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 Crazy. My job, not just to entertain, but educate, do some teaching. Call me 1-800-743-CBC. Tweet me @JimCramer. Back in the day, we used to just sit on our hands until we got the Treasury bond auction results. I can't believe it, but we're doing it again.
That's right. A little more than 30 years ago, with interest rates higher than they are now, the US government seemed constantly to be issuing new treasuries to pay its bills. We had nowhere near the debt we have now. In fact, the government was well on its way to balancing the budget. Almost seems quaint in retrospect.
But we knew one thing at my old hedge fund where I traded stocks and bonds with abandon. If we had a bad treasury auction, one that was poorly received and interest rates instantly moved higher, then we were chumps if we had bought any stocks we liked before those results had come out. After a bad treasury auction, rates would soar and the stock market would get slammed.
Back then, we had to wait until 2 p.m. to get the results. Now, we get them at 1:00. Today's auction was okay, but it wasn't inspirational, and we ended up having a similarly just okay session, with the Dow sinking 341 points, the S&P dipping 222 points, NASDAQ declining 222 points. Now, if the auction had gone better, though, we probably would have had a much better day.
Now, let's understand each other. Any market where you need to wait to see the results of a Treasury auction is simply not as good a market as one where you don't care about them. Every time you add a new variable to the equation, it makes owning stocks tougher. Anything that makes stocks tougher to own will push money onto the sidelines, especially after the sidelines start paying real good money. Why did stocks react so quickly to the sudden bond movements after auctions back then? Why did they go down almost every time an auction was weak? Because bonds pervaded everything back then. So many companies depend on credit, either for themselves or their customers. And credit costs for everything and everyone would go up every time we had a lousy treasury auction. If the US government had to pay higher interest rates to get money to pay its bills, you better believe so would Caterpillar, Ford, Macy's, or IBM.
There's one difference now from back then, though. Almost every company ran on credit back then, and the credit correlated with the strength or weakness in the American economy as well as interest rates. But that's no longer the case. Now we have two classes of companies in this country. We have old-school companies that need credit and suddenly find it hard to get, all the while paying more for it if the auctions go sour. And that's the vast majority of the S&P 500. And then we have another group of companies. I call them sainted companies. Companies that, even though they might need credit, definitely don't need to pay the going rate. You know which beloved companies I'm talking about? Yes, the artificial intelligence companies. They seem to be able to borrow at their leisure. They're crowding out other borrowers with demand for money. And with the sole exception of Oracle, they're considered terrific payers. Nothing we ever have to worry about.
For example, we learned this morning of SpaceX trying to borrow $40 billion to buy Nvidia chips. Oh, they'll set them up in data centers, most likely sell the computing power that they create to others who need it. I like they're already doing what Google and Anthropic do very profitably. When it comes to creditworthiness, companies are rated by entities that do nothing but grade paper. SpaceX is rated triple B. Okay, not great. And $40 billion is a huge amount of money. If it were any non-data-center-related company, its interest rate costs would skyrocket, especially if we're in the treasury auctions. But not the data centers. Nope. I bet that SpaceX, more on them later, doesn't have to pay that much over treasuries, as it's called when you borrow close to government rates, because the future for AI is considered so spectacular by the stock market and by the bond market.
Compare that with the bonds just issued by Paramount. Now, Skydance, the heavily indebted entertainment company that's buying Warner Brothers. Skydance is totally hostage to the economy. The company issued a similar amount of bonds to what SpaceX is looking for. And even though the rates seem relatively attractive at around 8%, those who bought the bonds were immediately clubbed.
Their losses were horrific. Why? Because the movie and television business are considered discretionary. You don't have to go to the movies, which, by the way, have gotten pretty darn expensive. And television is disappearing, advertisers are cutting, and young people who don't even—they never even had a cable bill. What is that about? Even though it has a double-B rating, only a little worse than SpaceX, no one would touch those bonds. There are two takeaways here. First, there's a gigantic part of the economy—finance, housing, utilities, entertainment, retail, autos, industrials—that is still totally correlated to credit. Then there are other areas—data centers, semiconductors that make AI possible, power companies, and cybersecurity—that basically have nothing to do with these credit concerns. Nothing at all. So you can pay less attention to the credit markets and more to their prospects.
You know, I don't like to talk about bonds. You don't like it either. They're boring and hard to understand, and we hear about them all day, and it's like my wife says I snore. Higher rates are bad for the economy. And how do you know you snore? You're asleep. Higher rates are bad for the economy. Lower rates are good. But some companies in some sectors have lower rates than you'd expect given their credit rating. AI companies. After I saw the hoopla about this Treasury auction, however, it made me reminisce about a time when I read magazines or even watched movies until I saw the results of the US Treasury auctions, because my head trader would say, 'Go do something, anything, but don't look at the market. It will only tell you the truth after the auction's over with and done with.' It was true then, and today I think it's going to be true again, except for the AI-related names. Even though they were down today, believe me, those stocks are saying it. You don't have to wait to hear about the Treasury bond auction to buy them. Here's the bottom line. The AI data center stocks, maybe aside from Oracle, have nothing to do with what price the federal government borrows at. They only have to do with a future that's considered so bright that it obscures any problems, any bumps, and even any pimples. The rest of corporate America should be so lucky. Let's go to Chuck in Florida. Chuck,
Hey Jim, thanks for taking my call.
Hey, Western—yeah, Western Digital.
I've been buying the thing on the way down, and I'm seriously underwater on it now, and it still keeps going down. But Toshiba throwing the word out there didn't help us. What do you think? Will it pop, or should I get out?
Well, okay. Western Digital up 135% for the year. So when you see that, you say to yourself, 'Wow, I mean, like, either I missed it or easy money's been made.' But the way I look at Western Digital is, it's not as good as Micron. Micron's much cheaper. We know Micron really well here. We like it a lot. We think it could go much higher. I'm a swapper of Western Digital, which I did at one point own almost 5% of. That's when I was able to own stocks. Now I'm allowed to own a checking account. It looks really good. But Western Digital is not as good as Micron. Let's kind of funny. Let's go to Ben in New York. Ben,
Hey. Hey, Jim. I was hoping to get your opinion on Vertiv, and if you had any concerns about these data center infrastructure.
No, no. I think Vertiv is a good company. I think they've got a great order book. I think if you believe in the data center, then I think you have to believe in Vertiv. I think it's a really good company. I like to buy it when it's down. And I've got to tell you, it's not even—it's not a spec. It's a very good situation, though. And I want to be really clear about this. If you had to buy one other than GE Vernova that handles the whole soup to nuts and it's down a lot, I would buy Vertiv. All right. Listen to me. AI stocks are the only ones that don't have to pay attention to the stock market, and certainly, you know, if you've been to the treasury auctions. I can't believe we're back doing that again, though. On Mad Money tonight, Levi Strauss is on the move after just reporting. Don't miss my sit-down with Constellation Brands, reported yesterday. So is it time to get a little more high-spirited about this stock? I'm breaking down the numbers. Veeva Systems is one of the best performers in the S&P 500 last month. I'm finding out what the hype is all about when I sit down with the CEO. So stay with Cramer.
Don't miss a second of Mad Money. Follow @JimCramer 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.
What do we make of these just-reported numbers from the Levi Strauss Company? The iconic denim-focused apparel. This stock had been having a great year until two months ago, when it started selling off along with basically every other consumer discretionary name. Everybody assumed Levi's would be crushed by high gas prices, but not all apparel companies are equal. Tonight, the company reported a technically mixed quarter that I thought was pretty darn positive. Levi's posted a small revenue miss, but some of that was driven by currency fluctuations. You can't control those. Their organic growth was more in line with expectations. On the other hand, they delivered a large earnings per share beat, but part of that was driven by tariff refunds. While Levi's raised its full-year earnings forecast, the boost was a little bit smaller than some expected, but I still thought it was pretty darn good. There's a lot of nuance here, so let's dig deep with Michelle Gass. She's the president and CEO of Levi Strauss & Company. To learn more. Gass, welcome back to Mad Money.
Thanks, Jim. Great to be here.
All right, so Michelle, I saw a kind of a different mix from what I'm used to. Your wholesale business, which is a really terrific business, showed great growth. Your DTC business, not as good growth. What do you make of the disparities here, and what can we learn going forward?
Yeah, you bet, Jim. So as you were saying earlier, we did come in at the top end of our guidance. We guided four to five organic growth. We came in about five. But the quarter came in a little differently. Wholesale was up 6%, international was really strong at 8%. And I do think that that demonstrates the core of our strategies and the power of this diversified portfolio that we've been building. So the wholesale beat, you know, the international growth did offset some weakness that we saw in DTC, which was up only 2%. That's isolated to a couple of markets, important markets, Europe, US. We'll get into the details there, Jim, but I will tell you the team got after the issues, and we're already seeing a rebound. US is positive. Overall global DTC in September is back up to mid-single-digit growth, and we expect the year to be back up to high single-digit growth. So we're feeling good. This is not about a trend. This is a point in time, and like I said, we've already rebounded.
Okay. Well, that matters. Did you think there was something off at the beginning with DTC that has since been corrected, and you're back to the strength, if not even better strength than we expected?
Yes. No, that's right. So it really was specifically in Europe and the US, DTC specifically. So if you take Europe, I think everybody knows it was pretty darn warm this summer. And while we had plenty of, you know, shorts and tanks and tees, it still hurt the business. Our wholesale business in Europe was very strong. So Europe as a region did quite well. They were up mid-single digits at 5%. But in DTC, as the temperatures moderated, as it got cooler, the business rebounded. So it's positive now quarter to date. We're feeling great. And then in the US, it was something different. So, you know, I would say, Jim, that in terms of our campaign, our marketing campaign for back to school, it didn't meet our expectations. Okay. Yeah, I'll tell you a little more about that. I mean, we felt it was a strong campaign, and we were featuring some of our top sellers in the loose category because loose has been a big trend, a big macro trend in denim. But for the US consumer, they were actually going lower in low-rise. And we do have those products. We just weren't talking about them as loudly as we needed to. So we pivoted. This is all retail. It's about detail, and it's about moving. And so when we saw this shift, the team got after it. We have the benefit of the tariff refunds. We are reinvesting. We can talk more about that, but a big chunk of that we're reinvesting back into the consumer to create demand. So we're increasing our marketing so we can focus on those products that the consumer wants right now, which is low. We have low loose, we got super low, we got straight low, we got low of any type you want. And that's happening as we speak. And that's been behind the acceleration that we're seeing, as I said, with the US DTC back to positive quarter to date here in Q4.
Well, look, I appreciate it because if you had not been transparent, I have to say I don't know what's going on. But the fact that you're both transparent that it didn't necessarily work well at the beginning and that it's come on strong is great. One area that everyone's doing terribly in, frankly, is China. And yet I did not see a terrible number from China. I saw a good one. Why are you able to do well in China and everybody else has really sputtered?
Yeah, we have a lot going for us in China. China was up 13% this quarter, and it has been doing well all year. First, I would say we have a great leader, we have a great team, and they are executing. Number two, we've changed the product strategy, and we have, you know, more of a focus of, I'll call it, global icons balanced with product made tailored to the Chinese consumer. And I'd say in the past that was a little bit more flip-flop. So as we brought that more in line, the consumers are responding. We're really focusing on execution in our stores, merchandising the stores differently, and in some cases, we're moving stores. We're getting out of some real estate. We're getting into new high-profile real estate. So, like I said, team doing a great job. And then we had a big winner in China and overall Asia, which is Rosé. We have this phenomenal partnership with this global K-pop star. She's got over 90 million followers globally, but she is incredible in Asia. She's been showing up in these pop-up stores. I mean, we've had thousands of people showing up for these, over three billion impressions from the media that's been created. And it's been a huge tailwind for us all over Asia, including in China.
All right. Now, I do want to ask about a division that maybe I shouldn't bother to anymore, but it was good, which is your yoga brand, Beyond Yoga. Now, I know it's very small, and you can say, 'Jim, any second you waste on this is probably a mistake,' but I haven't seen anyone who delivered any numbers that were kind of in line or better, and you guys just did it. Is there something afoot?
Yeah. Yeah. You know, the Beyond Yoga team is making great progress, and as we talk about expanding into more of a lifestyle company, you know, Levi's isn't going to go into activewear. That's where Beyond Yoga fits, and they delivered another strong quarter. It's a combination of strength in our e-commerce. We are building more stores. I don't know, Jim, if you've been to the pop-up in New York, but it's doing really well. And importantly, with their category, yes, they're yoga, but there's so much more. And the categories that are really winning are in the lifestyle categories, whether they're travel pants, sweaters, layering pieces, along with some new performance gear called Clo Glow Zone. So team is executing really well, and you know, it's a smaller business for us, but it's growing handily.
Now, you know, on Wall Street we do a lot of thesis kind of thinking and pattern recognition. We say that when gasoline is going up, well, we stop buying discretionary. I never know really what discretionary is, and whether jeans are discretionary or they're something that you wear when you don't have as much money. Are you seeing any impact or relating any impact to what the gas pump is doing to apparel?
You know, our consumer continues to prove resilient. Like I said, our issues in the US were DTC, and those were our issues. And on the flip side, our US wholesale business was positive in the quarter. So, you know, even when things get tighter, you just have to work harder because they're still going to spend. You just have to be that much more relevant, more innovative. And so that's what our teams are doing, are finding ways to really connect with the consumer. You know, in our world, too, you know, we're really going after segmentation. So we have our core Red Tab classic Levi's, which is also a great value. I mean, quality, durability, I think those matter, those things matter even more at times like these. But we've got our Signature brand by Levi Strauss that was up 13%. That's a big business for us, and a lot of, you know, consumers can buy that at Walmart, and, you know, they've been doing really well. So, and then on the high end, we've got Blue Tab. So now we're getting into products that are $200. Small business for us today, but growing double digits. So it's really about meeting the consumer where they want to be met, whether it's, you know, like I said, a Blue Tab or a Signature and our core Red Tab, but we'll be there for them.
All right. Well, look, I care about what's going to happen in the future, and honestly, what already happened. I think the people who decide, you know what, I don't like what happened in the first two months of DTC. So look at what happened with the stock, which completely reflected that, but does not reflect the comeback, which is what I care about. Michelle Gass is the president and CEO of Levi Strauss. Michelle, I thank you so much for coming on the show.
Okay. Everyone, again, I mean, take a look at Constellation Brands to see when they said things weren't so good, and then they said it got better, and the stock went up huge. I think the same thing's going to happen here with Levi Strauss and Michelle Gass. Mad Money's back.
Coming up, Cramer doesn't think it's last call for Constellation Brands. He's explaining why investors should feel confident. Next.
Has the long-struggling Constellation Brands (STZ) finally found its footing? Last night, the beer and liquor company best known for popular Mexican imports like Modelo, Corona, the very popular Pacifico, now top 10, and the well-reported market reacted like this was just another discouraging number from Constellation. The stock dramatically lowered after-hours trading. I mean, it was getting clobbered before the conference call began. Then something interesting happened. Constellation reversed in pre-market trading this morning and ultimately ended up rallying hard today, finishing up over 2%. I mean, it wasn't a good day for the market. It's been a long time since this company got the benefit of the doubt after an imperfect earnings report. Constellation peaked at nearly $275 in April of 2024. It's been downhill ever since, including a 38% decline last year, 14% decline year-to-date for 2026, now sits at $118 today's bounce. Now, I've gone over this story before. Like many other booze plays, these guys have been hit by the rise of GLP-1 drugs, which on top of reducing cravings for food, also reduces cravings for alcohol. On top of that, the younger generation's more health-conscious, and 24 states have legalized cannabis for recreation. Plus, Constellation's customer base leans Hispanic. With the Trump administration's immigration crackdown, that's a demographic that's probably not buying as much beer as they used to. In short, the company's been struggling for a long time to the point where they brought in a new CEO, Nick Fink, from Fortune Brands Innovations. Now, before Fortune Brands, by the way, Fink was an executive at Beam Suntory. So he did have some alcohol experience. He did very well at Jim Beam before focusing on faucets and Fortune Brands. Something definitely needed to change here. But the new leadership hasn't been able to turn the stock, or at least not yet. The darn thing had just kept sinking lower and lower. It doesn't help that gas prices remain high, the bane of all consumer stocks, especially ones that sell beer at convenience stores adjacent to the pub. Plus, high interest rates make Constellation's 3.5% dividend yield look a little less enticing, doesn't it? So then what happened? What happened this morning? What happened last night? Looking at the numbers, Constellation actually reported a much better-than-feared quarter.
Their net sales came in higher than expected, up 6% year-over-year. They posted a 19% earnings beat off a $3.55 basis. Really good cash flow, although that translates to just a 1% growth. Not that much. As I dug deeper into the quarter, though, I saw another steady performance from the stalwart beer segment, with shipments up 5.5%, much better than expected. Constellation's various brands were mixed going by depletions, the volume of product moving from wholesalers to retailers. That's the real indicator in this business. Modelo Especial was down 2%, and Corona Extra was down 5%. But that was mostly offset, believe it or not, by Pacifico up 19%. Victoria, really new here, not in Mexico, up 15%. And Modelo Chelada, Limón y Sal, up 5%. Management said the beer business took the most market share this quarter. Whether we're talking about in terms of dollars or volume, Especial is the number one brand in America by dollar sales. Pacifico and Victoria are both taking share aggressively. As I mentioned, overall, the beer business looks good. And surprisingly, Constellation's much smaller wine and spirits division was even better. Now, when I spoke to Nick Fink back in August, I was shocked to hear that he was so positive in that part of the business. It's a bit terrible. But now I see why. Wine and spirit shipments were up 15.4%. Analysts were only expecting—they were expecting a 0.4% decline. Net sales grew 17% year-over-year. A huge beat. They even put up a small operating profit. Constellation called out two brands in particular for this newfound strength. Kim Crawford wine, which had 11% depletions growth, and this is the big one, Casamigos tequila, this was up 51%. Turns out they're doing much better than the average wine and spirits company. Tequila, by the way, is the lone bright spot in hard liquor. Agave spirits, Constellation is cashing in.
At the same time, Constellation announced a new acquisition. They're paying $75 million upfront and as much as $278 million in contingent consideration over the next five years to acquire Spiked Aid—uh, Spiked Aid, like Gatorade Spiked Aid, which makes sports drinks spiked with vodka. Now, this is apparently one of the fastest-growing areas in the industry. Some of the younger members of the Mad Money team tell me that Spiked Aid is pretty good. So maybe, I don't know, you work out and you take it. I don't know. I got to learn about this thing. And look, even if Constellation is just chasing a trend, they don't have to pay very much if Spiked Aid fails to hit its milestones. And ready-to-drink drinks right now are the hottest thing in the entire industry. So why did the stock sell off so hard in response? Then at one point this morning, just before the conference call started, Constellation was down more than 7%. Simple. Even though the results were better than expected, management did not raise any part of the full-year forecast. When you beat numbers but leave your guidance untouched, Wall Street does the math and assumes that the rest of the year is going to be weaker than expected. Constellation is now two quarters into their 2027 fiscal year. And a lot of people assume that management lacked confidence in the following two quarters. That's why they didn't raise. But then the call starts at 8 a.m. this morning. And right off the bat, at the very beginning, CEO Fink said a few words that changed everything. Listen to this quote: 'First, we are reiterating our fiscal 2027 guidance, and if the positive September trends that we saw continue, we would expect to land at the high end of the range.' He went on to add that Constellation's marketing investments are working and its inventory levels look very healthy after the company spent much of the last six months rebuilding distributor inventory levels. Bingo. That's all that was needed. While Constellation isn't formally raising its guidance, they did have a good September, and assuming they'll slow it down from here, they expect to land at the high end of their forecast for the year. They left the numbers unchanged but informally raised the low end of the guidance. With that worry taken off the table, the stock started rebounding like crazy.
So now we got to ask: despite this back and forth, is the worst behind Constellation Brands? I think it's far too soon to say something definitive because this is a liquor business. But this was the best overall quarterly update that I've gotten from Constellation in quite a long time. With the stock still trading just over 10 times this year's earnings estimate for today, I don't blame anyone for feeling tempted to buy. Although I wouldn't go that far myself. The secular headwinds for the beer and liquor industry are real, but they're also well understood at this point. And they didn't stop Constellation from putting up a strong quarter, even if the company got a boost from the World Cup and also the Knicks' championship run. Here's the bottom line. For me, the most encouraging part of this story is that Constellation Brands stock initially sold off like crazy in after-hours trading before rebounding and finishing today well into the black. While I'm not ready to start pounding the table on Constellation again, let's just say this: I feel much better about this stock than I did 24 hours ago. Cordale in Ohio. Cordell,
What are you doing, man? What's going on?
How you doing? I'm calling in on a company that's trading around levels that it did in February of 2021. I was just wondering, is CMG going to reach lower lows before it reaches higher highs?
You know what, CMG, I still think Scott Boatright's getting it right. But you know what, the restaurant group is going to help just so out of favor, it's incredible. Now, some of that is because of gasoline and inflation. Some of that is because of belief that anything that costs more than $15 for dinner is too expensive in this country. And it's not just Chipotle that's being hit by that. Me, I think this too shall pass, but I know I'm probably one of the few people who thinks that $30 is a good level to buy CMG. All right, listen to me. I'm not yet ready to pound the table. We have any of that Spiked Aid? Because I'm going to work out tonight, and I think you take it during the workout. What do you do? Constellation Brands. I sure feel better about it today than I did before it reported. Hey, by the way, much more Mad Money, including my scoop on one of the hottest stocks in the S&P right now, Veeva Systems. Then Goldman just raised his price target on a certain stock by $10. I'm explaining why that $10 means everything to this name. And of course, all your calls, rapid fire, tonight's edition of the lightning round. So stay with Cramer.
After a brutal beatdown over the past couple of years, the cloud software stocks came roaring back this summer. This whole group had been weighed down by worries that AI would let their customers basically write their own software, and the selling was totally indiscriminate. Take Veeva Systems, the best of its business makes software for the pharma and biotech industries. Their platform helps capture the whole clinical trial process, where mistakes have really serious consequences. So this was never going to be an easy business to disrupt. They reported a truly great quarter at the end of August, which sent the stock up 15% in a single session. It's now been able to rally nearly 50% over the last three months, one of the best performers in the entire market. Not only were the results phenomenal, Veeva's even competing against Salesforce for a piece of the pharma customer relationship management, basically sales rep software. Recently won some business from Eli Lilly, Amgen, Biogen, Regeneron. Bit of a dogfight. They're also using AI themselves to handle repetitive tasks for customers. So can the stock keep running? Let's check in with Peter Gassner. He's the founder and CEO of Veeva Systems to find out. Mr. Gassner, welcome back to Mad Money.
Jim, thanks for having me, and great to see you.
All right, so Peter, I think you're the textbook here. There are people who come up with theories, and one of the theories was, you know what, they're going to vibe code. They'll beat Veeva. Drug companies will be able to beat Veeva. There wasn't an ounce of truth about it, Peter. Not one ounce. How does this happen? I've known you for 15 years. There's not one ounce of truth about it.
Well, you know, people get spun off on things, Jim, and they believe the dream SaaS apocalypse or whatever. It never made any sense to me. And I'll tell you why. These are critical, industry-specific applications you use to run your clinical trials, to manufacture medicines. You're not going to do that with Claude or Gemini. So it never made any sense to me. So we just kept heads down executing and let all that noise go by the wayside.
Now, in reality, of course, not only can you not do it that way, but the fact is, if you do it wrong, you could end or blow billions of dollars of your drug company. Correct.
Yeah. I mean, this is a serious thing. Yes, money is on the line, but also these are patients, Jim. You know, a clinical trial is a serious thing. It can be a life-or-death thing. Medicine that is injected into your veins, right? This is serious stuff. So yeah, it's like flying an airplane. You don't mess around with it. And our customers know that, right? They need reliable things because it's about the patient.
And how about confidentiality? I'm just going to put it out there: if I use Veeva, I have a pretty good sense that my data won't be discovered.
