wife. >> huge. >> to make it with - >> tim this long >> here we go. >> we have to -- >> i didn't know whose birthday it is. >> my mom! >> happy birthday! >> good job. >> thank you for watching. >> mom >> happy birthday. >> thank you all for watching "fast. "mad money" with jim cramer 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 just want to try to save you some money my job is not just to entertain but to educate, put it in context. so call me at 1-800-743-cnbc or tweet yes @jimcramer

signs. we're always looking for signs signs that the pain might be over >> the house of pain >> signs that the bear might be -- but there's been so much pain it just has to end soon right? wrong. just plain wrong we are not sure when the beatdown's going to be over. but it's definitely not over when you get a day like yesterday, where stocks roared because of something that happened in britain of all places, something that has nothing to do with the united states, because that's precisely how you get a horrible reversal like we had today. >> sell sell sell! >> dow lost 458 points s&p dropped 2.1% and the nasdaq 2.84% i don't want to be i abearer of bad news but i also don't want you to get faked out again that's kind of like my mantra here i don't want you to lose a lot of money so let me tell you what we need to see before you can actually be as excited as the buyers were yesterday. first i want to start on a

positive note. if you buy stocks i think most likely you'll make money a year from now i say that because if you bought the most traded stocks the day before the crash of 1987, arguably the dumbest day in history to buy stocks, and then you held them for a year, you made good money. the market immediately got cut in half after you bought and you still came out ahead after 12 months to me that cuts in favor of doing a little buying, like we did a little buying for my charitable trust but i think you'll do okay, not great right now. the market's oversold. there are a lot of good companies on the new low list. eventually owning them will work out. they'll do fine. but you could do even better by waiting for the right moment where things are a little more clear. what does that moment look like? okay, for starters, this is a bear market, and each bear market is unhappy in its own way, to paraphrase tolstoy this bear market's depending on

the federal reserve. and the hawks and the fed need to be appeased before it can end. that's just the way it is. that's the script. and that's why we need to anticipate exactly what the fed wants. particularly the hawks on the fed. unfortunately, there's one word of what they really want they want pain specifically they want to stamp out wage growth. and that hasn't happened yet they want people to stop making more money or even make less money. the fed's making that happen by raising its rates to a level where no one wants to start a new business or expand an existing one with higher rates companies that need money may not be able to get it this morning we heard jobless claims reached a five-month low. with all this tightening you'd think they'd be going the other way. that claims number was a disaster the opposite of what we'd be looking for. no wonder the president of the cleveland fed came on "squawk box" this morning, steve gleason interviewed her and she sawed v talked about the need for more rate hikes it got worse later nont day she came out and

said even a recession won't stop the fed from tightening. even a recession that might be the toughest talk i've ever heard from anyone in the fed in 40 years. and believe me, i was alive and well when paul volcker was doing w what he was doing. when you see low jobless claims after all they've done it will most likely lead to another overheated employment number next week, which will cause still one more run-up in treasury yields, something that's real bad for hawks. messer is such a hawk i don't know if she'll be pleased until we go to 5% unemployment with food and wages both lower than they were pre-pandemic i thought that's exactly what she's saying there will be others who hopefully aren't as hawkish on the fed because she's a one-woman stock destroyer. but she speaks like her camp is in charge and that is disconcerting. the fed's not going to stop until we see more employment, which is why we need more high-profile layoffs i know that sounds strange but it's what we need. sure -- bed bath & beyond

reported same-store sales down 28%. of course they've got to be firing people. but we need to see stronger companies doing the same thing well-run companies that simply don't have enough business no, i'm not talking about the hiring increase that mark zuckerberg announced at meta i'm talking about outright layoffs. he with need to see it because that's what the hawks on the fed want they want bankruptcies, liquidations you name it and they want them from real big name companies not small time tech outfits in silicon valley if we're unlucky the fed will want to see malls in the stores going under. steel mills closed, plastics companies going belly up a whole litany of things but notice i didn't say banks. the economy's so strong and the banks are so well capitalized that as rough as this moment is i don't think it's going to be anything like 2007, 2009 2007-2009, i'm calling that -- you know what that was that was cataclysmic this is just incredibly nauseating here's one you can fix tomorrow. the fed wants you off margin wants you off margin you hear me? no more buying with borrowed money. and wants speculation halted

speculation's a sign there's too much money out there, highly inflationary so we have to watch all speculative assets and bet they'll be wiped out crypto needs to get crushed before the fed will stop administering its tough medicine anyone who borrowed money to buy bitcoin or ethereum needs to be blown out of the water just to please these people. that's what the fed wants. they also want the memesters to disappear because they too stand for speculative access gamestop would make them happy i told you not to buy that beth bath & beyond. but you made fun of me to which i say sticks and stones may break my bones but unread twitter posts never hurt me. one more thing nfts, non-fungible tokens but now something i can't say on tv that it stands for, they need to disappear. with anyone who buys them becoming clothesless emperors. unlike a lot of people who run nfts, that dunce mean anything at the same time we need help wanted signs to come down. they're still everywhere

we have to see many more lease signs instead. i know these are not nice things i'm saying nobody wants a bad economy i don't want you to get laid off. you don't want me to get laid off. but the fed is going to make sure we have many, many, many more layoffs until they think inflation's under control. eventually people stop paying attention to the portfolios at all. sort of like the five stages of grief. he with still have too much hope he with saw that yesterday we need that stamped out to appease mester and her compadres. finally the fed wants to see homes sitting on the market a long time, not best and final bidding wars the fed wants your house to go down in price. we have nothing like that, nothing at all rates have to go up substantially to make that happen these are stark. these are vicious. they're far beyond what people were expecting until recently. but this is an aggressive concern, rightfully concerned fed. we've had a good run of it and now they are taking some back if you let them me i wouldn't do it this way. i think they should be more measured i think they should be more prudent. i think they should take their time they're beating inflation in so

many places. unfortunately they're not winning on food, they're not winning on houses and they're not winning on wages and they need to head that trifecta before this will end of course mester was on the hawkish side, she was talking in 2002 too right before the fed pivoted and turned dovish. it could happen again. but right now we're waiting for the negatives to show up in the economy before the fed can declare victory. it's going to be difficult that's the bad news. the good news, the fed wants to get this done real fast and real quick and i think they will. it will be more like the brief bear market of '87 than the financial crisis of 2007-2009. and will will be intervals withar it looks better there are stocks right now that are too cheap to ignore. if you take a longer-term view plus a lot of damage has already been done. you're not coming in at the high, right? we've got so many stocks of companies with healthy balance sheets and good dividends. and you have my blessing to buy them we talk about them all the time. we talk about them with the cnbc investing club but the bottom line until housing food and wages go down this market's taking its cue from that great investment legend mr. t as clubber lang in

"rocky 3" when he asked what he was going to bring to rocky balboa he said one word "pain" >> the house of pain >> lloyd, new york lloyd. >> caller: hi, jim thanks for taking my call. >> of course, lloyd. what's up? >> caller: my wife and i recently inherited papa john's stock. what are your thoughts >> okay. the restaurant business is a lousy business right now, a terrible business. i know that more than most costs are going up still and you can't contain them so i'm going to have to say even though i like that company very much you do not want to own it i'm sure your basis is very low, but i have to tell the truth you don't want to own that kind of stock right now uh-oh. richard in pennsylvania. richard. >> caller: jimmy, how are you doing? >> i'm having a long day but it's okay because we're all in this together i'm looking at my executive producer she knows i try every day to bring it i'm bringing it again. how can i help >> caller: so i have noticed that the banks are reluctant to raise their deposit rates, b.d.

rates. do you think banks are going to raise them and are they going to make more money on net interest margin my question's for bank of america. >> okay. i was doing this yesterday i was doing work on wells fargo because we own it for the charitable trust and i have to tell you, i know it's de rigueur to say this but i think the banks could be the leaders coming into the next cycle. why do i say that? because they are going to pay you very little on your interest on your balance account and they're going to make a lot of money. it's going to be very much like '91, '92 i cannot believe i'm old enough to remember that most people watching '91 they may not even have been born but that was some great time for buying banks let's go to james in washington. james! >> caller: boo-yah, jim. i'd like your opinion. in this market is my stock a buy, sell, or hold my stock is generac. >> i think the inventions generac's doing are so good i

actually like this stock it's down 50% for the year i think if i wanted to buy 100 shares i'd buy 25 here and every 20 points down i'd buy more. people say why not wait until it gets all the way because it may not get there i think it's a very interesting company for this time. i like it. now, if we're talking about stocks are healthy balance sheets you have my blessing to buy small. just like we're doing for the cnbc investing club. i think it's too late to sell. but until housing, food and wages go down let me tell you the market's bringing you one thing. it's clubber lang. pain morgan stanley an investment club stock favorite has a key thing going for it in its incredible leadership. tonight we're checking in with james gorman to discuss everything from volatility to the bond market to your money. then the used car cohort has collapsed. ever since it peaked last summer is there still room for the sector to cruise higher or has the opportunity come and gone? you can tell what i think. i'm taking a close look at the space. and yesterday's bounce had investors hopeful for what's to come but today tape told a

completely different story i'm breaking down exactly what happened and now negative it was about what occurred yesterday. so stay with cramer. >> announcer: don't miss a second of "mad money." follow @jimcramer on twitter have a question? tweet cramer #madtweets send jim an e-mail to madmoney@cnbc.com. or give us a call at 1-800-743-cnbc miss something head to madmoney.cnbc.com. - oh, the stock market is doing that fun thing again. - hey news from the future, you're going to live through that about 10 more times. (laughs) - oh, it's no stress. i just discovered yieldstreet. they vet investments that don't ride the stock market rollercoaster. - ooh. i think some of my gray hairs just reversed. - yeah. you're welcome.

- [narrator] become an investor today. yieldstreet: private market investing.

is. now that yesterday's unlikely rally's been repealed we're back in no man's lapped, totally hostage to the federal reserve. even though stocks have already come down dramatically, there's

no particularly compelling reason to stick your neck out and get bullish yet. sure it's a time when we can use some direction which bricks me to morgan stanley the best in breed investment bank that we own for our charitable trust i've liked this one for a long, long time because it's made a gigantic pivot toward asset management and that's a much more consistent game than the other guy. but i also like it because it's got great leadership ever since james gorman took over in 2010 morgan stanley's stock is up more than any of the other major banks. more importantly gorman knows the industry better than anyone. and that's why i'm so thrilled to speak with james gorman, the chairman and ceo of morgan stanley, to get a better sense of this moment mr. gorman, welcome to "mad money. >> jim, great to be here thank you. >> i cannot think of someone i want more on the show than you right now, james not because i want hand holding but i like rationality you've lived through bull and bear markets a lot of people feel this bear market will never end. what's your historical perspective? >> well, firstly, i've seen a lot of markets i think you have to look at what drives the change in sentiment and to me i'm just not

surprised. what did we expect we've got a war in the ukraine we've got inflation at the highest we've had for 40 years we've got the fed moving aggressively on rates, having done nothing for ten years rates have been zero the market's awash with money. what did we expect so you've had the bubbles that have been out there, the spacs, the cryptos, and getting washed out. it's not totally surprising where we are that's where i start from. >> if that's the case and you hear the fed talking tough, it should talk tough and it should take tough action. >> listen, you can't have free money forever. of course you'll end up with an imbalance. it's all about gdp growth and interest rates and the fed tries to moderate that about i think half the times they've tightened in the last 30, 40 years they've overshot a little bit. but half the times they haven't. so we're in that zone. and everybody's obviously making the bet whether they're overshooting, going to push us into a serious recession, whether we're going to have a mild recession, whether we're

going to have a soft landing or we're going to get perfection. and that remains to be seen. >> and what does james think i like your view you know more than almost everybody i speak to >> i think it's unlikely we're going to have a hard landing at this point i think the fed will keep pushing. we're at a little over 3% now. a house call is 4 1/2, 4.75. listen, we're totally in between inflation, unemployment and rates. and my sort of nirvana scenario for now would be four, four, and four get inflation back to 4%, bring rates up to 4%, and have unemployment which is slightly below 4. it will tick up a little bit to 4. that's nirvana we probably won't get that but i don't see yes enough to tell me this is a real crisis. geopolitical issues aside. that could tip things very differently. obviously if i'm wrong about the fed's ability to tame inflation that tips things differently

so there are reasons to be concerned clearly. the market is not stupid the market reflects that so we've got to respect the market and we've got an inverted yield curve at the moment. so there's a lot going on. but i personally am not seeing the very sort of dire crisis we've seen throughout my career. >> that's really important because i've studied your career and i recognize that if you felt it wasn't worth staying the course you would actually say it you would say you know what, jim, it's not a bad idea to sell a lot of stock here. i'm not hearing that >> i watch the behavior. we're dealing with 15 million clients through their places at work, through e-trade platform which i'm sure we'll talk about, wealth management advisers we manage over $4 trillion and with our asset management business nearly 6 trillion i'm not seeing panic in that this is not '87. it's not even '91. it's not the dotcom crash. and it's certainly not the financial crisis that doesn't mean it can't become one of those. but it's not there and behavior

supports that. >> we're going to talk about how you really have revolutionized the firm in a way i think you're best at. >> thank you >> but before we get to that it sounds like to me that if we don't get nirvana, even if we don't get nirvana we're still not in a situation like the 2007-2009 where morgan stanley was 11, 10,9, and i was concerned about the viability of a lot of the firms that's not going to happen >> well, there were two things that are very, very different from frankly all of those crisis periods i've talked about. the first is the bank's capital and balance sheet. the u.s. banks -- globally systemic banks are in the best shape financially they've been in in decades as a group different business model issues, et cetera. but as a group from a capital liquidity perspective going into a crisis you want your financial system and you want your core banks to be strong, and they are.

secondly, consumers, they refinanced a lot of their mortgages, they had the luxury of very low rates, they saved during covid, consumers come in with their personal balance sheet better those two things are very different from some of the other periods we've had over the last 20 years >> what are you looking for to see that perhaps the fed might be done? does unemployment have to go to 5? you tell us about the four four four but when i listened to loretta mester today, very important fed member, i felt that a lot of the work we had done toward the slowing inflation didn't mean much to them that they're not happy at all, wages are too high, homes are too high, they're not happy with how they're cooling things >> well, listen, the fed's got a ways to go we might have another 75 -- again, a house call is 75 followed by 50 followed by 50. i felt for a long time the fed was very late. i said i'd be like a squirrel. i like putting peanuts away because you never know when you're going to need them. we didn't do that.

covid obviously delayed that the ukrainian -- russian ukrainian war delayed that i understand it. i accept it. but now they've got to move aggressively so they're in my view going to be less concerned about whether we tip into a mild recession than they are about taming inflation, which if they don't creates all sorts of havoc >> what we'll do when we come back, we'll talk about your amazing wealth advisory business, what you're telling me and how you've reinvented the firm because you're the largest financial we own in my trust, and there's a reason because of your leadership >> thank you >> "mad money" will be back after this break with james gorman, the ceo of morgan stanley. >> cramer's continuing his conversation in his two-part exclusive interview with morgan stanley's ceo, when "mad money" returns. joins the cnbc investing club today. go to cnbc.com/investingclub

- oh, the stock market is doing that fun thing again. news from the future: you're going to live through that about 10 more times! (laughs) no stress. i just discovered yieldstreet. they vet investments that don't ride the stock market rollercoaster. - [narrator] yieldstreet: private market investing.

the hiring process used to be the death of me. but with upwork... with upwork the hiring process is fast and flexible. behold... all that talent! ♪ this is how we work now ♪

go. go scientist. go software. go cure. go production. go faster and safer. emerson automation software helps breakthrough medicines get to market at warp speed. go human go. go boldly. emerson. - oh, the stock market is doing that fun thing again. news from the future: you're going to live through that about 10 more times! (laughs) no stress. i just discovered yieldstreet. they vet investments that don't ride the stock market rollercoaster. - [narrator] yieldstreet: private market investing.

we're back with james gorman he's the chairman ceo of morgan stanley, the investment bank i like so much i own it for my charitable trust let's get right back to it james, you have reinvented this firm i remember the morgan stanley i applied to was kind of a trade 'em, wham a jamma firm your company is now the premier wealth investment adviser in the world. how were you able to do that >> firstly we had a view you had to start with a point of view and the view was that a separate trading banking business on its own was much less attractive because of its volatility to investors. so we needed some annuitized fee business we had it in the old dean witter business and the smaller asset management but they weren't at scale. so the view was there, we knew what the answer was but we had to get to scale. so we bought smith barney back in 2009. we bought etrade, solium, eaton vance, all of these were building blocks to get us to scale. it was actually a very simple concept. executing required -- we had to

make some calls and some people thought we overpaid for some of those assets they don't think so anymore. >> these are assets that are sticky they go "up" up. in the old days you were what's called an episodic firm. those days are now past. >> i think it's all about stability. if you look at the wealth businesses, which generate roughly $6 billion a quarter the last couple years, look at those businesses, they don't move very much in their daily numbers. plus or minus 5 million on 100 million. stable we love them then you've got the investment bank which is like a turbocharger when the markets are good the banks are doing phenomenally. >> but at the same time people lump these together. they say you have investment banking, investment bank's doing poorly so why don't we just sell the stock down it's not any different from the way it used to be. that's just not a fair characterization >> it's honestly just not looking at the numbers

some people have looked at and said because of the investment banking market -- which is tough. because of that these stocks are much less attractive i say seriously? take a look at what percentage of the revenues we have that are tied up in those kinds of activities that are depressed right now. by the way, they're delayed. they're not shut down. they're going to happen. companies will go public deals will get done. so i'm not concerned about it at all. i think where the stock is trading obviously i feel very good about what we're doing. >> obviously because you've been buying back more stock than anybody else and you've been returning a nice dividend. you've got the best in the group. >> and we're retiring -- we'll retire 6%, 7% of stocks this year and we've got a dividend yield of 3 1/2%. so shareholders are getting a 9-plus return without getting out of bed it's not bad so i feel very good about the position we should bring the share count down we started after the etrade eaton, 2 billion shares

outstanding. my tag will be down one five, one six. then you're paying smaller dividends because you're not paying dividends on the shares you retire >> there was a time if you told me that morgan stanley was going to own etrade i would have said are you kidding me but it turns out the wealth isn't solely in etrade, that's where it starts. you are going for the long ball. these are people who if they stay well will become the premium wealth clients for the next 20 years. >> well, and just give a call out to etrade, they just got rated the number one online brokerage business yesterday by clippinger's which is great we own the financial adviser piece. banks. second leg we needed to own the direct piece we needed to be in there we could build it or buy it. we bought etrade third leg we want to own or at least be one of the top two competitors in the workplace with fidelity and through solium and etrade we've got that. we're now managing something like 30%, 35% of s&p stock plans

in this country. so if you've got all three legs oar getting people through advisers, through trading online, and you're getting them through their work tlais, you can provide incredible capability to them because you're amortizing across a huge -- >> but you're not getting -- i know you can't talk about individual clients but you've got a big one in elon musk he may end up owning twitter and you could be on the hook for that is that true or not? >> well, as you said it, i can't talk about it, jim >> but we don't want you on the hook the shareholder doesn't want you on the hook. >> do i look distressed right now? okay that's all i'll say. we'll see how this plays out >> i like that attitude. if you're with your wealthiest clients what do you say that's different from the clients who aren't the wealthiest, would want to be wealthy >> what i've been worried about the next few years is the number of people who've been speculating in crypto -- you

know, it's fine if you bought at 6 600 and it's at -- >> you believe in it >> listen, i think it's an asset, it's a speculative asset by definition. i don't think it's a new form of stored value i think it's subject to a lot of regulatory risk. >> do you own any? >> no, i don't own any i wish i bought it at -- >> of course we all do >> but i'm glad i didn't buy it at 60,000. so what i've been worried about and what i've seen a lot of individual investors is they got caught up in the fight we've seen this before the dotcom we saw this in the early '90s. in '87 with the black monday crash and so on. my worry for that group is listen, your job is not to speculate. it's to build long-term wealth for stability. the very wealthy person is completely different they can put 1% of their money on anything, race horses, put it on crypto, put it on whatever they like. that's fine. that's no risk because they can afford to lose that. completely different focus >> but how about the young -- we have a lot of young watchers

25, 30 isn't this a time to start the market's so nowhere near its top. >> you know, australia has a scheme called the super innuation scheme where government mandated you save 15% of your income and it's created these huge sovereign wealth fund asset pools in australia if there's one thing i could tell every 22-year-old person starting a job, maybe they can't save 15%, but save 5 and the compounding impact of putting money into the market, maybe start with an index. just get in the market but it's all about duration. you're in the market 50 years. it's better than 30. a whole lot better than 10 >> james gorman is a little bit close to me in age can you stay longer? how much longer do you want to stay >> i truly believe in succession planning and i've been very clear with the board. but these organizations do best when you regenerate and provide growth, and part of that is giving opportunities to people so we've got a plan.

i won't give you the date right now. but no, i'll step down at the right moment >> fair enough >> we've got a great chain to follow me. but it's not today >> you've done the best in the group. and i know you have a great team >> thank you >> but i'm looking at the top. that's james gorman, chairman and ceo of morgan stanley. thank you so much, james good to talk to you. >> announcer: has the used car market stalled or could an investment in the sector help your portfolio cruise higher? cramer's in the driver's seat and offering his take. next - oh, the stock market is doing that fun thing again. news from the future: you're going to live through that about 10 more times! (laughs) no stress. i just discovered yieldstreet. they vet investments that don't ride the stock market rollercoaster. - [narrator] yieldstreet: private market investing.

go. go scientist. go software. go cure.

go production. go faster and safer. emerson automation software helps breakthrough medicines get to market at warp speed. go human go. go boldly. emerson.

we are really, really back on inflation watch now that we've woken up from yesterday's dream session to our nightmare reality. where the fed reserve's going to keep tightening and tightening until we get some price stability. but maybe we're actually making more progress on the inflation front than you might think or even that the fed realizes. when inflation started getting ugly one of the first places it got out of control was in the used car market. thanks to the chip shortage we didn't have enough new cars. even as demand for vehicles soared because people were fleeing the cities for the suburbs. by early to mid 2021 used car prices skyrocketed higher and they ultimately became a huge contributor to high inflation. but what matters was used cars were a great tell. those price increases hit before we got more broad-based inflation. the whole group were higher before peaking around last summer and then collapsing over the last year or so. carvana, carmax and auto nation.

unfortunately, the actual price of used vehicles remains stubbornly high for most of the year, jacking up the inflation indices it's a part of before pulling back pretty hard over the last couple months now, in recent weeks, though, investors started trying to bottom fish in the group they found out that's a terrible mistake when carmax reported a devastating quarter and that crushed every stock in the space. it was just brutal so what's going on here? why don't we start with something called the mannheim used vehicle value index which paints the clearest picture of used car inflation or deflation. this has been declining steadily since january but each reading was still up year over year because of earlier price increases. the mannheim index reading for the month, it was down 2.3 from august but it was still up half a percent from last september. however, as long as the trend continues then it's looking very likely we're going to see a year-over-year decline in used car prices next month. that's what's been a weight. we're really hoping for that

represents real progress against inflation. believe me when i say like the top of the show the fed sees this as a win if we started getting year over year declines. a weird thing happened over the last few months, though. after getting obliterated over this year the used car stocks started making a comeback. carvana the digitally focused used car retailer bottomed in mid july its highest loft month only to pull back to 26 and change again as of yesterday's close. the fact is the stock wasn't making new lows even as the s&p 500 kept plumbing new depths that was perceived as bullish. carmax, more of a traditional used car dealership, did make a new low plaft friday before surging to $86 yesterday the bank of england ratcheting back its -- let me put it this way, from the end of april through last night's close carmax was actually up slightly while the s&p was down 10% i can't really say the stock was thriving but it was certainly holding up better than the rest of the market.

how about auto nation, which is similar to carmax? this stock bottomed at 96 in april and it went out at 112 last night that's surprisingly strong performance for an industry that's directly in the federal reserve's crosshairs why the heck did so many people get excited about the used car stocks carvana's a unique case because at its lows many investors were worried that the company would actually go under because of its balance sheet. fortunately, carvana was able to raise several million dollars in april. albeit terrible terms. but that kept the business afloat when the court reported last month there t. was substantially worse than expected but the stock still stormed 40% the next day because it was beaten down so badly and there was a lot of short covering the quarter wasn't apock lippettic and that was enough for some people. as for car max and auto nation i think they were seen as trade down plays, more demand for cheap stuff in a slowdown and also their stocks were seen as extremely cheap. carmax appeared, that's the operative word, appeared to be selling for 15 times earnings. auto nation appeared to be selling for less than five times

earnings emphasis on appear the used car stocks look cheap but that was a trap because they simply can't meet wall street's earnings estimates in this environment. sure enough when carmax reported this very morning they gave you a sxwriethic shortfall the company earned 79 cents a share. analysts were looking for $1.39. much weaker than expected revenue. same-store sales down 8.3% that's horrible. their total wholesale unit sales were even worse. off 15%. and each of those sales was much less profitable. carmax is getting squeezed by bad affordability. inflation has made used cars too expensive. and weakening consumer confidence crosshairs of the fed. they see consumers prioritizing smaller discretionary purchases not taking big ticket items like cars and trucks. ceo bill nash talked about the cadence of the quarter they were seeing low single-digit declines in same-store sales for june. those numbers fell sharply at the beginning of july with declines in the mid teens. in other words, the quarter started off bad and then it got

much, much worse when asked about the slowdown nash explained there's not one single thing i can point to like oh, this happened and that's why we saw the decline, i think it's just a continuation, the deterioration of the overall consumer then he added early in september we're seeing the same softness that we saw in august. that's real bad news for investors. but it's actually good news if you're the federal reserve waging war against inflation rec, that's our theme. carmax also provides financing for its used cars, and that's not a business you want to be in when the fed's aggressively raising interest rates got to worry about bad loans now. the only time to take away -- carmax gained market share during the quarter this is how the used car business looks when a company's doing well versus the competition. just imagine how the other guys are doing, the ones who lost market share it's no wonder the whole used car complex collapsed today. carmax plummeted 25% pin action sent carvana down 20%. auto nation losing more than 10% of its value and lithium motors of medford, oregon sinking 7%.

sometimes when a stock looks cheap that's simply because it is a value -- but we care about the used car business because of what it tells us about inflation and the bottom line is this, when you look at this quarter from carmax it tells you the fed's been incredibly successful at eroding consumer confidence jay powell doesn't want people to spend their money on big ticket items, and it sure seems like everything's going according to plan when it comes to used cars again, we want the fed to win. but not by throwing any of these companies into permanent purgatory. a tough fed, though, if it isn't careful, will do just that let's take calls let's go to dave in new hampshire. dave >> caller: hey, jim. how are you doing? >> i am doing fine, dave thank you for calling. how are you doing? >> okay. i think you're great i've been with you quite a while. my stock tonight, jim, is tesla. i'm also hearing about elon musk and rumble i don't know what that is -- >> here's what we know we know that tesla's best in class.

we know that they're even making their numbers in china we do think world of elon musk i think tesla is going to bounce here i never recommend calls on this show but i would be paying deep in the money calls just in case something happens in that lawsuit with twitter that causes him to have to sell. let's go to lisa in nevada lisa >> caller: hey, jim. how are you doing? >> you know, these days are getting hard, lisa let me tell you the truth. they're really getting hard. how can i help >> caller: well, jim, i wanted to talk about chargepoint. i've heavy into this stock and i want to know what you think about if the number's ever going to get to $20. >> well, i'll tell you, here's the problem with chargepoint it's in the right place. but it's speculative and the stock market, as we've been saying, is disliked by the fed for its speculative nature and chargepoint is, even though totally right zeitgeist of our country, too speculative for "mad money." we care about the used car

business because of what it tells us about inflation and the fed should care too. i mean, you look at this quarter from carmax, it tells you the fed's being incredibly successful at eroding consumer confidence maybe that will help it's not clear "mad money's" back after the break. >> announcer: coming up, cramer takes your calls, and the sky is the limit. it's a fast-fire "lightning round. next next, hurricane ian's aftermath. the damage left behind and the latest on the rescue effort. live reports from florida. >> announcer: the facts. the truth. "the news" with shepard smith. next cnbc to live through that about 10 more times. (laughs) - oh, it's no stress. i just discovered yieldstreet. they vet investments that don't ride the stock market rollercoaster. - ooh. i think some of my gray hairs just reversed. - yeah. you're welcome. - [narrator] become an investor today. yieldstreet: private market investing.

it seems like things are falling apart lately. the economy. the market... everything. but upwork lets you strategically hire talent to weather all ups and downs your business might go through. look at all that talent. ♪♪ it is time it's time for "lightning round." where i take your calls rapid fire you say the name of the

stock and i tell you whether to buy buy buy or sell sell sell. i do not know the caller or stock ahead of time. we play until we hear this sound. and then the lightning round is over are you ready, ski daddy we'll start with brandon in maryland brandon! >> caller: hey, jim. first-time caller. i'm calling about a global ecommerce stock. i want your opinion on alibaba >> numbers are coming down price target's coming down i do not want you to touch that stock. let's go to dusty in virginia. dusty! >> caller: how are you doing, jim? good to talk with you. >> i'm doing well, dusty how are you? >> caller: i'ming doing great. i would like your thoughts on the sherwin williams company, shw. do you -- >> price to earnings multiple is still way to high on that stock even though it is possible -- i think the stock goes lower how about we go to jack in massachusetts? jack >> caller: yes, jim. thanks for taking my call. >> of course

>> i think charles lear labs has come down so much. finally doesn't have a high price range multiple i would start buying that stock right here right now let's go to karen in georgia karen. >> caller: hi. thanks for having me, jim. so should i hold or sell my sh shares >> this is a fantastic speculative play as long as you understand it's speculative. i do a lot of work with neurologists and this is the kind of company that could strike gold or not. but you've got to understand you could lose everything. and that matters let's go to jake in pennsylvania jake >> caller: boo-yah, jim! here from the suburbs of philadelphia how about those eagles >> oh, go birds! go birds what's happening >> caller: calling to get your thoughts on rvnc >> very good dermatology and aesthetic medicine

they've got the right drugs. people like it, it's good in this environment it's okay to buy let's go to bill in illinois bill >> caller: boo-yah, jim. from the jetstream i'm a long-term airline pilot and interested in boeing's stock. and wondering if you think it's a buy at these low levels -- >> now we're seeing -- you know, first of all, i think you have a great job but i've got to tell you there are companies -- china's developing its own plane. they've been doing that for a l long time. boeing need a break or two and i can't see where they're going to get it from. you've still got to avoid the stock. marty in west virginia marty! >> caller: boo-yah, jim. long-time, first time. >> excellent >> caller: cs digital. >> don't need it don't need it. don't want it. losing money do not buy money losers in this environment. when there are so many companies that are making a killing. dave in illinois dave

>> caller: dr. cramer, my mad tuscan friend. how are you? >> dave, you know more days like this it couldn't be better right? you and me together. we need to go to the bear, the bears restaurant okay >> caller: i'm there, buddy. your thoughts on cgen. >> i think merck has to buy them i would not sell this stock here i'd be a buyer and i've got to tell you all i can say is when i see that stock there i think merck, you need the growth, you do the buying. and that, ladies and gentlemen, is the conclusion of the lightning round! >> announcer: yesterday's move higher had investors hopeful for the future of this market. but what explains today's sudden turn drrm's offering up a rarely talked about explanation next

nothing worse than a bear market rally, the kind that gets rolled back the very next day. the problem with a bear market is it's really insidious it beckons you to come back in it calls you it knows your name it mesmerizes you. it makes you feel that whatever's wrong is now a thing of the past. bear markets are expert at playing dead then you discover that the bear's very much alive and you get mauled, like we saw today. although maybe that's giving the market too much credit yesterday buyers thought we were at the beginning of a new era because the bank of england threw in the towel in its fight

against inflation. i guess people forgot we live in america. the very next day these same buyers realized the fed's going to do whatever the heck it needs to do to tame inflation, so the stocks they bought, they just got completely slaughtered bear markets are always like that >> the house of pain >> it comes and goes leaving you holding the bag. why is this so hard to recognize? first, we've all been keying off the two-year treasury. i talk about that endlessly. these notes have gone -- they've been going down relentlessly, meaning their yields have been surging higher, making these pieces of paper ever more attractive to people who might own stocks when the bulls saw the two-year moving rapidly in the opposite direction, rates going down, they thought it was an all-clear signal false! the problem is that bond traders can be just as dumb as stock traders. there was no reason for the yield on the two-year to go down yesterday. everybody was taking their cue from the uk. that makes no sense whatsoever the british economy's a disaster

right now. it's just not analogous to what's happening here. second, as i described last night, there's so much negativity out there that it's very easy for the bulls to start a fire with a little kindling. extreme negativity is a precondition for any kind of rally. but that doesn't matter because right now the fed wants your portfolio lower. i keep saying that to you. they're not going to stop until they get their way third, speaking of sets you'd better believe they're going to maintain their war on inflation. nothing has happened that's going to change their minds. some would think it's only gotten worse we got strong jobless claims today, another overheated inflation number no justification or reason so they're not going to. they're going to tighten now, maybe you're wondering how could the buyers not know that yesterday? weren't they basing their decisions on something more sophisticated? the answer is no you've heard of smart money. but tonight i want to introduce you to the concept of dumb money. on days like yesterday at my old hedge fund i would always hit the wires, check around various trading desks to see who was

doing the buying i never wanted to get the names of funds that's a secret. but i'd ask is it smart money or is it dumb money invariably on a day like yesterday i'd get the answer, dumb money, jim. that means money managers who are often wrong because they're too eager or they're too bullish all the time and you've seen those people on tv too bullish. look, i know that when you're a market commentator you're not supposed to say oh, the reason we went up is because the buyers were idiots. that should never be your go-to explanation. way too glib sometimes, though, stupid diis the most important explanation sure, there are a lot of very smart people in this business, but there are a lot of morons too. yesterday the morons bought. they bought like crazy and when the dumb money wants to do something foolish nothing can stop them. they have every right to be as stupid as possible you've got to remember, in a bear market there are plenty of people who are eager to do stupid things. sometimes they dominate the action the important thing is you can't take the averages seriously when they come in and buy because that's how you get your guts ripped out

so next time you see the market go up for no reason whatsoever, ask yourself if it's the dumb money doing it and chasing a rally or let's just say one based on nothing you must never do that i like to say there's always a bull market somewhe.e. i promise to trymarket summer, just regular mad money. i am jim cramer, see you tomorrow. widespread destruction , coastal areas obliterated roads washed away, communities underwater, even now. and tonight, ian is gaining strength as a hurricane yet again targeting georgia and the carolinas. i am shepard smith. this is the news on cnbc. >> hurricane ian, going to be a storm that we talk about for decades. >> or the guest