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 Cramer's friends. I'm just trying to save you a little money here. My job is not just to entertain, but to put it in context. So, call me at 1-800-743-CBC. Tweet me at Jim Cramer. This is a frozen market in the sense that you got to let it go. Let it go. Devotees of Disney will recognize those lyrics from Frozen, and boy, are they applicable to this economy. Market after market is getting frozen right now, and that's killing stocks.
Sometimes you get a mixed day like today. Dow dipped 444 points. S&P dropped 0.25%, but the Nasdaq gained 0.24%. Still, they become less and less common. The way I see it, we won't get the big rally I'm looking for until we learn to let it go. That means the war must end. The retreat in oil must happen. We have to shove the rate increases, and we got to bring rates down. Until then, the freeze is on. What do I mean by frozen? Let's take the housing market. Mortgage rates just keep going up and up. Right now, the national average for a 15-year mortgage is 6.70%. Do you know exactly 5 years ago that rate was 2.32%? You want a 30-year? The national average is 7.34%. Exactly 5 years ago it was 3%. That is outrageous.
Look, this isn't Jim Cramer's mad mortgage, but rates have frozen the market. It's all around the country. I need you to put yourself in the heads of potential home buyers. Maybe they bought a home 5 years ago with a 3% mortgage. Now they have a child with another one on the way. The typical starter home may be too small for that. Normally, they'd be searching for a larger home. But now that mortgage rates have surged, they literally can't afford to move. If you have a 30-year mortgage that you pay, you got 3% on, right? Your interest rate payments, get this, they will more than double if you try to get a new house. Who can afford that? The nearly 7.5% mortgage has made housing the least affordable it's been in 40 years.
Even as the price of a new home hasn't moved up all that much of late, that's what I call a frozen market. And keep in mind, housing punches above its weight in the economy. A housing transaction, even if it's just for a dollar amount and doesn't require a lot of artificial intelligence, does have a lot of people involved: salespeople, title people, loan officers, lawyers. Once you get that home, you have so much to do, especially if it's not new: furniture, appliances, painting, perhaps a roof, maybe a pool, a redone kitchen or a bath. That's probably a fraction of what you might need to refurbish or to remodel. Impact. Last night, I got a call about QXO. That's a company founded by the very successful Brad Jacobs, the chairman CEO. I know he's successful because he wrote How to Make a Few Billion in January of 2024 and then followed up last December with How to Make a Few More Billion. So, I guess he's successful. The company QXO is an amalgam of Beacon Roofing Supply, Kodiak Building Partners, and Top Build, making it the top outfit when it comes to insulation and waterproofing. It's number two in roofing and then arguably number one or two in building materials. The stock was at $27 and change earlier this year. It's now at 11 and change because this is a miserable time to be a supplier to the home builders.
Hey, look, the home builders themselves are doing very poorly. The stocks of Lennar and KB Home are down 20% and 17% year-to-date, respectively. The others are treading water, slightly down, although Toll Brothers is only down 0.35%. That's because about 25% of their buyers pay cash. Toll is the rich man's home builder, so the customers have less sensitivity to mortgage rates. But the weakness in this industry spreads throughout the entire housing food chain. Think of everything that goes into a house. There's a reason why Whirlpool just suspended its dividend and its stock has dropped from $94 to $30. Or how about the pathetic housing retailers? Lowe's and Home Depot off 23% and 17% for the year, respectively. Both hit 52-week lows today. Aisle after aisle of these stores is filled with goods that struggle to move: hammers, screws, lighting, faucets, so many other products that don't sell when the housing market's frozen. Walmart and Costco have been terrible stocks of late. Why? I think part of it's housing. RH, the old Restoration Hardware, is a housing trap. It's gone from $745 when rates were half of what they are now to just $121. And by the way, you know, this is a profitable company. The frozen housing market, let it go.
Of course, it's not just housing. How about the IPO market? Just a few months ago it was on fire. On June 12th, SpaceX came public to amazing fanfare. Biggest deal, $2 trillion company. Yesterday, Aura, which makes these very successful health rings, a profitable company, decided to scrap its $2.2 billion offering, citing market conditions. I marveled that the Nasdaq 100 was only 1.3% away from its highs. Yet, they're fretting about market conditions.
It would have been better if the bankers had said, 'Well, the IPO market is frozen. You can't do anything.' But they're not gonna do that. You aren't gonna see this Inspire, the one that I was kind of hoping and counting on, the parent of Buffalo Wild Wings, Dunkin' Donuts, Sonic, Arby's, Baskin-Robbins, going public this year. That's been shelved. Any halfway decent stock market could have handled that one. But this market, with 40% of stocks in bear market territory, is hardly halfway decent. The mergers and acquisitions market has been a reliable source of profits for the major banks ever since Trump got sworn back in. But other than Paramount Warner Brothers, it's mighty hard to think of two public companies merging with each other right now. It's almost as if that game is over. One of the side benefits of mergers is that the company that runs the S&P 500 gets to pick a new one, a hot stock to put in the index when the target, which is also up a lot, vanishes. But no deal. Stagnant S&P without IPOs or M&As. The huge banking cohort is frozen except for fees, and that's just not good enough. Let it go.
We're headed into earnings season, which starts with the banks. What happens if they say our markets are frozen by the Iran war? Business people who were loving Trump's antitrust regime, or lack thereof, but now they're afraid to make commitments when any day Iran could sink an oil tanker and all hell will break loose. Let it go. Finally, as much as we consider the data centers a growth market, and there's been no sensation in the ability of them, the politics have certainly gotten ugly, regardless of what we saw yesterday in the White House when two of the biggest supporting governors, Josh Shapiro in Pennsylvania and Greg Abbott in Texas, Democrat Republican, have put the industry on hold in their states because they're up for reelection and data centers have become a real albatross. It's difficult to see that industry, let's say, have the growth that we thought it would have, and that's the way I have to look at it. It's politically frozen. And I am not seeing anything particularly bullish out of Micron's earnings tonight to defrost the story. Maybe let that go too.
Now, there's an alternative reality I'm not losing faith in. You end the war, the price of oil goes down, inflation goes down, the Fed takes the next rate hike off the table, and we got a face-ripping, lung-snapping bull market move that would bury the short sellers. It could happen. It might just be three quick days, perhaps three of the important days of 2026. That's why I hesitate to leave the market at this moment. But here's the bottom line: let it go. Not if things get unfrozen. Then you get a virtual running of the bulls, a Pamplona situation. But if these markets stay frozen, if the bell doesn't go off, we could be looking at a trip to the slaughterhouse.
Let's go to Jerry in Florida. Jerry. Jerry, you're up.
Yeah. Hey Jim. Yeah. Hey Jim. Um, what about a little bottom fishing with Nike, NKE?
You know, I tried to bottom fish in Nike about, I guess it was about 10 points ago for the trust. I hit today's 52-week low. I lost money for the trust, and it was very painful. I don't want to go back to the well. Good guys, but I lost, you know, once burned, twice shy. How about that? Large parts of this market are indeed frozen. So you have to let it go. Let it go until it gets unfrozen.
On Mad Money today: restaurants are a fickle business, but one founder seems to crack the code by leaning into hospitality. Hey, do not miss my conversation with the man behind Gramercy Tavern and Shake Shack, Danny Meyer. Then, what do you get when you cross a data center play with a basketball team? How about a darn good stock performance? Don't miss my deep dive on Bloom Energy. And should you try the new public player Reformation? You asked me about it, I'm surveying it. So stay with Cramer.
Don't miss a second of Mad Money. Follow Jim Cramer on X. Have a question? Tweet Cramer #madmentions. Send Jim an email to
[email protected] or give us a call at 1-800-743-CNBC. Miss something? Head to madmoney.cnbc.com.
Nobody understands the hospitality industry better than Danny Meyer, who's built an empire in the restaurant industry. Most of you know him as the founder and chairman of Shake Shack. But here in New York, he's the man behind some of the best fine dining establishments in the city. From Union Square Cafe to Gramercy Tavern to Manhatta down here in the financial district. The Modern, where I asked my wife to marry me, has two Michelin stars. For the record, she turned me down flat because I hadn't first asked her dad for her hand. Suboptimal. Gramercy Tavern has a Michelin star of its own. You might assume everything's been smooth sailing for him, but we're talking about the restaurant industry, which is absolutely brutal. So, he's had a ton of failures along the way, too. He explains everything in a humorous, candid fashion you just don't see from most authors anymore. That's a big part of this new book, What Could Possibly Go Right? The Essential Journey to Scale and Enduring Culture. It's honest, entertaining, and very informative, just like his first book, Setting the Table. These are both must-reads, even if you aren't that interested in restaurants or the trials of running a business. Earlier this week, I had a chance to speak with Danny Meyer about the book at Ci Siamo, his excellent Italian restaurant in the Hudson Yards neighborhood of New York City. Take a look.
Danny, you did it again. It is remarkable. Setting the Table I thought was the best business book that wasn't named a business book. What Could Possibly Go Right? You tell us more about how to run a company and how not to. How do you do it?
By making mistakes, learning from them, and then hopefully teaching from them as well.
Well, you talk a lot about how to make good and bad decisions. And there are, after some great anecdotal information, you do have charts of which I ripped out a lot of them because I intend to continue to develop businesses. And I need you for how to develop culture, how to develop behavior, and how to develop scale.
Well, I think that businesses that you cover every single day probably know more about how to scale than I will ever know. What I really try to do is to try to scale a feeling and let that be the fuel for what scales culture, and then let that be the reason that enterprise value gets created.
Well, I didn't mean to go into this so early in the interview because it's more specific, but I did find it remarkable that you developed the ultimate scale that we were told couldn't be scaled, which is a juicy, terrific hamburger, but you also obviously have the fine dining that's so hard to scale. How do you balance?
How do you balance between... Well, like, you know, honestly, you tried to scale juice, you tried to scale pizza, they didn't scale.
Yeah, I made some mistakes along the way. And I think a lot of that was in the days after Shake Shack's very successful IPO. I kind of...
was successful. Remember what I said?
I remember you said that, and I wrote about it in the book. You told me that was going to be the worst day of my life. It was a pretty good day. But you know what? In retrospect, I think you knew exactly what you were talking about. But you know what? Sometimes my instinct is, what could possibly go right?
It's not just the title of the book. It's kind of an underlying optimism that I bring to everything. And one of the optimistic things that I believed right after Shake Shack went public was that we could do it again and create that kind of uplift for many people on our team. And so I said to everybody, you come up with a great idea, you come up with a great idea, let's see if we can make you successful. And we came up with some ideas that weren't so successful, but it was well intended.
Yes. And one of the things that I think is classic, you came up with what I thought was, and I went to all your restaurants, the non-tip. I thought that was terrific. I hate calculating. I always have given 25% because it's like easy to do a quarter. And I always thought it was an intimidating process. I think you felt others felt that way too, but it turned out we like to tip.
Turned out that people do like to tip. It turns out that servers like to receive tips. I was trying to kind of balance out an age-old inequity that exists within the tipping system, which is that tips are generally not legally able to be shared with cooks. And I didn't think it was fair. Imagine if your beloved Eagles went into halftime behind. I know that that'll never happen this year.
But now imagine if the offense was paid three times as much as the defense and the coach has to make everybody feel great about going out there. That's how it is in the restaurant business where tipped employees can make so much more than non-tipped. And I was trying to right that or at least narrow that disparity.
You are in the end a great storyteller, which is why I think this is the one that's so right. After Setting the Table, I wrote, you inspire like a great NFL coach. What are your favorite methods for firing people up, and can it really be done at scale?
Absolutely. You don't have to fire up each individual. You have to fire up the people who hired all those individuals. You got to make sure that the people who you're putting on your team have what we call a high HQ, a high hospitality quotient. So, over and beyond the 49% technical skills we look for, like I want someone to be great at what they do, I'm looking for the 51% hospitality skills. And we teach anyone who's doing the hiring not to settle until they get someone who's got a high HQ.
Yeah. I think the HQ examples that you gave is terrific. But I've got to tell you, What Could Possibly Go Right? also has some examples of what I regard as bad behavior by people you couldn't control. Some landlords who seem to be wrong, some partners who seem not to be good. So I need to know from you, if I'm a young entrepreneur, how do I know not to partner with certain people?
It's hard. You know, we all make mistakes, but I do think that if you enter every partnership, every developer partnership, every employee partnership with your eyes wide open and you say, 'This is my intention,' and you really know what your intention is, I think your batting average goes up. And then, you know, one of the things I lay out pretty vulnerably in this book is that I haven't always gotten it right. And as a matter of fact, I've sometimes hung in there with bad decisions too long because I always believe I can turn it around. I always believe I could make it right.
Well, closing a restaurant is monumental to you. You don't want to ever admit that defeat, but sometimes it's good to admit the defeat so you can move on.
That's right. That's why I began the book with the antithesis of what I wrote in the first paragraph of Setting the Table, where I proudly proclaimed that I've never closed a restaurant in 25 years. And I open this book talking about the first restaurant I ever closed, Tabla, because I learned a lot of lessons. I learned that number one, a 13-year-old restaurant closing is not necessarily a failure. A lot of great things came from Tabla. But I also learned that I should have pulled the plug sooner because counterintuitively, what I was really afraid of was laying people off for the first time.
I was afraid of being seen as a failure. That's my own emotional nonsense. What I should have done is to say the worst thing we could do is keep a restaurant going that's losing money because no one on this team that I care so much about is getting a raise for two years. That's not fair.
And we all had experiences. I know you could, as someone who was at Tabla. I had my 43rd there, and it was remarkable. We were upstairs looking down, and all my... you were so gracious to have it. We all have good stories about Danny Meyer and what he does. We know that you have a fondness for Italy. So we're at this beautiful restaurant. How do these thoughts come to you?
So right now we're at Ci Siamo, which means here we are.
And the idea for the name of Ci Siamo came to me because we had planned this restaurant probably two years before the pandemic started. And this restaurant, like any gestation period, had to be born. So it was born in October of 2021. Not only was the pandemic still going on, but we ended up having to close the restaurant a month after it opened because of the Omicron variant. So, Ci Siamo was my optimistic way of saying we've arrived. We're here. I do love Italy. What I do with conceiving any restaurant these days is I look at the location and I look at the context of it and I say that's the frame. My challenge is to figure out what piece of art belongs in that frame. Look, we did it in 2004 with Shake Shack. Here's the park. That's the frame. What belongs there? We did it with Citi Field. They gave us center field in 2009. They said, 'What's the right solution here?' Shake Shack, Blue Smoke, El Verano, Papparazzo. The Modern, the museum gave us this space. What belongs there? The Modern. Ci Siamo is what belonged here. We're in Brookfield Manhattan West, and this is an area that's steps away from Madison Square Garden, steps away from the Moynihan Train Hall. This is what belonged here.
Most definitely. Now, I do want to ask you, subsequent to What Could Possibly Go Right?, we've had some tremendous food inflation. You always deal head-on with the problems. If you were to write this book right now, how much would be about food inflation and cost for people?
Because I think that whenever there's apples to apples, every restaurant business in the country, in fact, every business in the country, one way, shape, or another, is dealing with the uncertainty of what tomorrow's costs will be. And what that does is it actually gives an increased advantage over the businesses that not only run the rest of their business well, but add hospitality. Because when you get your bill, whether it's this big, this big, or this big, what you're going to be judging in terms of value is how we made you feel. And so, I don't think there's anything I would write. It's no fun. We hate raising prices. In fact, we hang on to the very last second looking for other areas that we can cut costs, and we do that. But I wouldn't write a whole chapter on inflation.
Is there a price where Shake Shack, where the burgers that are so delicious, that they're going to cost too much?
