerading as canadian.

>> yes, it is. yes, it is. i've got to tell you something, i hate to end the "lightning round" on this note but i do not know canadian solar, which means i've got to come back on it. what can i tell you? and that, ladies and gentlemen, is the conclusion of the "lightning round." >> the "lightning round" is sponsored by td ameritrade. [ indistinct shouting ] [ male announcer ] time and sales data. split-second stats. [ indistinct shouting ] ♪ it's so close to the options floor... [ indistinct shouting, bell dinging ] ...you'll bust your brain box. ♪ all on thinkorswim from td ameritrade. ♪

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no, not buying it at all. i'm talking about coca-cola's outlines for a disappointing quarter. our second quarter volume results came in below expectations reflecting ongoing challenging global macroeconomic environment and unusually poor weather conditions in the quarter. huh? challenging global macro conditions? does it suddenly cost as much to buy a can of coke as it does a car? a dishwasher maybe? sure coca-cola's a global company, we all know there's turmoil in the emerging markets, but in china, for example, domestic economy is pretty

decent. to buy a record number of bmws. i'm not hearing a lot of complaints in other consumer companies about chinese sales for goods that are a lot more expensive than a can of coke. far from it. weather? do we stop drinking coke if it's cooler or rainier in some places? and that didn't hold a lot of water either. granted i like the company didn't pretend it was a good quarter and accepted that it was disappointed with itself. i expected better from a company that sells one of the least expensive, noncyclical products, a good record of being like the post office where neither rain, snow, heat nor gloom of night would stop their appointed sales. you substitute cool for heat. in short, i expect better from coca-cola. meanwhile, yesterday, pepsico hit an all-time high and i do not expect similar hand wringing in alibi when it reports next week. in fact, what this release of coca-cola may verify that pepsico has the better model as some think it makes sense to split it in two with a drink company and snack company. to me the combination frito lay

and drinks is what makes pep the standard out here and not coca-cola and why the stock is up double what coca-cola was up the beginning of the year. the consistency of the models along with the leadership of indra nooyi who has taken pepsico more global has made it the go-to name in this space. evenly valued, very similar priced to earnings multiples and very similar yields. tomorrow at cnbc's delivering alpha conference, andrew ross-sorkin will be interviewing a fabulous investor, one i urge you to mimic. including big stakes in the fastest growing snack and beverage company. there have been rumors he favored merging the two companies because he might not have been all that happy with the performance at the time. may i suggest, mr. peltz, that you'd be better off taking a stake in coca-cola and suggest they merge in the stake that pepsico already has. perhaps diversification from the model so dependent on carbonated soda could be as good for coca-cola as it clearly is for pepsico.

this quarter shows that pepsico is the better because they favored splitting it into two. you don't just want to be just a drink company anymore. not only because there's a challenging economic environment as coca-cola told us this very morning. "mad money" is back after the break. ♪

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you may not believe it when i tell you that the u.s. economy is doing better than pretty much anywhere else on earth. i'm telling the truth. here's a great tale, florida. six years ago when the stock market peaked and the financial crisis was waiting in the wings, florida's housing market was the canary in the coal mine. florida was one of the hardest hit areas in the whole country. places like miami, many home prices were literally cut in half. fast forward to today. florida's witnessing a major turn around with an unemployment rate lower than the national average, housing market in

terrific shape. i bet you wish you bought at least until the interest rate spiked. that's why we want to talk to rick scott, the pro-growth, anti-regulation republican governor of florida. he had a better sense of how the sunshine state is doing. welcome to "mad money." >> it's great to be here. >> thank you so much, governor. >> when are you moving to florida? >> well, i've already lived there. i lived in tallahassee, where you live, and it was the sunshine state. >> we need you back. >> well, thank you. one day -- i still -- i go to florida every single year. >> good. >> let's -- before we get to the business side, your state's been in the white hot spotlight because of nothing to do with florida business which is the george zimmerman trial. and i know that the service business matters, tourism matters, this was considered something to be people are unhappy about with the outcome. how do you deal with it as governor? >> first thing you do is mourn for the family. they lost a 17-year-old son. i met with the parents. i introduced them to law enforcement. i told them about this special prosecutor.

you know, you mourn for them. i want to thank the jurors, six women, but as the martin family said, they accepted the verdict. >> and a service economy like florida, it's just something that is separate from that? people will not link the two. tourism won't go down? >> we are having record tourism, 91 million tourists last year, two record years in a row. i think we're about 4% up this year. so we're headed in the right direction. 42-year low on our crime rate, i want to make sure the state stays safe. get more tourists to our state, sell more homes, get people jobs. >> let's talk about housing. you saw it coming. your state got hit very hard. how sustainable is the housing recovery in florida given the fact that we know that mortgage rates just jumped a full -- well, 100 basis points. >> well, i think here's the reason why it is. housing prices have come back about 30% in two years. >> okay. >> we're the gateway to latin america. all right. and latin america is growing.

got the expansion of the panama canal, we've got 15 sea ports in our state. >> do you have enough money to do that dredging today? it's not clear, are you up to the challenge of 2014? >> we put up the money. the federal government didn't put up the money so we did, $78 million. >> okay. >> the tunnel's almost done. the dredging will be done by the end of next year. >> okay. >> before the panama canal, that's already 25,000 jobs, and should be another 33,000 jobs. so the housing market's coming back because of jobs and, plus, people want to live there. >> how many of those houses bought are for cash? >> i think over 50%. >> that means mortgage rates may not be as much of a factor in florida as it is in the rest of the country? >> yeah, probably not. i think they'll stay up because business is coming back. moving the corporate office -- >> yeah, i wanted to talk about how that happened. how many of these houses are owned by hedge funds and how much by individuals? >> i don't know how many. but in some markets, there's a lot -- they purchased a lot of them and they're going to stay

there. >> don't we have to worry they dump them if rates go high? >> i don't think they're going to dump them. they're there for the long run if they need to be. this is a great state. no income tax, right to work state, low business tax. we've got the panama canal expansion, the latin american economies, all of this going for us. >> hertz moved to your state. why? >> it's a nice place to live. great workforce, no income tax, right to work state. we're lower cost than new jersey. all right. we've got a low business tax and we're the tourism capital of the world. >> well, let's talk about the tourism capital, that means you need a lot of service jobs. there are a lot of people on -- a lot of people who are very worried about the affordable care act. i know you know health care better than any other governor. >> it's bad. >> do we not have to worry that part-time is the new full-time because it's just much easier to not have to pay the 50? >> absolutely. >> what's going to happen?

>> i think obama care is a disaster for our country. >> but you are on record saying you're willing to go with the new medicaid. >> well, let's take the pieces of it. >> all right. >> in 2009, i organized a group called conservatives for patients rights. there's a better way to fix this. we need to have more competition, let people buy the insurance they want to buy, give people the same tax breaks as employees and reward people for eating right, exercising, that would be the right thing. this is going to hurt jobs, hurt your access to health care, all these things. >> well, it is going to do that, but you don't think people are going to cut back on hiring? >> absolutely, they're going to put people on part-time to get out. we'll have more part-time jobs, unfortunately. >> if i go through, look at new york, other than a couple of places in brooklyn. if i were to fly over florida, commercial real estate isn't making a comeback. >> it's behind residential. residential's coming back first. >> i was hoping you would tell me it's coming. your construction has been a

huge creator of jobs. >> well, we're a big infrastructure state. i've got the biggest transportation budget in the history of the state, $8.5 billion. we're building roads all around the state. so commercial's coming back but not as fast as residential. it's about a year, year and a half behind. >> so if you tried to figure out what would cause commercial to get better, do you need more government spending? why aren't companies -- why aren't companies coming down and just building with the growth market that you have? building office towers? >> you know what i think happened, people got more conservative. i think they -- >> that's what we think. >> i think people got more conservative. i was at a housing development the other day, doing very well, they're going to sell 1,000 homes this year. they said they were talking about some franchises. they said four years ago they were lined up to buy. now they're waiting for the the houses to sell. so people are just being more cautious. >> right, they don't borrow as much money. >> they're being more cautious. but it's happening. you can see everybody's getting busier and our state housing's coming back. commercial's slower. >> okay. well, governor, i know that the

state has made a major comeback and i believe a lot of it is your policies and i want to congratulate you for the turn. i went to florida, it was an opportunity area, it wasn't for a while, i think it's coming back. rick scott, thank you. ♪ [ male announcer ] you wait all year for summer.

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don't forget to watch my interview tomorrow. he happens to be the u.s. attorney for the southern district of new york. i always like to say there's a bull market somewhere, and i promise to try to find it for you here on "mad money." i'm jim cramer and i'll see you tomorrow. >> bradley birkenfeld spent most of the last decade living in switzerland helping wealthy americans hide their money. you'll hear how he did it and how he touched off an investigation that would shake 300 years of banking secrecy to the foundation of its underground vaults. how unusual is it for a swiss banker to come forward and say, "this is how it works"? >> it's never happened before in history. i'm the first one. [watch ticking] >> many of the deals that helped create the current financial crisis would have been illegal during most of the 20th century, in violation am