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. people want to make friends. i'm trying to make money. my job not just to entertain but to educate you. analysts don't know how to factor in something that's not in the cold numbers. they build their models based on previous data without creative input because that's not their

job, which is how you could have apple roaring $23 despite a down day where the dow sank 50 points. s&p sank a lot. first you need to understand the way the market works before i get too far afield what the analysts did in this case and do in general. their job is to build. they want to estimate a company's sales, factor in the margins, how much is left after the cost of goods are produced and then come up with an earnings number, which is then divided by the share cap to arrive at an earnings per share figure we say beat the earnings per share estimate or didn't. after they come up with the number, they try to figure out what people would be willing to pay for that number. that's the price-to-earnings multiple we talk about. all that's very professional, very by the book. but some companies are harder to read than others. they have many moving parts. conglomerates are very difficult to value because each piece of the company might have its own earnings and its own multiple in

those earnings. you have to make a blend. banks trade on what the bank pays you for your depp sits and what they charge you for loans. that's the net interest margin. drug companies trade on their pipelines. oils trade on their production growth. tech, tech trades on product cycles. specifically how a product cycle will do in the mark place. how many units will be shipped. how much money can be made on each one. how strong is demand vest competition. will there be too much inventory? which brings me too apple. for years apple traded differently from all other tech stocks. it traded more like a biotech stock where you look at what could be in the pipeline, try to put a high multiple on it with the presumption there are products we don't even know about that could be revealed in the future, like when a biotech comes up with a new drug. if you value on the prosaic stream of ipads, ipods, macs and iphones, you undervalue it.

that's how people thought about apple. you were looking at a snapshot of the enterprise, not a continuum. that's why the market used to pay a high multiple for apple earnings, because you expected a big up year. but in the last 18 months analysts didn't believe there was much in the pipeline. many questioned whether there could be anything earth shaking that would allow apple's earnings per share to really rise. why analysts don't talk much to each other, they have a bit of a group think, a mentality about how their universe of companies is is doing. the last few weeks, as we got closer to the launch of the new iphones, almost collectively the universe of analysts grew disappointed with what apple was saying and doing. [ boos ] with these new phones perp choosing to look only on the outside, the hardware side, and it didn't seem revolutionary enough to unseat new market darling samsung. that's why after the big reveal so many analysts cut their numbers and cut their rates. the perceived lesson was that apple had a product priced too

high and didn't offer the overseas market a phone cheap enough to up seat samsung. the new phones coming down 6, 7, 5 million, two weeks ago they said the pricing scheme would hurt apple in china. they called it a head scratcher. the analyst was worried about brand perception. given apple's loss last year, analysts figured the market would only pay 11 times earnings, maybe 11 and change, on a $45 earnings figure. it was a do-nothing stock. interestingly, there was no mention of the possibility that it could do better here. it was all about china. bank of america went from buy to hold on worries about china in part because the 5s and 5c were regarded as evolutionary, not revolutionary. analysts have a $47 number for next year but should only get an 11 flat multiple. you think china won't like it, phone is no good. the downgrade from credit suisse was the most damaging. the analyst was disappointed.

that was his word. that apple remained a premium-priced vendor even as its products were no longer premium. the analyst said the new phones weren't game changers and the product launch was lacking real innovation. so the firm gave price right around here. now, notice what these analysts were all about. chinese demand, pricing on the phone, no pizazz, no belief there was anything different, so how can the company get away with the premium price on these new phones? then a funny thing happened. the phone launched an it launched rave non-wall street actual independent newspaper, tv, online reviews. stupendous reviews. review where is if you didn't want to buy one, you were convinced that you were wrong, that you had to go to the store and get one, that you had to order one. reviews that made it clear that the phone was a big leap from what it had been out there, better than a lot of incremental ways that added to a big difference versus previous

smartphones. the reviews were so positive, consumers were perfectly willing to pay the new price for the new iphone. who knows if the chinese will. we don't know if it matters. but apple sold as many as analysts expected to sell over the product's lifetime. plus the technology critics didn't judge the book by its cover. the software is still in its infancy is about to soar with apple's new phone having the best there is. i don't know about you, but i couldn't wait to town load the new operating system. i've had it for 24 hours. these tech critics made me feel the new phone was a bargain, the best there is for a reasonable price, a price that samsung has no answer for. so now you have 9 million phones already sold with a price point that was high versus what the analysts were expecting, they were hoping for a lower price point, which means apple gets superior gross margins on phone, which means the earnings estimates clustered around $46 a share are now too low. so the price-earnings multiple could be expanding, not contracting as analysts expected.

suddenly the naysayers are dead wrong. plus apple put out estimates this morning that i think can be beat. it's an underpromise that can be overdelivered on, something you and i both know i've been pleading for apple to do. next thing you know, over the weekend apple goes from being an also-ran to a superstar, something even my friend herb greenberg said at thestreet.com, called it a superstar, company that couldn't please the chinese to a company that the chinese would buy because it's better than what samsung has. that's what they care about, the product. the analysts can't change directional thought. they lose their jobs. they did what their colleagues did, make a judgment about what people would think about the phone. the problem is the analysts are not critics. they aren't professional gadget experts. they didn't stop and think that perhaps this phone will please those who decide what we want. they're reviewers who tell us what to buy. that's what happened. the deciders aren't the analysts. they tear critics.

they've spoken. here's the bottom line. as usual, the analysts were way too linear and blew wit apple. they forgot the new phone is more of an art form. they were bound by the four walls of the spreadsheet. they got it wrong. the device is loved. wall street didn't get it. the public is infatuated with the new phones. they're moving the needle and that you don't keep moving until it converts the analysts naysayers at a new plateau that could be much higher than where apple stands now. nikhil from minnesota. boo-yah. >> caller: i follow your show for great insights regarding investment strategy. >> right. >> caller: today i wanted to ask about adobe systems. it came out with earnings last week showing profits went down, but it being a diversified software company, do you think it's on its way to make substantial gains? >> i think it can go dramatically higher. here's what you need to know. this is now a clown company. that's why it could go up on a

shortfall. go over that and you will see this company has come into its own. it is a buy, buy, buy. i'm going to zack in maryland. zack. >> caller: a big baltimore boo-yah to you, jim. >> good. the last guy was a minnesota viking guy. he's 0 for 3. what's up? >> caller: thank you for everything you do, helping the little guy like me make money. >> trying. >> caller: is stock is groupon. >> i think groupon's management has gained. i think this company is a changed company. i would not sell it. i would use the weakness we got today to buy groupon, not sell it. because i think it's doing better than people think. all right. let's face it, just as with actual apples, one bad analyst can spoil a bunch. remember, the bunch was already spoiled. on the new iphone, wall street hated it. okay? where did that get you? it's the critics who matter, and the critics have us all salivating for it.

"mad money" is right back. coming back, beating the odds. it's been a september to remember for the market. but can stocks continue to defy the statistics? cramer is searching for signals that can tell you where it's headed on a special edition of "off the charts." and later, king of the castle? from film to fantasy lands, disney has been making dreams come true on main street and wall street. what's next for the largest media conglomerate in the world? can you fly high by buying in? find out with cramer's exclusive with bob iger. and moving farming into the future by connecting agriculture to the cloud. is this techie tractor playing a field of dreams or is the story soiled? tonight cramer talks with the ceo to find out if you can harvest a profit. all coming up on "mad money."

don't miss a second of "mad money." follow @jimcramer on twitter. tweet cramer #madtweets. send jim an e-mail. or give us a call at 1-800-743-cnbc. miss something? head to madmoney.cnbc.com. in a world that's changing faster than ever,

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because the future belongs to those who challenge the present.

now that all the nail-biting over the fed is behind us, having been put to bed by ben bernanke's wise decision to keep up his bond-buying program, we need to get ready for more washington-based leaders from our elected leaders. once again the president and congress are squabbling over the government and threaten to shut down the government but terrify the business community, slam the brakes on the economy, and send the stock market into a tailspin. there's one good thing about the impending political debacle. we've been here before. this is far from the first time that washington's ability to compromise has threatened the stock market in the last few years. the more often this happens the more data points we have to put together a playbook.

that's why we're going "off the charts with the with a technician who's director of trading at swan wealth advisers as well as being the founder of optionpit.com. sebastian is our resident expert on the volatility index, the vix, and indicator widely known as the fear gauge because it's a fabulous proxy for the level of terror in the stock market. over the next month it's like to increasingly -- well, it probably will happen, that washington could put the market through the meat grinder. what better way to analyze a situation than check on the complacency here, go to the vix. it uses option prices to measure how much traders expect the s&p 500 to move over the next 30 days. when the vix is riding, they believe traders could be in for pain. when the vix is falling it means traders are more confident about the market and the fear index can be gained. we've seen sebastian use it many times to predict changes in the market trajectory to good effect. in other words, a forward-looking indicator. let's take a trip to the

way-back machine because as sebastian has noted the vix has been a crucial tell whenever the market gets battered by political wrangling. that's what we need because he ear not politicians. consider the first budget resolution clash between the president and the republican-controlled house of representatives. we got a deal headed for showdown april 2011. look at these charts of the s&p 500 and the vix during that period. okay. at the time, the vix has already slightly elevated from worries about greece. okay? but going to the resolution of the small crisis in early april of 2011, the fear index rallied hard. this is the fear index, down here. rallied hard. then the s&p slowly sold off over the next week and a half, okay? as no one was particularly satisfied with the deal. but this is a very important issue for sebastian. the fear index fell along with the market. in other words, the vix goes down and the market dropped. normally when the s&p is dropping the vix is rising. so when you get this kind of diversions, sebastian says pounce, takes it as an important

sign that the fear is petering out. sure enough, the s&p roared for the next few months. the lesson being you had to buy stocks as the vix spiked. when the vix spikes, market goes down, then as it goes down, you know, the vix goes down, but the s&p goes down at the same time. that's unusual. and that's when you've got to buy, when you get that carbon monoxide of diversion, it's about what should be happening. now let's take a closer look at what happened during the fiscal cliff crisis the end of last year. check out the chart. once again, a nasty selloff in the s&p 500, the red line. people grew more and more fearful washington wouldn't be able to get a deal done. and the vix went up and up and up. then washington came through and we got a deal at the end of the year and the vix crashed while the s&p was off to races. again, you made a killing if you bought stocks as the vix hit its high. boom. that's when you had to buy. what a great call by the vix! yes, the s&p now up 20% since then. notice the pattern, though. first week of washington fighting, then the vix rallies.

we just started the infighting. leaders make a deal, the vix pulls back, then and only then does the market roar. you have to go through the cycle. at first we see the same pattern. the president and congress fight. the vix starts to roar. s&p gets crushed. then we get a deal. this time, though, the end game is different. for the debt ceiling deal the vix didn't sell off and the s&p didn't immediately rebound. the difference here is that even after this deal the market was still worried about the s&p downgrading its u.s. debt. something went on to happen a few days later. stocks took a huge dive. while this turned out to be a terrific long-term buying for stocks and bonds, sebastian points out it led to an ugly four-month stretch in the near term. we have to be aware, the market didn't do anything. that's because the vix didn't go down the way we would have expected. so what to take away from the fist debt ceiling debacle unlike the other two scenarios we've

looked at after the debt resolution, we didn't get a pullback in the vix. if we get a deal and the vix stays elevated, you will have a strong signal the market could still in be in trouble. in other words, if the vix doesn't come down, we could be in trouble. takes us to today. the current pair of charts, the s&p 500 and the vix. s&p, vix. so far, cement's been a terrific month for the market. we know that. right? now we're about to head into our next washington-mandated crisis. this time the fear level is at historically low levels, not good, 14 and change. based on what we've seen before when a potential government shutdown is on the table, sebastian predicts over the next ten days the market will sell off and the vix will rally big time. he's saying this is going to go like this and this is going to go like that. but eventually our so-called leaders will have to make a deal. when that happens, the fear index should plummet, okay, and sebastian thinks the s&p could make a new high for the year. wow. we're here.

give than we've been through this before, sebastian says now is a good time to raise cash if you haven't already because we're not at the bottom of the s&p channel. i find this hard to disagree with. what else? based on past experience, the washington-created crisis, sebastian believes you shouldn't try to buy before any deal is announced. in other words, you can't front run a day. sometimes the market gets a nice pop on the first day after the deal breaks but in general the rallies have a nice followthrough. better to wait. and most important, based on the debt ceiling scenario, you have to watch the vix. if the volatility index doesn't sell off when we get a budget deal, sebastian says you need to punt. do not buy the market because there might be something else holding the stocks back, maybe the tapering. here's the bottom line. we're always looking for new way for how the market will react to periodic washington blowups. thanks to the charts interpreted by the vix expert mark sebastian, our playbook has a new wrinkle. we're just entering the washington sell-off phase right now, but once politicians make a deal, that doesn't mean the

stock market will necessarily be able to rebound. we could get a resolution but the volatility index refusing to go down, clear sign stocks might not be ready to go up. so, remember to use the vix test when your leaders finally make a deal, which admittedly night might not be for some time. vix goes down, you got to buy. vix stays up, you got to sell. sandra in florida, sandra. >> caller: hi, jim. thank you so for your dedication, your boundless energy, for your sincerity and most of all for your love. your love for what you do, your love to us. we you back. >> thank you. thank you. these are tough times so i'm glad to hear that. always a labor of love here. go ahead. >> caller: we can just imagine how hard you work just to give us a little help here. >> thank you. >> caller: my question is, we're retired. my question is kmp, kinder morgan, i have already looked, $1,000 with them, it's been going down.

i'm not afraid. i can handle it. however, i bought it at 88. then i bought it at 81. and it's now close to 79. i have a question. should i buy more or should we sell and cut our losses? what's going on with that company? >> don't take your loss. here's what's happened. there are three things that happened. one that there was a charge that they underspent on their infrastructure. i think rich kinder defeated that. two, lots of talk they'll get rid of the great, great tax benefits of this kind of mlp. i don't think that's true. but, three, rates go higher, these go down, and that's the one to worry about, and that's why i don't think you have that much worry because already 6.65%. blame it on them. no. blame it on the vix! and a new wrinkle in our washington uncertainty. yes, we need to see the vix go higher first and the market go lower before we can buy.

but be aware, the vix doesn't come down, you don't even want to attempt this. but if it does come down, new highs! after the break, try to make you more money. coming up, king of the castle? from film to fantasy lands, disney has been making dreams come true on main street and wall street. what's next for the largest media conglomerate in the world? and can you fly high by buying in? find out in cramer's exclusive with ceo bob iger. i know what you're thinking...

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on your online statement. i'm john kaplan, and i'm a member of a synchronized world. this is what membership is. this is what membership does. time to talk about one of the most needlessly controversial stocks out there, disney. espn, terrific movie star business, pixar, marvell, and the newly acquired film set to release a new "star wars" movie in 2013. theme parks like disney world and disneyland setting new attendance records. the company told us it's significantly upping its buyback in the near future, in the range of $6 billion to $8 billion, meaningful even for disney. the film franchises mean it's got catalysts as far as the eye can see. the stock saw a 46% rally since we last booked the ceo in may of 2012. get the naysayers.

they go nuts. don't take it from me. take it from the man himself, bob iger, ceo of disney. hear more about where his company is and how it's doing. welcome back to "mad money." >> thank you, jim. >> thank you, bob. last week some guys says growth in upside tied, difficult to predict success. my take is, and i've told you this, i think this is probably the most balanced i've seen it because i see a three, four, five-year earnings path. >> well, the company will always rely on great creative success to drive its bottom line. however, we are extremely well positioned with that array of brands that you talked about, the ability to create intellectual property, the ability to take advantage of dramatic changes in technology is providing us that gives us the opportunity to reach so many more people not just here in the united states and worldwide. speaking of worldwide, we have made some -- replaced some really strong key i remember

markets, china notably, that will power growth for this company long term. this company is very, very well positioned beyond just having executing well creatively, although i will say that will still remain our number-one priority. >> all right. so constant chatter about how cut the cord, unbundling. what you're describing to me is that the technology that you've got could trump any of those words. >> well, yes. look, no question technology is playing a part in changing our businesses, challenging existing business models. but at the same time, it's providing us with real opportunity and it's providing consumers with real opportunity. let me explain. first of all, new platforms arise almost every day that have a voracious appetite for content and high quality branded content. so there's almost -- isn't a day that goes by when we don't get a call from some entity that's just launched a platform saying we want disney, we want espn, we want abc, marvell, pixar, and they will want lucas.

that's one thing i think that is something that you need to focus on in terms of the opportunity for the content creator. secondly, people will have a chance and are getting that chance today to consume content in far broader ways. used to be you wanted to watch tv, you sat at home, you watched television on that set that was fixed to the wall. you wanted to watch a movie, you went to a movie theater. now mobile is driving unbelievable access for the consumer. >> how do you make money off watch espn? i'm obviously not configured in my usual nielsen box when i'm watching it on this. >> what we're doing is launching apps that enable people to watch our linear channels. they will also enable people to watch far more than just the linear channels. and we will monetize those apps primarily in three ways. first of all, we will get paid by the distributors because we want to watch a linear channel on a mobile device, you have to be a subscriber to a

multichannel provider -- comcast, directv, et cetera. and since we're providing them with an added benefit to sell to their consumers, we're getting paid incremental money to enable them to enable their customers to get those apps. secondly, advertising. still nascent in terms of measurement. we're waiting for that to happen more, but it will come. and the third way is using customer information not only to provide them with contextual ads and raise knew there but to gain access to basically what they're interested in, their not only user information but their user desires and ultimately sell more product to them. >> and perhaps also hit them with native advertising. >> absolutely. >> this is going to be important because without that you will atrophy. >> i think native advertising is a good opportunity for the advertiser and the seller of advertising. >> now you've got -- you mentioned marvell, lucas, pixar. but we all notice that the brookheimer deal ended.

that's been a fabulous relationship. does that no longer fit in because it's too hit or miss? >> no, not at all. first of all, jerry will probably end up making more films for us because we have a cup until the pipeline that will ultimately get made. "pirates 5" is one of them. secondly, we both have changed over the years. jerry had a desire to spread his wings and make non-disney-branded films. with the acquisition of pixar, marvel, lucas, our needs are have changed a bit in terms of our live action movie business so, it was a decision we both reached and i think it's to our mutual benefit. >> it wasn't like one happens and you call him up and say nice to have met you. >> no. jerry provided great value for us, highly successful films, four great pirate films and "national treasure." you can go back 20-some-odd years to a repertoire of sorts to films that made great money and were very, very successful for both jerry and us.

>> espn, i pick up the paper today, flagship revs up marketing, implication here, fox, nbc, other guys coming in, you were on the defensive. true? >> no, not true. i think, first of all, espn's best days are ahead of it. that said, there is more competition in the marketplace and espn is the number-one brand. they aim to remain the number-one brand in that space. and in order to maintain a number-one position in the face of more competition, you don't get complacent. you turn the heat up. by the way, since fox sports 1 launched, which was sometime in the summer, espn's rating increases since that time were actually higher than the ratings for fox sports 1. so they're doing just fine. but what they've also done is they've made sure that their programming is higher in quality, so they've take an number of steps, licensing sports from various sports leagues, one of the ways they've done that, improving the product, "college gameday," which has stepped up its game. they're making their product

more available using technology, not only making it better but more available. they also are stepping up their marketing as the article you talked about suggested. and they're just not going to take anything for granted. i feel great about how they're positioned. and we're confident that that position that they have in the marketplace will remain for years to come. >> you're stepping up brand, developing theme park, new technology. you have to spend more money, obviously, some people say spend more money for content, and yet here you are upping your buyback last week substantially from what i expected, obviously trying to get share count down from 1.8 billion down significantly. how do you do that and not trigger the rating indices? >> well, the company has a very strong balance sheet. and we've managed over my tenure to spend about 60% of our capital on basically supporting and growing our businesses, about 20% on acquisitions, pixar, marvell, lucas being the

three big one, and about 20% on dividends and buybacks, and we increased our dividends significantly the last couple of years. we're going to continue to deliver more free cash flow even after we've kind of taken care of our businesses. we're not a company that plans to horde cash, and so we have an opportunity to return more to our shareholders, and one way to do that as you know is through buybacks. we'll buy back over $4 billion this year, and so we announced a couple weeks ago that that number we're going to target for 2014 at least $6 billion and possible as high as $8 billion. >> so there's no other lucas acquisition in the short term, then, or else you wouldn't be committed to that. >> unlikely. not necessarily, but we don't see right there in the near-term horizon potential acquisitions of the size of lucas pixar. i should say just to fully answer your question, the rating agencies, you know, given us the confidence that we're not going

to change, that our rating is not going to change so, the cost of capital should remain relatively what it's been. >> hong kong theme park has been gigantic on fire, tokyo on fire. room for shanghai too? >> absolutely. hong kong is doing extremely well. that's an opportunity not only in terms of growing the company long term but i think there are great opportunities to invest even further in that marketplace. you're right, tokyo, going there in a couple weeks, celebrating its 30th anniversary this year, incredible. very strong returns for the company. we're building a theme park in shanghai, pudong, i can't think of an opportunity for a company i'm more excited about because the opportunity to take that great theme park experience and disney in its most immersive form to the most populous country in the world i think is extraordinary for the company, not just when it opens but for a long time to come because this great opportunity to expand after we open.

>> all right, bob. i know i'm running out of time here, but last night -- congratulations, "modern family." but also vince gilligan, "breaking bad," says this is the golden age of tv. disney's brand is such that i wouldn't want disney to be affiliated with a show like "breaking bad" as much as i like it. you are a connoisseur of great tv. are there things you can't do because of disney? >> well, yes. first of all, we use the disney brand very judiciously, so when we make programming, not everything gets the disney name on it, but because we're the disney company, we are, you know, a bit mindful of the kind of product that we make, and we do limit ourselves a bit even if we're using a non-disney brand, we're careful because that disney brand, even if it's not applied to specific product, still is important for the product the company makes. i'm glad you brought up last night because -- and the comment about the golden age of tv. i think it is the golden age of tv because the opportunities for

creators to create given all the access they have, given all the new platforms, have never been greater. and they're only going to continue to get better. we're taking advantage of that as well because i wouldn't be surprised to see in the near future the walt disney company creating product for some of these new platforms directly. so actually using our production, creative capabilities and our brands to do just that. >> excellent. okay. that's bob iger, chairman and ceo of walt disney. you see i've been recommending the stock for almost nine years the show has been on. thank you so much, bob. great to see you. stay with cramer. mad about "mad money"? immerse yourself into cramer's world while you watch the show with zbox. on your phone, tablet or the web, get sneak peeks. go behind the scenes. and join the conversation. download the free app today for the ultimate cramerican adventure. huh...fifteen minutes

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it is time, time for the lightning round. buy, buy, buy, sell, sell, sell. are you ready? the lightning round. jack.

>> caller: boo-yah from san francisco. >> nice. >> caller: this stock is trading at eight times management precash flow value for 2014. the company is growing like a weed. and fac capital owns a big stake. >> man, that is a good communications company. you have a winner there. i have to do more work on it. that is a winner. kevin in pennsylvania. kevin. kevin? kevin? wake up, partner. [ buzzer ] i think we have to take another call. i think kevin was napping. let's go to christine in new york. christine. >> caller: pleasure to talk to you. i have kessler and ford. i was thinking of throwing more money -- >> kessler is high risk. ford is very inexpensive. chrysler just filed an ipo

tonight. i think chrysler could be good, too, because i like ford. i like gm. and maybe there's something to like for chrysler. i'm going to go to tony in nevada. tony. >> caller: hey, jim. green energy. >> no. i see you with yingli and trump you with yuengling. sell, sell, sell. bruce in missouri. bruce. >> caller: hey, jim. five below. where might it go? >> oh, man. five below. that's secondary, time to buy. buy, buy, buy! i need to go to sal in new jersey. sal. >> caller: how are ya, jim? a big boo-yah to you from marlborough, new jersey. >> love marlborough. been there. been to the racetrack down there. what's up? >> caller: i'm calling to find out how you feel about micron. >> it's not done going higher. why? because capacity constrained in

nand and d ram prices haven't fallen. tim in california. could be tim cook. tim. >> caller: cramer, i'm wondering about rig transocean. what do you think? >> okay. i do not like rig. i don't like that group anymore. >> sell, sell, sell. >> deep water does not have what we're looking for. and that, ladies and gentlemen, is the conclusion of the lightning round! ♪ [ cows moo ] [ sizzling ] more rain... [ thunder rumbles ] ♪ [ male announcer ] when the world moves... futures move first. learn futures from experienced pros with dedicated chats and daily live webinars. and trade with papermoney to test-drive the market. ♪ all on thinkorswim. from td ameritrade.

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let's talk agriculture. it's been a rough period for the ag stocks. deere down for the year. fertilizer names have been crashed including action grum. even in sectors that are having trouble, you can find names standing above the trend. take agco, everything from tractor, combines, forage equipment, grain storage. it's close to its 52-week high, not its low, and it has an 11-week gain since its july. it outperforms because it gets a quarter of it sales from north america.

it gets half of its business from europe, which is turning, huge in south america, especially brazil, and started growing in asia and russia. agco is a global player, announced its $100 million joint venture with russian machine last week, giving you a bigger foothold in a gigantic market desperately in need of modernization. let's take a closer look with the chairman, president, and ceo of agco to get a better sense of his company and its prospects. welcome back to "mad money." have a seat. >> thank you very much for the invitation. >> it seems like you had a strategy to buy high-quality properties, put them together and not necessarily dominate north america but go everywhere else. >> yeah. >> that has worked well for you. >> this was actually my predecessor, and that was what we did the first 15 years from 1990 on, and the last 15 years or the last ten, i have to say, ten years with the company now, we are into harvesting what we

have invested, and that works pretty well. >> okay. now, we're seeing a turn in europe in terms of overall business environment. does that translate to ag or is it so different it doesn't matter? >> it doesn't matter so much but we have certain issues. england is not doing that well. had a very tough spring. it was too cold. land, for example, they just died because they were born in scotland while they still had snow and ice. >> but spain was good for you. >> spain is good because it's a growing market for us. we grow market share there. i think overall the advantage of agco is a pretty good global footprint as you mentioned. we just opened last week our new factory in russia in the presence of president putin. >> how does that work? he's a tough guy to deal with. everyone knows he's not necessarily a friend of the united states. does it matter that you guys --

that you're not viewed as being as much of a u.s. company as deere? >> yeah. my advantage is that i'm a native german. in the meantime, i have dual citizenship, so i have the privilege to be -- i can vote here and also in germany. and he likes the idea that i'm not an american. >> you're serious. he does. >> it's a little advantage, yes. >> that's got to be the same case in latin america where we have fewer friends than we used to have. >> i will be there next week, and together with president christina kirshner i will open a new factory in argentina. it's something we didn't like so much initially because we were forced into it. they changed the laws, so you were capped twice so you could only import as much as you did last year and then only as much as you export. so it forces you into local manufacturing, but we are doing it. and we open a new assembly factor for both combines and tractors. >> it seems that ag again in certain states is just very different.

brazil we read about the riots. they weren't on the farm. >> they were not on the farm. more in the big cities. and the reason is kind of unrest because people feel underpaid. it's mainly because all the money which is invested for the soccer games and the olympics -- >> right, the olympics. >> and they say well actually i can't feel it, why don't they build a street for us or a school for my kids or something like that. >> in this country we read about the republicans and democrats trying to cut back on farm, cut back on subsidies. now want to cut back on food stamps. is that why this market has not been a major emphasis for you? >> actually, no, no, no. it's a mistake. we could have done better. what deere does very well is they have a very strong brand and they have super distribution. and so when i joined the company we had more than 2,000 dealers, and of course we were either small in a big dealership or we had a lousy small dealer. now we are down to about 600 and that's a much better number, and we have exclusive dealers and that will help us to gain market

share in america, which we want to do. we need it. >> one last question. you've been very -- there's feint, gsi. are you still on the prowl? has everybody that can be bought been bought? >> not really because we have further consolidation in our industry. gsi i think was a neat new idea, so if i would find something which moves the needle i would still do it. >> excellent. okay. mr. richennagen, the chairman, president, and ceo of agco. this is the only ag play i'm recommending. all the rest of them i want nothing to do with except for agco. stay with cramer. tomorrow, kick off the trading day with "squawk on the street", live from post nine to the nyse. >> this is insanity. >> it all starts at 9:00 a.m. eastern. ♪

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we don't spend enough time talking about why paper actually matters, but we caught up with the democrats and republicans are fighting about in washington, the deficit. we learn about what happens if and when the fed stop steps away from its bond buying thanks to the summer spike in rates. no demand for credit at the 3% level because the 3% on the ten-year treasury translates to 5% mortgage rate coupled with higher home prices cuts into the affordability of housing. we'll find out how badly it hits demand in our reports tomorrow,

big home builders. but could be a serious slowdown in home construction. secondly, more important for the budget talks is the debt of the u.s. government itself. with the federal reserve taking down as much as 60% of more of the u.s. government's debts, that's what they do, you know, if you remove the fed from the picture, rates soar even though there's no demand for credit on the corporate side. no place to put the debt. it would take a major prop away from the bond market equivalent stocks. it's hard to imagine even the better utilities like con ed trading below a 5.5% yield. that's where i think they go, which means a considerably lower price for the stock because it's at four and change. the real estate investment trusts will be happy, the partnerships will be hit again and the year of the price-earnings multiple will disappear. so long, bond market equivalents. nice to see you. only the auto stocks seem to be immune from higher rates, which is good for the chrysler ipo. take a look at this piece.

finally, if the fed stops buying our bonds, why are foreign governments hiding u.s. debt as they have for so many years? you could see money flowing out of here into there. that's why the selloff in stocks was so warranted here ahead of what might have been a very different decision from the fed last week about whether to taper. give than there will likely be no serious deficit deal between the republicans and the democrats because everyone is spoiling for a fight, no one is in the mood for higher taxes. you could bet rates go higher at the same time rates get softer. no wonder ben bernanke wants to preserve the status quo. easy to imagine the yield on the ten-year going above 3% even though there's little or no demand. rates could have gone up substantially if the fed hadn't stepped in and still might. they would have if larry summers had been appointed. last week's decision mattered to stocks and it will again when we see the schedule of debt that must be auctioned off and the lack of appetite for it now that the world's central banks have become sellers of our debt and not buyers.

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than i thought. we have to watch that. let's focus on this chrysler deal because i'm going to say would you buy it. it depends on the price. if they price it through ford and gm, i'm going to tell you to buy the heck out of it. it's the pricing. i'm jim cramer and i will see you tomorrow. [soft piano music] ♪ [snapping photos] ♪ (female #1) wanna do one on his lap? ♪