icahn announced he raised his stake. >> all right. i'm melissa lee. thank you so much for watching. catch fast money again at 5:00. "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'm just trying to save you some money. my job is not just to entertain but to educate you. call me at 1-800-743-cnbc. battle stations! that's where we are on the eve of the hugely important labor department nonfarm payroll report that comes out tomorrow morning at 8:30 a.m.
the stock market is telling us to be ready. we had our fifth straight decline today. dow seeking 68 points, nasdaq declining .12%. we know that's because there's been too much good data lately. it should be that, no, good data. because we are in a good news is bad news environment. this is good news moves interest rates higher. whether the fed likes it or not! remember, the fed wants rates down as more jobs can be created. but at a certain point, you have to ask, aren't more jobs being created? the fed stops trying to keep interest rates down or stops being able to. it's a fore gone conclusion the whole stock market will decline regardless of what the fed says or does. that's been the case before even as the last late run-up t.st going to be the case again. i'm not debating that. there are tons of reasons why stocks could. we know risk-free bonds that generate returns of 3% on the ten-year treasury and 4% on the 30-year treasury.
a prediction of where we'll go on the employment number. will, indeed, be killer competition for dividend stocks with high yields. we know this because even the run from 1.8 to 2.8 on the treasury crushed two of the highest yielding groups out there. they have not been able to withstand the higher rate. they could be canaries in the coal mine for the products that yield more than 3% or roughly about that. but are a great deal -- been up a great deal for the year because the earnings have been by and large fantastic. but that will not protect them if interest rates go much higher on a strong employment number. plus, there's a whole other group of investors that will flee the stocks of any other company hurt by higher rates. trading in lock step with treasuries but also cyclical companies with earnings that were just beginning to kick in as the data turns positive. and they're going to sell the utilities. again, you know the drill, the litany. that is not exceptional. it's not why you come to "mad money." let's change things up for a
second. do it the "mad money" way. let's accept the groups will and deserve to get hammered, hammered further given the bond competition. let's also presume that the sellers won't take any prisoners, right? they'll use the s&p 500 futures to hedge or sell stocks and that will knock most of the 500 names down simultaneously. that's what happens when they come in like that. >> sell, sell, sell! >> they're indiscriminate is the word. isn't it worth asking what stocks might benefit from higher rates? that's what i want to talk about now. rather than bore you with what everyone thinks will happen, i'd rather take a shot at making you money. after what everyone is predicting actually comes true. before i go there, though, keep in mind the classic admonition that no operation extends with any certainty beyond the first encounter with the main body of the enemy, or no battle plan survives contact with the enemy. if we don't get a gigantic number or more important, perhaps people sort through the data and decide it's skewed usually by government workers returning to their posts, then
this battle plan won't be any more useful than the new orleans saints battle plan last week against the seattle seahawks. hopefully for something unlike the saints game plan actually works. suppose the jobs numbers -- what stocks do better? a higher rate environment? first, the banks. i have no doubt they'll get hit tomorrow and be bloody because they're a huge part of the s&p and there's a misperception about them. we've seen major downgrades of the bank, two alone for citigroup and one for morgan stanley. so before you think how easy this is, remember the downgraders -- well, as soon as the stocks get hit will reiterate the negative stance and someone will say, hey, it's bad for the banks because no one likes to give up a profit. everyone has the right to be wrong. i think these analysts will be wrong. that said, i know that banks do better when rates go higher. how do i know this? because jamie dimon explained it to me personally and he's the ceo of jpmorgan.
in order to really get earnings to expand, he needs rates to go to 4%. that's right. you can raise earnings on the bank stocks starting tomorrow if this battle plan is correct. the analysts will most likely not do so. why? they're worried too. maybe they do it on tuesday? so to quote another german strategist, that might give you the opportunity. and if you think the recommendation means you can buy the stock of safeway, the owner of the supermarket chain, wrong again. let's say you don't want exposure to jpmorgan because you think the bank's in too much legal trouble. by all means go with morgan stanley, becoming much more depositor's institution, and that means risk-free assets and pays you less than they earn. the net interest margin. we're going to be talking to the quintessential banking stock later in the show texas capital bank shares, as it'll make money lending -- lending money to companies that are doing well and clean up on those deposits too and they're not in the cr s
crosshairs of anybody. now let's get beyond the banks. my colleague david faber had an amazing interview with kyle bass this morning on "squawk on the street." he's buying gm aggressively. i was blown away by this. he said, listen, one of the chief reasons is a big jump in rates could ease the pension liability burden of the company. why didn't i think of this myself? that's because general motors can get a better return that could then lead to an $8 billion swing in profits over time given the company's $27 billion pension liability. i'm an idiot. i heard that. why didn't i talk about that? that's a great call. who else gets a boost like that? general electric, boeing, and dupont. given all these will be hammered tomorrow, according to our battle plan, that could be a silver lining worth considering. although, we have to recognize that most investors will initially think who cares. higher rates, lower sales, higher costs. they will not be thinking pension savings, but maybe they should. another idea, how about the payroll processors. morgan stanley rolled out the
coverage of paychex. they started with a sell. but i want to buy paychex, because the benefits from increased formation which is part in parcel for demand of more money that causes rates to go up in the first place and gets to make money off the float. that's been a huge reason to own the stock in the past when rates were higher. it will be again, although not initially, i would buy the stock if it gets hit tomorrow, though. finally, a huge hit in positive. the cash may be better invested at better rates. right now a ton of cash has meant nothing for companies because they like to invest the money short-term. and they can't get much in return because the rates are so low. but when rates go higher, suddenly that cash is going to be worth much more because it'll generate a more meaningful return. who has the most cash under management? and that's really what we're doing here, managing the cash. how about apple? yeah. that's why if rates spike, i would reach for shares of this incredibly undervalued company on the exciting new news of a deal with china mobile. it was part of the s&p and the
s&p got hammered on fear of rates going higher tomorrow. finally, might want to buy the stocks of companies huge buyers of their own stocks. the big four, viacom, aol, and time warner. aol is not a big one, but one of the big four buybacks. they seem addicted to shrinking available shares. i'm sure they'll be in there monday taking advantage of any rate-related decline. here's the bottom line. while the fog and shrouds all stocks tomorrow, pick up an apple or paychex or one of the companies i mentioned. when the fog clears, that is where the action will be. you need to get before, not after the crowd. chuck in new jersey. chuck? >> caller: hi, jim. this is chuck the tennis pro. i want to thank you for taking my call, tell you what a wonderful job you do. i watch you every day. and i was researching tiffany's. i actually started to research it in july when it was $71 a share. i went into a jewelry store to
check out the inventory. a salesgirl produced documents saying the gold jewelry was bought at about $1,800 an ounce and the market had it at about $1,400 an ounce. and it just made me be scared because i didn't know what i was looking at. considering the job report is tomorrow and that can dramatically affect the price of gold, how does the price of g d gold, the dollar, the euro and the yen play into this company's balance sheet and income statement? >> well, first of all, that's great homework and you're great to do that and i'll buy you a dinner for that. but it's just a small part of tiffany's business. it does not matter as much as your little jewelry guy struggling with the inventory. and that's why i'm not fretting the program. however, the stock is too high. why? because goldman came out today and recommended it. and we chuckled -- we chortled on "squawk on the street" saying, oh, now? stock's too high.
i would be a quick schnitzler of it, buy lower. eric in new york. eric? >> caller: hey, jim, thanks for having me. my second time calling. >> well, that's great. >> caller: jim, my question is about xec. i'm wondering what you feel the future outlook is for the stock. >> guys taking profits. if it's up a lot, you know it's one of our permian plays, we think it's terrific. but we also have a positive attitude toward oil here. let's go to tim in california, please. tim? >> hey, cramer. i'm long in pcp. >> i think it's a great move. i think boeing uses a huge amount of precision. pcp has been one of the best stories because of the major league cycle that includes the fact that you can't get a dream liner until 2020. i'm warming up -- you know i like alcoa too because they're the biggest maker. 2 million screws in a plane.
but it's a really terrific company. i'd be a buyer. as rates jump, the fog will continue to spread. do you have your battle plan? i just gave you mine. "mad money" will be right back. coming up -- nice view? hilton worldwide is planning the hospitality industry's biggest ipo to date. wall street may be lining up to book a room. but are there better accommodations available? keep your reservation with cramer to see which stock may deserve a long-term stay. and later -- lone star shining? everything's bigger in texas, especially its monster oil and gas finds. but there's more than one way to play this trend. texas capital bank shares has been cashing in on the economic boom. should you make a deposit? find out in cramer's exclusive. all coming up on "mad money." don't miss a second of "mad
money." follow @jimcramer on twitter. have a question? tweet cramer, #madtweets. send jim an e-mail to email@example.com. or give us a call at 1-800-743-cnbc. miss something? head to madmoney.cnbc.com. ya know, with new fedex one rate you can fill that box and pay one flat rate. i didn't know the coal thing was real. it's very real... david rivera. rivera, david. [ male announcer ] fedex one rate. simple, flat rate shipping with the reliability of fedex. if every u.s. home replaced one light bulb with a compact fluorescent bulb, the energy saved could light how many homes? 1 million? 2 million?
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all right. who can blame anyone for not selling on the employment number tomorrow? but i'm also mindful we're seeing a regional boom in oil and gas related companies, something i've talked about a great deal on the show, including earlier tonight and this game-changer gives me hope that some stocks can go up on better than expected earnings right into the teeth of rising interest rates, bucking the tide we saw on the screens today and the last four days before. that's why i want to talk about conns. a retailer selling everything from home appliance to furniture, television, computers, that shot the lights out when it reported this morning, over 19%. wow, on a down day. the number was better than expected, we have to look at a breakdown of where the stores
are. something's going on underneath it's too big to ignore. you don't see this kind of environment where the best retailers are struggling as i told you last night unless there's been an enormous sea change in the area where the company in question operates. here's the neighborhood run down for conn's. 22 stores in houston, 14 in dallas, 11 in san antonio, and 11 more in cities through texas. six stores in louisiana, two in oklahoma, one in arizona and new mexico. when you think of the alignment, you realize basically conn's is the retailer for the red hot oil and gas region. the company i believe is seeing the miracle of eagleford and permian playing out firsthand. the beginning of the earnings story that can buck the whirlpool of higher interest rates. and witnessing the wonder of job creation. talk about a cramer fave that won't quit. not to mention the need for so many workers to surround the beehives of activity. yep, this oil and gas boom, we're seeing a tremendous job multiplier playing out right now. think of what's happening with
gtls, the company with the best technology for transforming natural gas into something similar to gasoline. as ceo sam thomas told us the other night, all the better to build the hard to construct big boxes that encompass the transfer technology and put them on boats to put them overseas. the company can't get enough workers to make these. i know welding requires a particular skill set that may not be available in louisiana right now. it will take time, they will get there eventually. charts also making a device to build out natural gas station. and more important shell. yeah, shell's building them now. these stations cost between $1 million and $1.5 million. and these companies are building perhaps as many as 400 stations and the cost is going down. once that gets rolling, they'll get a reverberation as far as indiana where cummins is located because cummins is making truck engines that are perfect for long haul truckers. they've been waiting for these engines. don't forget about the pipe and train tracks that need to be
laid down to transport the stuff from where it's produced to where it's needed. i believe they're already impacting the gross domestic product and payroll numbers. i think it had a tinge of this this morning. i know any job gains above the baseline will cause interest rates to jump. i know higher rates can hurt the stock market for reasons. that's why there's so much fear and it's justified. i'm simply pointing out higher rates don't have to be the end of the world provided that revenues are strong and the earnings that come from them bountiful. and perhaps conn's is a microcosm of what can occur. here's the bottom line. okay, it's a stretch. it's a stretch. but soon there may be many stretches and that's what needs to happen to combat the good news is bad news conundrum that's caused us to be down five days running. it's a read, but i think it's a fat read, not a thin one that i trust others will finally be talking about in 2014. charlie in florida. charlie? >> caller: yes, jim, thank you so much for taking my call, it's an honor to speak with you, jim. >> thanks for coming on the show. >> el with, i watch you all the
time. and the stock i bought was heckman and bought by navarra. it was split, way down from the original price when you first spoke about it, which was $4. and i'd like to know if i should take a loss, get rid of it. >> you know, it's been a terrible stock. i like the bloodlines of it because dick heckman made a lot of money in u.s. filter. i think he's got to come back on and tell us why the company is really performing this poorly because there's a lot of drilling going on in the country. i don't like it pending hearing from dick about why i may not be wrong not to like it. it's been bad. and i apologize to those people who say, well, i think cramer really liked it. i did and do like dick heckman. but this has not been a good stock. i own the fact i liked it and i was wrong. roland in new york, roland?
>> caller: i have a question -- i retired early, have an i.r.a. i'm looking for conservative dividends income. and i've recently been looking at kmp. kinder morgan partners. really would like your opinion about it. >> check with your tax accountant. some stocks cannot really go in because of a business tax. you want to be sure. you've got to talk with your accountant about these. the stock had a not great quarter and it's been knocked down. and the master limited partnerships have been coming down. but i believe in rich kinder. rich kinder is not dick heckman. he had a terrific company around, this one's not it. rich kinder made a lot of people a lot of money. i'm not going to abandon that company. but i do honestly right now like linn energy right now. higher reats don't have to be the end of the world, conn's might be a microcosm. wouldn't you like to have a
stock that goes up gigantically? or would you say i don't want that gain because rates are going higher? stay with cramer. coming up -- nice view? hilton's more than $2 billion ipo is about to hit the street. are there better accommodations for your cash? or should you try and book a room in this newly minted spot? ♪
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you know that this has been a downright incredible year for initial public offerings. >> buy, buy, buy! >> so far, 210 ipos in 2013, the average deal giving you 20% return, according to renaissance capital. i bring this up again because we've got an enormous deal coming next week, the hilton ipo. and i think you should try to get a piece of it. i'm not just highlighting this one because the ipo market has been so strong either. hilton is a high-quality company in an industry that's currently en fuego, outstripping supply. and if the economy keeps improving, things will get even better for the hotel operators. hilton is, in fact, the world's largest hotel chain. it's under a number of brands, not just hilton. waldorf astoria, hampton,
homewood suites. now it's expected to price next thursday at $18 to $20 a share. i want to give you a head start to focus on this one. a little over a week, stocks trading under the symbol hlt. at the mid point of that range, this would be a $19.3 billion company and the stock would be fairly expensive by most metrics. however, i think it makes sense for you to try to get in on the deal. let me tell you why. i think it's likely the stock will pop on the first day of trading as has been the pattern for the vast majority of ipos this year. some of that because hilton is privately equity backed ipo by blackstone. blackstone took the chain private in 2007 and now they're spinning it off again as a private company. last month we saw another hotel play from blackstone come public. i'm talking about extended stay. and that one jumped 19% on the first day of trading. i didn't get in front of that enough to tell you to buy it. i'm not making that mistake this time. and blackstone owns a ton of other companies they'd like to take public. they have every incentive to make sure something as high
profile works out well for everyone. and i'm betting they're telling the underwriters to make sure of it. i have been recommending blackstone for some time and not backing away from that either. if you can't get any stock in the ipo, i don't want you paying more than $26 for hilton. did i pick that out of the sky? you need to understand when you're dealing with companies with lots of debt, physical assets like the hotel stocks, sometimes the best way to value them is by using what's known as the enterprise multiple. and that's the enterprise value, the market capital, all the debt on the balance sheet and divided by the earnings for interest, taxes, appreciation, and amortization. been putting it at a 30% premium to thely traded hyatt. i believe they deserve to trade at a higher premium. but once the premium gets too high, the stock becomes too expensive relatively and i'd rather have you fall back on cramer fave starwood, symbol
h.o.t. hilton and starwood, by far the best two players. hilton is the largest hotel operator by far with over 4,000 locations. starwood number two with 1,200 properties in 100 countries and this is an industry where scale does matter. beyond size, though, we also care very much about geography. the u.s. market is pretty much saturated with big hotel chains which means you need exposure to the rest of the world if you want to grow. starwood has that in spade which is why i've been recommending it for ages. 60% of the rooms outside north america, last year, 60% of the earnings came from overseas and the company plans to get that up to 80% in the not too distant future. talking about moving to china when he was opening a lot of those. within the pipeline, 85% of the new locations they're working on are located outside the united states including in china. right now they get 27% of the revenues from outside the u.s. but understands that international is the future as
80% of their rooms under construction are located overseas. that makes it a better buy. we also care about the business model with these hotel stocks. it's much better to have an asset, what's known as an asset light model where other people own the actual real estate and pay you to either manage their properties or to franchise your brand. this is the model starwood has had so much success with in 2000 they own 70% of the hotels, now that's down to 25%. hilton's very much moving this direction too. hilton owns or leases 156 hotels, the other 3,383 in their system are owned by third party who pay licensing fees. right now the side of the business 52% of hilton's earnings before interest, taxes, appreciation and amortization. and they're focused on this part of the business because it's the smarter, faster way for a chain to grow and turning them into a total cash machine. marriott and hyatt, on the other hand, are trying to become more asset light, not doing it as quickly. how about the revenue per available room? that's the key metric to the
hotel industry. last quarter, starwood saw a 5% increase in worldwide revenue per room. hilton is in line over this past year. then there's the pipeline. the number of new rooms in development. hilton has 176,000, 99% of which are in the higher franchise segment. starwood has 100,000 rooms in development. excellent considering they're growing off a smaller base than hilton. hyatt is a laggard. how about valuation? hilton's going to be very expensive on a priced to earnings multiple basis, probably going to fool you, you're going to say i'm not paying that. but, remember, the way to value hotel stock with a bunch of debt and hilton will have $13 billion worth of debt is using that enterprise multiplier. hyatt has an enterprise multiple of 13, marriott's 14. that metric makes less sense for them. at the midpoint of the price
range, hilton would have a price multiple of 15, which is not that expensive. that's also why i'm telling you not to pay more than $26 for hilton in the aftermarket because at that point it stops trading at a deserved premium and becomes too overvalued for me. here's the bottom line, call your broker and ask to get a piece of the hilton ipo. if you can't get in on the deal, don't pay more than $26 in the aftermarket. at that point, take a pass. and if you want to own a stock, stick with starwood. and as long as he's running that joint. count me as a believer. gail? >> caller: hi, mr. cramer, pleasure to speak with you. >> same. >> caller: i would like to know about priceline. i have a question about that. first it was on the market, then came off the market and no one knew it went back on the market. how did that happen? >> well, i'm -- i'm more focused on where price line the stock is
going. the answer is that this isn't -- $1,100 stock that's headed much higher. i think you should own priceline. it's one of my favorite stocks. guy in georgia? please, guy? >> caller: boo-yah, jim. i want to buy rhp symbol. i trust you more than i trust myself. what do you think? >> well, first of all, you shouldn't do that. you should trust yourself more than you trust me. i'm out there trying hard. and one of the reasons you're going to like what i have to say is i have to do work. i cannot offer you a better ryman hospitality decision than you can right now. i do like that business. let me come back. all right. need your portfolio to get to your next destination? i want you to buy some hilton, hlt on the ipo. no more than $26. stay with cramer. tomorrow, kick off the trading day with "squawk on the street."
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it is time. time for "lightning round" on cramer's "mad money." rapid-fire calls, you say the name of the stock, i tell you whether to buy or sell. play until this sound -- and then the "lightning round" is over. are you ready skedaddy? i'm going to start with randy in wisconsin. randy? >> caller: well, thanks for taking my calls, jim. this is randy from brew city, wisconsin. and my stock is facebook. >> well, look, i think facebook's fine. people say, jim, you're being two-faced because you sold facebook for your charitable trust. we're up 90%. and when we get up 90%, ca-ching ca-ching. that said, twitter came back to where it came public today, where it opened at $45, and an umbrella moving the stock up. facebook probably has more upside and i know a lot of the social and mobile stories like veeva that we introduced to you
at salesforce, also doing well. j.j. in new york. j.j.? >> caller: professor cramer. >> hey. >> caller: big boo-yah to you. >> boo-yah right back. >> caller: i'd like some information on ezcorp. >> people are going to sell that pawnshop and move up to something like tiffany. i don't want to recommend tiffany, it's up too much, but i would buy that on a pullback and not own ez. phil? >> caller: cramer, cramer, cramer. >> boo-yah, boo-yah, boo-yah. >> caller: what do you think about sky works? >> a 52-week high. i do not like the different pieces that go into a cell phone. but the china mobile deal is hugely positive for sky works and it's a very well-run company. i'm not going to recommend it at a 52-week high. but i think if you have to play a parts component play, it is -- it should be skyworks for cell phones and it should be micron for pcs. >> caller: hi, i'd like to know
if redn is a buy at this current level? >> all right, let's understand regeneron. it's one of those stocks, wild trader. let's say it's 28 instead of 283. i think the future's bright for regeneron, they have a drug where if you can't tolerate, you can take their drug. that's going to be approved soon. we know this drug is being rolled out all over the globe. you have to buy it in stages on the way down. don't buy it at once. buy it lower. take a look at the strategy. let's go to jeffrey in texas. jeffrey? >> hey, jimbo. >> how are you? >> caller: great big texas boom baby, boo-yah. >> i'll give you a texans boo-yah than a cowboy boo-yah. what's up? >> caller: hey, my stock, i picked it up in august, it has doubled. i wanted to know what your thoughts were.
>> it's doubled, it's up 100%. we did a piece on the biotechs saying the ones that have been hot are too hot and we want to take a little off the table and that would include that one. dan in kentucky. dan? >> caller: hey, cramer, this is dan in kentucky wishing you a big boo-yah. >> taking that bluegrass boo-yah. i like kentucky a lot. wouldn't mind going back for the kentucky derby if we can swing it. what's up? >> caller: okay. what you think about lmt, lo lockheed martin. >> it's finally going down because maybe they solved the sequester problem? oh, give me a break. i wish the ceo would come on the show because i can't be more abject about the need to see her. she should come on the show. mental note. call her tomorrow. let's go to salvador in illinois. salvador? >> caller: hey, jim, it's salvador from chicago.
long-time listener, first-time caller. >> nice. >> caller: my question is about afop, alliance fiberoptics and wanted to get your take on that stock. >> it's tough. i was watching lvlt go up, it's more of a derivative play. and i feel like they're like cutler, you can pick them up, put them in your fantasy league, otherwise, not, i don't want to own it. donna in texas. >> caller: boo-yah, jim. so good to talk to you. >> same. >> caller: old man winter, i'm talking to you, it's heating up. >> what's up? >> caller: okay. flowers foods. >> too hard. i've got to tell you something, i think it was terrific growth company at one time, but i believe the bakery business is too hard. i've seen too many bakers even though this is consolidation play, i've seen too many do not that well on the end so i'm not
going to recommend flowers foods even though those people are incredibly nice. and that, ladies and gentlemen, is the conclusion of the "lightning round." >> the "lightning round" is sponsored by td ameritrade. coming up -- lonestar shining? everything's bigger in texas, especially its monster oil and gas lines. but there's more than one way to play this trend. texas capital bank shares has been cashing in on the economic boom. should you make a deposit? find out in cramer's exclusive. ? ♪ like, really big... then expanded? ♪ or their new product tanked? ♪ or not? what if they embrace new technology instead? ♪ imagine a company's future with the future of trading. company profile. a research tool on thinkorswim. from td ameritrade.
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people say don't mess with texas. i always think that's good advice. tonight i'd like to propose a corollary, don't mess with texas capital bank shares, tcbi for all you home gamers. at a moment where the banks are looking better and better by the day courtesy of higher interest rates and that's good. one of the strongest regional banks out there, period. we know the economy in texas is booming thanks in large part to oil and being found in places like the eagle ford shale, permian basin. it's a great place to start a new business. very business friendly. no wonder that tcbi has rallied 23% in the past few years. operating in austin, dallas, ft.
worth, houston, san antonio, which also does personal banking for wealthy professionals and entrepreneurs and they have a lending business as well. and that's where tcbi lends money to other banks so they can in turn originate mortgages. when the company reported back in october, tcbi missed off 77 cent basis. but the underlying metrics were so strong, people saw through that. growing 10% year-over-year. total deposits up 33%, pretty staggering, stock jumped 12.4% the next day. bank's on fire. let's check in with george jones. he's the ceo of capital bank shares, learn more about where the company's headed. mr. jones, welcome to "mad money." how are you, sir? great to see you, sir. have a seat. how do you grow organically that kind of deposit base. is that because the economy really is booming down there? >> well, we're fortunate to be in texas for one thing, obviously. but it's more than that, it's real execution. and kind of a secret to our success, whatever success we've had, frankly, is finding the
right people to execute for you. and we work hard at hiring teams from other competing organizations that can bring their business with them. and that's the organic growth we get. as you said, we haven't bought a financial institution ever. >> so this is one of the things also where you're a local bank for a state and not some out of towner? >> yes. that's exactly right and i think that helps us too. we work hard at being local home fella to be able to do business with people that bank in texas and we've expanded a little bit. you mentioned the mortgage warehouse business and a couple of other national businesses outside the state. but probably about 90% of our business is related -- >> let's talk about what is strong. we heard from one of the most -- biggest stocks today, a retailer mostly in texas. consumer spending, sounds like they're buying homes but also creating businesses. >> yes. >> probably far more quickly than any other state in the country. what is that about? >> yes.
you know, it's a great place to start a business. it's a business friendly state, no state income taxes. taxes are friendly today, cost of living reasonable. and as you said, the housing industry is really doing quite well. the real estate business, commercial real estate. >> people actually building things. >> people are actually building a few things. >> what would you say? how much if you had to put a percentage on it. oil and gas really booming. how much of that might be a confidence builder if not job creation? >> you know, it's interesting you talk about that because we hear a lot about oil and gas in texas. and that is very important to the state. but it's a lot less important, believe it or not, than it was 20 or 25 years ago. those other businesses that you've talked about that were started, commercial businesses have grown dramatically over the last 20 years. so oil and gas is super important, very good for the
economy, very good for texas. but it doesn't make up as much of the economy as just these businesses that have been growing for the last 20 years. >> not so good to have a boom bust depending upon a price set elsewhere. >> we have been there before. >> right. george a plain-spoken man. so tomorrow, if we get a big jump in job creation and people think interest rates, the ten-year may go to 3% to 3.25%, bank stocks go down. right or wrong in your opinion? >> it depends on balance sheets and the bank. from our perspective, we believe we're positioned about as well as we could be. >> really? >> yeah. today in a low-rate environment, we have floors on many of our loans so that we're not getting the pressure of downward rates. and we're asset sensitive from the standpoint of about 90 to 95% of our assets float with interest rates. and we've grown greatly in demand deposits. so that also helps our margins and our pricing on our credit.
>> well, there it is. that's why i tell people, look, when the smoke clears, buy a texas capital bank because numbers go higher when rates go higher. >> you're exactly right. and we will do well at higher rates. >> simple good story. no bank regulator, never going to be in front of congress that i know of. not involving swaps, no the in the pages, not in the "new york times." congratulations. >> thank you. >> that's george josephs, take the pressure off yourself, find a stock like this one or this one when rates go up and you won't -- let's say you can still make some money. stay with cramer. i love having a free checked bag
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when you call 1-888-330-3137 now. optionsxpress by charles schwab. okay. for a moment, let me put my old trading hat on. let me tell you what i'd be saying to the troops at my old hedge fund. probably saying a little bit today maybe tomorrow. it would go like this. i guess, guys, we've got to sell those drug stocks on a big increase in interest rates after a strong payroll number, right? that's going to be the conversation. quick draw types all over the country are going to be dumping these health care stocks. why not? maybe some will be shorting. i might have shorted them. you can't be a short squeeze. these are big cap stocks that can't be squeezed higher. there are too many shares. but there can be -- and judging by the earlier rate scare this year, there should be a quick 4% to 5% decline in these stocks over the next few days because the strong employment number makes them go out of favor. who wants their boring
consistency when there will be cyclicals, the giant industrial concerns that will report terrific numbers when the smoke clears and we have quarterly earnings in 2014. if business is improving, that's what happens. how much of the strong performance this year is because of better than average yields? these health care stocks, come on, the natural candidates to go down. maybe more than the foods and perhaps more than the real estate investment trusts at this point or the master limited partnerships because those have been hammered relentlessly already. although i don't want to start accumulating into the weakness yet. is there anything wrong with this thesis about dumping or shorting these kind of health care stocks? yes. first, i've got to tell you, it's so darn obvious that i'm sure someone will say, jim, well, of course i would have fired someone if they disagreed with me. it's obvious if you get a strong number and rates go higher, t t that, you know, the scenario's going to play out, but maybe a possibility that people say, okay, that's the big bad event we've been waiting for. that's the one that caused stocks to go down five straight
days and now it's over. now it's behind us. what's been thrown away by the market that we like? then someone might actually circle back to these stocks. that's happened before too. it could happen again. if sellers don't panic all at once, they might be buys. that said, the traders among you probably should err on the side of selling stocks. i think simply because the stocks are up huge for the year and the competition will be compelling given that stocks aren't using much at all these days after the outstanding performance. we can lump in the consumer package goods stocks here as shares we don't want to own if, again, we're putting on our trading hats. investors, don't heed this, you'll be going in and out of stocks. i feel like i have to give you trading advice. what's the point of owning colgate with a little yield, short-term, at least, long-term i know the story. after such a magnificent gain, such a puny yield. that, too, will be asked around at the hedge fund shops. that's what a lot of managers will be asking.
you know i like clorox. i will never recommend such a strategy on the air. that's not what i do. but i do think buying puts on the xlv, that's the health care sector etf or the xlp, the consumer staples etf does make sense on any lift tomorrow. i don't like to buy them in the vortex of a big decline. you might be able to eliminate some of the risk of betting against an individual stock where something good might be happening and you get the protection for the rest of your portfolio that you need. that's hedging. it's a real good hedge. if you want to, you can buy johnson & johnson and procter & gamble. and my trust owns both of them because they are earnings momentum and restructuring stories respectively. we will be looking to buy them for the trust if they get hammered. i know it shouldn't be that easy. you have to be suspicious of any trading strategy that comes out so easily. but it sure makes sense if you're calling for the over so to speak, meaning more jobs as
my friend and writing colleague at the street.com has suggested to me. and by the way, this man has been dead right on this number. probably the best guy i know on what the number's going to be like. besides, it's cheap insurance of what could be a treacherous 3.35% in the ten-year that will, indeed cause stocks to decline. it's going to be a shock to the parts of the stock market that are most sensitive to rates. no, i'm not calling for bonds to go to 3.5% immediately, but bonds do overshoot, and that's where the ten-year could go in a short period of time after a stronger than expected number. needless to say, you can also go buy puts on the tlt. that's the bond etf that mimics the direction of the ten-year treasury like the 13,000 december contracts that traded today, given the tlt went out at 102.43. that's a lot of downside coverage on bonds, and i also would have been tempted to put that trade on too and might again tomorrow. again, if i were at my hedge fund that doesn't exist now.
as always, there are really trading -- these are trading derived ideas and an investing show. but every once in a while, i think it pays to give you the strategy i would have used in my old hedge fund if faced with the need to protect my fund from the downside in a rising interest rate environment as we most certainly are about to embark on it right now. stay with cramer. i'm jim cramer and welcome to my world. >> one man, one mission. >> i want to make you money. >> eight years. >> you need to get in the game. >> tens of thousands of miles traveled. >> this new black gold rush is just getting started. it's the sound of american industry roaring back to life. >> hundreds of ceos. >> my life story can be your life story. >> thousands of callers. millions of your e-mails and tweets. "mad money" thanks cramerica for being with us for over 2,000 episodes.
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fbi. watch the show that helped put him behind bars tonight on cnbc. i think that's sweet justice. i'd like to say there's always a bull market somewhere, i promise to try to find it for you here on "mad money." i'm jim cramer. and i'll see you tomorrow! through his fierce dignity and unbending will to sacrifice his own freedom for the freedom of others, madiba transformed south africa and moved all of us. his journey from a prisoner to a president embodied the promise that human beings and countries can change for the better. >> good evening, everyone. i'm larry kudlow. this is "the kudlow report." we're live here at 7:00 p.m. eastern and 4:00 p.m. pacific. of course, the big news this evening, legendary south african leader nelson mandela has died at the age of 95. we have a