Mad Money 04/06/26 | Audio Only

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Hey, I'm Cramer. Welcome to Mad Money. Welcome to Cramer. Other people want to make friends. I'm just trying to make you a little bit of money here. My job is not just to entertain, but to educate you. So, call me at 1-800-743-CBC or tweet me at Jim Cramer.

People are starting to say that looking back, maybe the S&P 500 bottomed on Monday, March 30th, when it hit 6316.

Oh, that was the low. And lots of people are saying it's time to call the bottom right here, right now. And you know what? It's certainly possible. But what I want to do is walk you through what caused that low so that if we're ready, so we're ready if we get another big decline, right? As the war against Iran could escalate, I need you to know what to do.

Notice I said if, because it's very hard to call a bottom in a market where the variables are the plans of President Trump and whoever's running Iran today. We can certainly set the stage of what happened at the lows last week, though, so that you'll be ready even as this now feels like a very different market today, with the Dow gaining another 165, the S&P advancing 44, and the NASDAQ rising 0.54%.

First, you have to recognize, no matter what you heard today, that the supposed bottom last week was not caused by anything related to stocks themselves. The bottom was caused by interest rates. Specifically, on Friday, March 27th, the 10-year Treasury hit an eight-month high of 4.482, and that was really scary to people. But last Monday, rates dropped, and they dropped very hard to around 4.3%.

That's a big percentage move that happened despite the fact that oil actually went higher that day. The first time we saw the divergence in this terrible stretch — oil up and rates down — that was the shock that caused the bottom.

What happened that day to make that impossible story change? Did President Trump say something that brought the war closer to a conclusion? Did the Iranians capitulate somehow? No. Nothing like that. Not at all. What happened was Fed Chief Jay Pal gave a talk at Harvard on Monday, March 30th, and he took a lot of people by surprise, who follow bonds at least.

He said that inflation expectations are grounded even as the energy pressures rise. He said the central bank doesn't need to respond to this oil shock with higher interest rates. He said that the Fed will look beyond the short-term gyrations of the energy market. And he said that the federal funds rate, the one set by the Fed, is a quote good place for the Fed to sit and observe.

That was a monumental call. As it was overlooked by stock traders, it meant everything to bond traders and was more than enough to stop the decline. Rates were going lower. Why? Simple. As recently as that Friday morning before the Monday talk at Harvard, traders were wagering that there'd be a better than 50% probability of a quarter percentage point rate hike — not cut, hike, an increase — because that's what the Fed's supposed to do when costs get out of control and inflation's creeping back up while employment's steady. Kind of exactly what we have.

Pal busted that thesis, plain and simple. The traders were on to something very big. They knew that the Fed chief was taking a rate hike off the table, not just for last week, but for the April meeting. And then, well, that's the end of Pal. In June, Kevin Wash will be Fed chief. He's Trump's pick. He's not a marionette, but we know that, like the president, Wash thinks the economy needs a push.

We had good employment numbers reported just Friday, right? Good Friday. Market stocks were closed. They were much better than expected. But with Pal taking the possibility of a rate hike off the table, we don't need to worry about the labor market being too strong.

And that's how important Pal's comments were to bonds, to oil, and most importantly for you, to your stocks. Now, if we step back, we realize that as much as the war dominates the headlines, as much as the president says that without a deal that will include the reopening of the Strait of Hormuz he will take out Iran's power plants tomorrow night, what really matters to the stock market is plain and simple interest rates.

What did the bottom not encompass? It didn't matter, for instance, what price of oil truly goes to. The Fed was more important. Now, I'm sure if oil were to go to 150 or 160 from here, we might get a totally different view from the Fed. What can I do? But anything in this range won't matter. It didn't matter what the president said either.

We kept thinking that his threats, his bombastic challenges, even his stone-age comment directly related to the stock market. Nope. They haven't moved markets. Maybe he's not believed anymore because he keeps changing his mind. Iran closed the Strait of Hormuz. Well, let's say that does matter. But compared to interest rates, it's not that important.

I'm pointing this out because I think most people watching don't understand that the bond market's in charge of the stock market. Even in a time of war, rates are especially important when so many investors are caught leaning the wrong way, betting that rates are headed higher. If rates were set to go up, if the Fed were to tack on a quarter of a point because of oil, I think it's safe to say that we'd be in the grips of a vicious bear market.

And we've seen these before when other Fed chiefs have raised during an oil shock. The retailers, the home builders, the banks — they crater. Healthcare sensitive to interest rates would have been crushed. Utilities just annihilated. Airlines. That big move in the health insurance that we see tonight because of higher rates being given by the federal government — that would be rolled back tomorrow.

Let's go beyond the March 30th lows. Every day there have been more threats by our president, but we rallied every day last week since the lows, and we rallied again today despite the president's plan to attack Iran's power plants and bridges in order to force them to capitulate. None of that mattered to the stock market because rates are staying low. Today the 10-year held at around 4.33.

This week we have almost no earnings reports. I'd say that as long as rates stay benign and we have no earnings reports, I think we'd look back and say that there was a bottom. Now, the real test will come the week after when we begin to get earnings. We're going to react to those earnings, and it's entirely possible we could have some real blowoffs.

There haven't been enough earnings reports for us to be able to make a judgment about what's happening and what the war's done to the economy. There's certainly large numbers of companies that will give us good earnings paired with bad outlooks because of the war. There are plenty of headwinds. We have inflation picking up. We still have the trade battles. We need to worry about private credit, even as I think that the private credit scourge can be contained.

Most tech companies don't report till near the end of the month. They won't be a factor. Still, I want to make it clear that the market bottomed because the 10-year didn't punch through 4.5%, not because of where Nvidia traded or Microsoft or Apple. That's why for the duration of this war, I'm going to check the 10-year first, then the price of oil, and only then the stock research.

Here's the bottom line. If we see oil go up and rates go up, well then I think we haven't seen the bottom. But if rates stay tame, then last week's lows could represent a real firm bottom, and we might be able to buy the stocks and companies that are due to report. That means the banks first up may be the best here. They could surprise with some excellent mergers and acquisitions and some good news about IPOs down the road. I'd like a bunch of them. Check with the travel trust. Lot to buy. Could be Jamie in Florida. Jamie.

Uh, I think it is actually. I think you've had a really, really good move. It's been a parabolic move. I say kaching, kaching. Let's go to Bob in Florida. Bob.

Thank you. Thank you. Do I always wonder? I mean, you know, relevancy, niche, scale — what am I doing? I get a call like what you just said. I feel terrific. Let's go to work.

I want you to be very optimistic. They have enough money to do a buyback. They're going to be finally merged correctly with Discover. They did make an acquisition that kind of threw people off, hurt the stock. Plus, of course, Trump talked about how he ought to put a tariff in at 10%. That was really bad for them. I think that's gone away. I think Capital One is one of my absolute favorite stocks. I said so this morning in our broadcast with Jeff. I say you're on a good one. I want to go to Lou in Florida. Lou.

Oh, I'm so glad that you're on the show. Thank you so much yourself.

Well, I mean, I got to tell you, Verizon's actually got some game here. It's got a new CEO. It's starting to move up. I care for Verizon. I think it's well behind the market. I think you got a good idea. I'm not kidding. One of the best ideas around, frankly.

Okay. If rates stay tame, then last week's lows could represent a real bottom. And that's why I'm trying to communicate to you: it's interest rates that are in charge. And then we might be able to buy some of the bank stocks, including, by the way, Capital One that we just talked about.

On May tonight, we were off for last week's jobs report, so I didn't get a chance to give you my take on the most important piece of data we get each month. I'm breaking it all down for you next. Then Tesla's latest deliveries. Ooh, wow. Right. Well, below. I'm digging into all the numbers from the EV maker, and a huge food distribution merger is in the works, but Wall Street doesn't seem all that thrilled. I'm getting the latest straight from the source when I sit down with Sysco, the SY kind. So stay with Cramer.

Last Friday, we got the monthly non-farm payrolls report for March, and it was surprisingly better than expected. Unfortunately, given where we are right now, a strong labor market is not what we want to see.

Next month, we get a new Fed chief, Kevin Walsh, who's eager to cut interest rates. But with a robust job market, it's much harder to justify that kind of policy, especially when the war with Iran has caused surging commodity prices all over the place. Even if we know Walsh sees great sense in lowering rates because some industries like housing certainly need them.

Now, heading into last Friday morning, we had months of soft job numbers. That was the best argument for why the Fed should start cutting rates again following three rate cuts at the end of last year. After averaging a monthly gain of roughly 122,000 jobs in 2024 and seeing no negative job growth months that year, wow, we managed an average gain of less than 10,000 jobs per month in 2025. And we had net job losses in five out of 12 months last year.

January started out on a positive note, big monthly gain. But February saw another big negative number also. After the unemployment rate bottomed out at 3.4% early 2023, it's drifted up into the mid-4% range now, reaching a four-year high of 4.5% late last year before settling back in the 4.3 to 4.4 range. Of course, in a vacuum, that's hardly an alarming unemployment rate. For most of my adult life, anything below 5% was considered full employment.

But if you're incoming Fed Chief Kevin Walsh and you're searching for a reason to cut rates — after all, that's the reason why President Trump apparently appointed him — then a softening labor market makes your job a heck of a lot easier. In fact, you could argue that the lack of momentum in the job market is more important than all these war-related price spikes, because in theory, the war is temporary.

But then we get these March unemployment numbers and, geez, they're really good, although not good enough to put a rate hike back on the table. But we don't need any more of these if you want a rate hike. Now, you might get a rate hike if you keep getting strong numbers. The economy added many more jobs than expected in March, with the non-farm payroll up a seasonally adjusted 178,000 jobs. That was roughly triple the Dow Jones consensus estimate of a 59,000 job increase. And in fact, it was the best single month of job growth since December of 2024.

In addition to the first pass of the March numbers, the February change in non-farm payrolls was revised down to negative 133,000. That is worse than the original result of 92,000 job losses. At the same time, the January result was revised higher by 34,000 jobs, up 160,000 jobs. Combined, the three-month average was just over 68,000 jobs created per month. Well, look, that is the best since early last year.

In absolute terms, these really aren't great numbers, okay? But they're more or less fine, and they represent a big improvement from last year. Plus, the official unemployment rate ticked back down to 4.3%. Now, there's some important context behind both the weak employment numbers from February and the much stronger numbers that we got in March.

First, the biggest contributor to job growth in March was the health care sector. Curious, it added 76,000 positions, and a big chunk of those gains were from workers who had been on strike at Kaiser Permanente. It's that giant healthcare system in California, in February, finally returning to work. Plus, the weather was particularly heinous in February, so the employment situation naturally improved along with the weather.

I do think we could see some revisions downward, which is why I don't think the big rate cut thesis should disappear. What else matters here? First, while the overall jobs market numbers tell much of the story, over the past few years I've noticed a steady increase in the median number of weeks that people are unemployed.

Second, after it plateaued last year, we've seen a sharp decrease in the overall employment level since the new year began, with more than 1 million jobs disappearing just in the first three months of 2026. Now, that hasn't caused a spike in the unemployment rate because many people have stopped looking for work and many others have been deported.

Putting it all together, I think we're looking at a very complicated labor market. Despite some of the headlines that you'll see, we don't actually have widespread layoffs resulting in huge jumps in unemployment. But we also just aren't seeing much hiring in the aggregate. And if you do lose your job or are just entering the workforce for the first time, this matters. It's getting increasingly difficult to find work.

Now, that's only natural given the rise of AI in corporate America. Something that's finally starting to be reflected in the numbers, although in a more subtle way than you might expect. I don't see big job losses yet because of it. But what does the March non-farm payroll data mean for the broader market?

Listen, I don't want to be negative after hearing that we just had the best jobs report in 15 years. In general, I like hearing that, and I like hearing that unemployment rate would sit at 4.3%, which in the grand scheme of things is a very good number. Having said that, if you were someone who was hoping that we'll get new waves of rate cuts once Fed Chief Kevin Walsh takes over next month, last Friday's report was not a positive development.

Because it's very hard to convince the open market committee to cut rates when we've got healthy job creation, all sorts of supply shortages. Typically, the Fed doesn't cut when the unemployment rate sits at 4.3 and the price of oil is in the triple digits. Personally, I think more rate cuts could really help to juice the labor market, which is weaker than the headline numbers might suggest from this latest report.

Obviously, incoming Fed Chief Walsh knows this, and he can tell a story that justifies cuts, but it won't be easy. Of course, as I made it clear at the top, stock buyers sure want them, or else we wouldn't have bottomed last week when long-term rates went lower despite the fact that oil was higher.

The bottom line is this complex issue. If you want the Fed to start cutting rates again like I do, the last thing we need to see is solid job creation, especially when we're also dealing with an oil price shock as well as shortages in fertilizers, key materials for plastics, and some industrial gases. As long as the labor market looks okay, it'll be very difficult for Kevin W to gift us with those rate cuts.

Maybe if peace breaks out in the Middle East, possibly facilitated maybe by Pakistan trying to orchestrate a ceasefire, that could change the rate calculus. For now, though, I say don't hold your breath. Unless you think that the Fed independence will be a thing of the past. Complicated story. You got to know it. Mad Money's back after the break.

This is a tricky moment for Tesla. The core business, electric cars, has been in decline for years. That hasn't done much damage to the stock yet because the shareholder base believes in Elon Musk's vision of the future, his plan for robo taxis and humanoid robots. But the core business keeps getting worse. And once SpaceX goes public later this year, I think people are going to have a much more exciting way to play Elon Musk's vision.

Last Thursday, Tesla reported its first quarter deliveries, which came in at 358,230. Now, it's up about 6% over a year. All right. But well below expectations. The company compiles its own set of consensus estimates every quarter. And this time, people were looking for north of 365,000 units. If you look at what the analysts were talking about, it was more like 370,000. Look, whichever numbers you pick, Tesla fell short.

At the same time, Tesla's production rose nearly 13% year-over-year to over 408,000 vehicles. Now, typically, you don't want to see production increasing at a much faster rate than deliveries because that suggests there's a lack of demand for the product, and you might need to mark down your merchandise in order to sell excess inventory.

There was one more number we got that didn't get as much attention, but it also is important. Tesla said that it had deployed 8.8 gigawatt hours of energy storage products. Now, Wall Street was looking for something closer to 14.4 gigawatt hours. So, we're talking about a major shortfall here. Bad auto deliveries and real bad energy storage deployment. I mean, I got to tell you, I was really disappointed at the latter, which had been a saving grace for a while.

Keep in mind, this is really nothing new, though. Tesla's seen declining auto deliveries for two years now. Their car business peaked all the way back in 2023. Tesla's overall sales peaked in 2024 at just under 98 billion before falling 3% in 2025 to below 95 billion. And Tesla's earnings peaked way back in 2022 at $4.7 per share before falling 23% in 2023, another 22% in 2024, and another 31% last year to $1.66. That's almost a 60% decline from 2022.

If this were any other company in the world, these numbers would have just been devastating for the stock. But it's not any other company. It's Elon Musk. Tesla, you probably own it. Shareholder base believes in Musk. You believe in Musk. Stock had been doing basically nothing from 2021 to late 2024. Exploded higher after the presidential election because at the time Musk was tight with Trump. We figured he could get major support from the executive branch for his robo taxis and then his robot business.

The stock did pull back hard early last year, falling more than 50% in just a few months as investors priced in the impact of Trump's Liberation Day tariffs. After Tesla's initial recovery post-Liberation Day, it had another quick sharp pullback in early June when Musk had some very public disagreements with the White House. Eventually, they reconciled and Tesla shot up to a new all-time high just before last Christmas. But now the stock's under pressure again. Tesla fell 5.4% last Thursday in response to disappointing deliveries, another 2% today. It's now down nearly 22% year to date.

The house of pain. So what's going on here? Are shareholders finally reacting to Tesla's deteriorating fundamentals or is something else going on? You know what? I think it's both. First, let's talk about the fundamentals. The consensus estimates for Tesla for 2026 and 2027 indicate that the analysts and investors do in fact expect sales and earnings to start growing again both this year and next year. I doubt they'll be happy if the company can't deliver.

Of course, the first quarter 2026 production and delivery results did show year-over-year growth, which is positive, but it still was disappointing to see deliveries fall short of expectations in the first quarter. Again, really, I think the issue here is that Tesla needs to show some more progress for what Musk considers the future of the company, which is robo taxis. There's only so long that the stock can trade on hopes about the future before we fall back to car sales.

They finally launched the robo taxi business in Austin, Texas last year. They're already starting to expand. We also need to see some sign that humanoid robots are really on track to hit the market by the end of next year, as Musk has predicted. I want to order one. At the same time, it'd be nice to see some indication that there was real demand for these things. I think there is, but for now, there's no way to determine if that's true.

Without more progress on robo taxis and robots, all we're left with is this deteriorating auto business, and it's really starting getting people to think: is this a dangerous stock? It's starting to hit harder because Elon Musk's SpaceX intends to come public in the not too distant future, maybe this year. I suspect that Musk fans might be inclined to swap out of Tesla and swap into SpaceX once they have the opportunity.

Now, I'm going to get into this in more depth later in the show, but for now, you need to understand that when you get huge IPOs like we expect from SpaceX or Anthropic or OpenAI...

Retail investors will need to sell something in order to participate in these deals. I think this is really acute for Tesla, which is currently the only publicly traded stock for investors who want to bet on Elon Musk. Starting in June or whenever the SpaceX IPO happens, that's no longer the case. And if Tesla continues to function more like a play on the declining electric vehicle business rather than a bet on robo taxis and humanoid robots, then that choice becomes much easier. People will just buy SpaceX, which is a play on space, satellite internet, and AI through the xAI subsidiary that's now been folded into SpaceX. If you're going to bet on Elon Musk, why not bet on his fast-growing space business rather than his deteriorating auto business? Seems pretty straightforward to me.

So, here's the bottom line, and it's a pretty chilling piece here. Tesla's underwhelming production and deliveries results last week will serve as a good reminder that the core auto business is not doing all that well. In fact, it hasn't been doing well for a couple of years now. So far, that hasn't really mattered to the stock as investors have been able to look past the current weakness and focus on Elon Musk's vision for the future. But that only works because Tesla's got scarcity value as the only publicly traded way to bet on Musk's brilliance. With the SpaceX IPO on the way, Tesla's about to lose that scarcity value. And when that happens, I expect the stock to keep drifting lower until they either make more progress in robo taxis or the core business finally turns around. Let's take questions. Let's go to Tom in New York. Tom, hey Jim, good evening.

Good evening, Tom. Thank you for calling. Thank you. Quick shout out to your crew, your excellent crew there at Mad Money, Jim. They're fantastic. They're fantastic. Absolutely. Great. Thank you.

Okay. I have a large holding in our club favorite Boeing, but my question tonight for you is on an adjacent stock. All those planes Boeing is putting out, don't they all need at least two engines each to keep them flying? So my question is on GE Aerospace.

Well, I think GE Aerospace, remember, does make most of its business doing maintenance. So people were selling it thinking that maybe there'll be less air flight because of the problems with the TSA, but also fuel and rising costs. I think they won't. I think the stock is a buy. I do like Boeing more because Boeing is a little more depressed, but GE is Larry Culp. I think you've got a good one. All right.

Tesla's delivery numbers are a reminder that the core auto business isn't doing that well. I think the stock could keep going lower. Now, much more on Mad Money, including my take on food distributor Sysco. Then hotly anticipated IPOs like OpenAI and SpaceX are set to shake up the public markets. But how will the changes affect your portfolio? I'm giving you my take on new waves of supply and demand calls rapid fire in tonight's edition of the lightning round. So stay with Cramer.

Last week, Sysco Corporation, SYY, made a big move, and Wall Street doesn't seem to like it. The food distribution kingpin announced that it's acquiring Jetro Restaurant Depot for $29 billion in cash and stock. Sysco plunged from $81 to $69 on the news. And while it's rebounded to $73 today, it's still down. I think this is nuts. And I say that as someone with experience, both as an innkeeper and a restaurateur. If you're a restaurant, you go to Sysco to keep yourself supplied long term. Jetro, meanwhile, is where you go when you're in a jam. Or if you own a small-scale restaurant or an inn, it's got 166 locations across 35 states. You combine both these assets into one company and you've got the entire restaurant industry over a barrel. It's perfect.

According to management, this deal should increase their revenue by 20% and their free cash flow by 55%. Sysco says it will result in mid- to high-single-digit increases just in the first year and a low- to mid-teens increase in year two. Plus, even before we learned about the merger, Sysco was doing incredibly well. That's why I think this stock's such a steal after the selloff. Don't take it from me. Let's check in with Kevin Hourican. He's the chairman and CEO of Sysco Corporation. You'll get a better sense of the deal. Mr. Hourican, welcome back to Mad Money.

Well, why don't we start by saying, Kevin, what did Wall Street get wrong about the deal?