[Beginning of Cramer's verbatim comments for this segment...]

Jim:           When the market's roaring like this... and people are hoofin' to the land of a thousand bull dances... when the market soars and the Dow Jones Industrial Average leaps above 10,000, and the Nasdaq has its best day since July... well then, you need to do some real trolling for new ideas... to which I say, you can't always get the best ideas from the business pages. Sometimes you have to get them from the art section of the New York Times... did you see this today?... "Prices Far Surpass Estimates at Sotheby's Auction." Wow! We were blown away by the Sotheby's auction last night, even as we didn't care for the quarter, announced this evening. Our first reaction was to take down the Grateful Dead and Che posters and go buy some impressionists...

After that revisionist line left our heads, we decided to think through the implications of the rich opening their wallets for perhaps even more than just over-valued masterworks. And you know what? You know what I think we have right here?... I think we've got a "no-kidding Sherlock" moment...

Sotheby's made us think something... that Sotheby's auction made us realize something... To paraphrase terrific hack writer, F. Scott Fitzgerald... let me tell you about the very rich... they are different from you and me... and they are spending money! We realize that that's what's happening here when we link the stabilization of sales at Whole Foods Market Inc. (WFMI), even as the stock got pounded on its earnings outlook. What do you do at Whole Foods... think about it... what do you do at Whole Foods?... Let's deal in common sense here!... You overpay for the same food you can get at Safeway or Shoprite or SuperValu... or the positive noises from the CFO of Williams-Sonoma Inc. (WSM), where you overpay for cookware, similar to what you can find at TJX (TJX)'s Home Goods... And let's throw in the strength at Tiffany & Co. (TIF), where you overpay for stuff that you can get from QVC... Uh, can you really tell the difference between Tiffany and Cubic Zirconium, especially when you put it in one of those blue boxes?...

Or how about the better-than-expected quarter from Coach Inc. (COH), where you overpay for the same handbags that are available on Canal Street in Chinatown?... Or at least that's how they look to my naked eye... You can see it at Saks Inc. (SKS), where rich people overpay for coats that you can get at Ross For Less... How about Saks? They had a better-than-expected October same-store sales, and they saw strength in women's designer, sportswear, gold rings, apparel, outerwear, jewelry and soft accessories. It's also obvious from Nordstrom Inc. (JWN)... where you get to overpay for shoes, instead of going to Payless or Marty's... and where the same-store sales were up 6.5% in October... much better than the Street's expectation of 2.9%. It's blatant from the fantastic numbers and guide up that Starbucks Corp. (SBUX) gave you this very evening... even as you can walk across the street in Summit, New Jersey and buy a cup of Joe for twice as big, and better tasting, at Dunkin' Donuts for half the price and a nice smile from Belle, one of my favorite counter women... I'm sure that Cramer-fave, Deckers Outdoor Corp. (DECK), would tell you that people are radically overpaying for UGGs... as we talk... It's clear from the huge earnings beat we saw last Tuesday from Polo Ralph Lauren Corp. (RL), where people overpay for stuff they can get at Marshall's...

When you see all of this, you have more than just the trade-up... you know that the rich, at long last, are spending again! The rich are happy! Wow!...

Anyway, in my hedge fund playbook, that's always a prelude... when the rich spend... to everyone spending again. Not because I believe in the magic of Ronald Reagan's "trickle down" theory... but because the first people to feel better... and, yes, it is all psychology... are the rich. And, after that, everyone else gets "aspirational" again... and the malls are jammed with shoppers! That means regular people can start visiting Darden Restaurants (DRI), for instance, and its high-end Capital Grille division, not to mention putting in some additional trips to Red Lobster and Olive Garden... The stock just might be too cheap from down 20% from its high... come on...

How else can we play the return of luxury?...

We're mindful that it's time to go to the only other book worth reading, besides Getting Back To Even, and that's Setting The Table by restauranteur, Danny Meyer... who created the Danny Meyer hospitality index [See interview with Meyer on February 2, 2009], which measures what Meyer calls, "the hospitality quotient"... basically what stuff people actually pay up for... who has the aspirational special sauce...

Do you know that the index is up 15% since it was created on September 30th of 2008?... While the S&P 500 is down 8.6% over the same period?... Danny really nailed it.

Lo and behold... the Danny Meyer Index reveals a classic name for this moment too... It's one that I have not been bullish on... my bad... and that one is...

American Express (AXP)... which encapsulates so much that we want to capture when we talk about a return to luxury... without having to worry... right, without having to worry about hedge funds gaming the monthly same-store sales figures, like we'd have to do if we bought a particular retailer...

Why American Express?...

This is the preferred credit card of the rich. After all, only the rich would pay an annual fee to get their hands on an American Express card. The company foreshadowed this return to luxury when it reported back on October 22nd saying, "Our premium customer base remains a key advantage, and it retains the capacity to grow spending substantially as the economy improves." I mean they hit you over the head with it already. The company also said that spending levels have stabilized, and predicted the possibility of the return to cardmember spending growth in the current quarter. When the rich spend money, they use American Express... which is why average spending per card is much higher for American Express cardholders than with its competitors.

And while American Express is indeed hitting its 52-week high right now, we have to remember that, at its peak in July of 2007, the stock was at $65.89... That's right... $65 bucks... that's 75% higher than the current price.

Given that many of the analysts don't like it... American Express has 10 buys, 11 holds, and 5 sells... I don't think it's done moving higher. They'll all go platinum in the coming months... better late than never.

Here's the bottom line...

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The Bottom Line!:     The rich are spending again, as you can see by how much they're overpaying at Sotheby's, Whole Foods, William Sonoma, Saks, Nordstrom's, Ralph Lauren, Starbucks, Tiffany, Coach... And, when that happens, you buy American Express (AXP). Don't leave home without it.

[verbatim recap]

[end of segment]

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Market Results today: Dow:  + 204 Nasdaq:  + 50 S&P 500:  + 20   2 3 4 5 6 See all of tonight's stocks mentioned on Yahoo! Finance, here...