Higher Interest Rates. As a rapid rising rates well, lets just say it helps wreck any hope of reaching still one more record high, at least for today. Dow backsliding 26 points. Nasdaq up. 01 . Why did Interest Rates start climbing today after a period it looked like theyd been tamed . Why does it feel like we could be, yes, in for another round if were not careful of Mortgage Rate increases . Today i heard speculation that the reason for the jump and they did jump one thats kind of in sync with where we were a couple of weeks ago, is that the feds starting the tapering debate once again. Im ending this debate right now. This is well, what to we deal with when we hear about the taper rate . Its on the fed and bernanke attitude that bothers me so much. I dont think thats the reason at all why rates went up. I think rates are going up because alas, they should go up. Yes, i think from what ive heard this Earnings Period, the economys getting well enough to suggest that rates might warrant higher levels. What makes me say this . Remember my ability to divine things has much to do with the country not the data that the economists and their minions derive all their thinking from. Frankly, i prefer the thinking of the minions in despicable me or despicable me 2 over the worship of the fed. Because the fed worshippers have betrayed us, they have hurt us with their myopic views, just like the pundits have hurt us by constantly worrying that the revenues will never grow so the rally is doomed. Theyve been saying that for about 30 . In fact, i believe the fed is looking at the same corporate rate reporting data as i am and wondering head scratching, perhaps, whether were about to get some better employment numbers because of whats happening in the real economy as exhibited by the earnings that have been reported. Now, i know there have been plenty of press reports today about how caterpillar disappointed, and thats got us wondering whether the world again is slowing. That is the wrong take away. Entirely boo i have to tell you that i think c. A. T. s just a victim of excessive optimism on the part of a Management Team that has repeatedly done the wrong thing including buying two Mining Companies for top dollar and writing one of them almost off entirely because of fraud and simply ignoring the fact that it wildly paid for the other one. C. A. T. Is about a bet, not on our economy, but the chinese economy. And im not talking about china tonight. Okay . Caterpillars a distraction with a cavalier and cocky but suddenly gloomy management that doesnt get the new world of commodity declines. You know what, theyre not just cavalier, theyre clueless anyway, so heres whats driving rates higher. The first is housing. Its just too darn hot despite the increase in Mortgage Rates to twoyear highs. We learned new home sales increased 8. 3 . The prices of homes are up 12 in a year, too fast, too hot. If i were ben bernanke, i would like to slow down these sizzling numbers and give Home Builders a chance to catch up, perhaps even shake out the 10 billion worth of homes that are held by private equity in order to be able to play that game. Look, i still think like john paulson who was interviewed in that delivering alpha conference that seems to make news every single day, i think were in the early innings of housings multiyear comeback. The fed needs to be mindful that there simply isnt enough inventory right now. And no one wants the rampant flipping were beginning to hear about, like the housing bubble. When i listen to reports today and congratulations to alan malally who is one of our invest in america icons, i thought this is truly one of the greatest auto markets in american history, which ford is definitely the hottest in the world. Do you want to have the lowest rates imaginable when autos could be bearing down on the best level of sales in years . I think you could argue that the tenyear treasury, the most important piece of paper in the world, should be yielding 3. 6, not 2. 6, on the way to 4 not 3 . Business in autos is that good. Hey, listen, i want to attribute it all to ford, but the auto business is good, the f150 is great. I only bought one f350, known as the superduty. I didnt buy hundreds of thousands of them. Weve got travel and leisure getting stronger too. We know from the incredible earnings we got from delta and u. S. Airways today as well as trip adviser tonight, wow, what amazing numbers all. When you see the Airlines Beat the numbers, something that rarely happens in the 70year trading history of the airlines, you know times really are flush. It gets better unless you own bonds. The gulf stream from general dynamics, they were up 29 from a year ago. If i were the fed, i would be freaking out at that number. No one really needs to buy a g5, do they . Ask yourself. Theres probably a lot of people watching the show who have one. Boeing reported an amazing number on top of united techs numbers earlier this week, those are gigantic employers who need to add people to their workforce to meet the demand. Dont take your cue about what boeing stock did. The mark was not great. Take your cue about what what he said when he sat here, believe it or not, was better than what he said here. We know that gas doesnt want to come in. How about telecommunications . Sure at t may not have had the best numbers, but thats not the fault of the consumer. The consumer is signing up for new lines in incredibly strong fashion and carrier spending at an incredibly important part of the tech sector has to go up to meet the demand as we heard from qualcomm this evening. We know from apples iphone sales that the customers still wants the most expensive phone even for subsidized, you dont do that if youre down and out. Federal reserve had been worried that sequestration would hurt the economy. That it would cut in the growth economy, particularly the defense sector. Hold that thought, the bestperforming stocks this year, defense, general dynamics, northrup grumman, lockheed martin. The congressional cost cutting may not be as crushing as ben bernanke thought it was. Hes got to be thinking, man, i dont know. Auto, gas, homes, leisures, defense spending. Lets see, these are big parts of the u. S. Economy. And rates are ridiculously low versus the strength in those key sectors. Throw in the fact that last night we got our first truly post recessionary numbers from europe, a report that shows an expansion, something ive said is the hallmark of the Earnings Period but no one believed me until this morning. You get the feeling things have changed for the better. Rate changes have got to come. The stock market tries to predict what will happen and not just surmise what is happening. What does the market see . How about the possibility we get a good jobless claims number tomorrow and a better nonfarm payroll number next week. Rates have to come back up to where they were a couple of weeks ago before we got gloomy gus data. I would urge you not to jump to too many conclusions. In an economy where mcdonalds, cocacola and panera bread tell you things might not be so strong. Well, an economy not able to bear higher rates unless you look through the lens of wendys, chipotle and pepsico, an economy is judged by the earnings of Norfolk Southern is one that doesnt warrant higher rates, but an economy graded by csx and Union Pacific indicates things are humming along pretty darn well and lots of people are working on the railroad. You can grade the economy on caterpillar, but how can you explain the strength in united technology, Emerson Electric . You can say that semis must be in weakness because broadcom until you heard qualcomm tonight say all it will right thing. Interest rates should be higher and we know from experience when rates take off, they do hurt stocks. The profit taking we saw today, its because companies are doing so much better than we thought. And that means rates could, indeed, head a little bit higher. So until they stop, you can worry you can worry for the moment that weve got too much of a good thing going. And after the run weve had, stocks right now, right here just arent ready yet for the Interest Rate climb to resume once again. I need to go to don in florida. Don . Caller hey, jim, thank you for taking my call. My pleasure, don. Caller my questions on home depot. Right now, housing is on the rise and particularly in the northeast because of Hurricane Sandy where thousands of homes were destroyed. Home depot is marketing a new wood in that area thats fireproof and mold resistant. Do you think that will help home depot pick up market share . And is home depot a no, look, its a rising tide situation there. And its very gutwrenching right now. Lumber liquidators was up gigantically. That should bode very well for home depot. Every time we see a different Interest Rate climb, people sell these stocks. Im not going to bet against home depot. If it comes down ive already told stephanie link, coresearch director with me, i want to buy home depot for the charitable trust. End of story. Thiru in california. Caller hi, thanks, for taking my call, jim. I just wanted to find out whats happening with the linn energy and walter energy. Well, people are very concerned, they think that coals not that good. Linn energy, that is in the grips of one of the greatest bull bear battles ive ever seen. And until the sec blesses linn energys accounting, youre going to see this war rage and its like the hundred years war. Its not the war of the roses, believe me because one side i think really smells bad. Too much of a good thing, we saw the silent killer in action today. Companies are doing well maybe better than we thought so Interest Rates went up and the markets trying to adjust to that new level. Mad money will be right back. Coming up broken glass. From keeping you insulated to keeping you in the air Owens Corning has you covered. But this mornings earnings miss caused the company to go from pink into the red. Could its housing exposure help solidify the foundation . Find out in cramers exclusive. And later sweet specs, high risk could also mean high reward. Its all part of a little healthy speculation. Tonight, cramers taking a look back to see how his best plays have done, and hes found one that may have even better days to come. Plus too hot . While the market flirts with alltime highs, are you worried your stocks are becoming too hot to handle . Cramer makes sure your portfolio makes the grade on am i diversified, all coming up on mad money. Dont miss a second of mad money. Follow jimcramer on twitter. Have a question . Tweet cramer madtweets. Send jim an email to madmoney cnbc. Com, or give us a call at 1800743cnbc. Miss something . Head to madmoney. Cnbc. Com. Clients are always learning more to make their money do more. ann to help me plan my next move, i take scottrades free, inbranch seminars. Plus, their live webinars. I use daily market commentary to improve my strategy. And my local scottrade Office Guides my learning every step of the way. Because they know i dont trade like everybody. I trade like me. Im with scottrade. announcer scottrade. Ranked highest in Customer Loyalty for brokerage and investment companies. Has oats that can help lower cholesterol . And it tastes good . Sure does wow. Its the honey, it makes it taste so. Well, would you look at the time. Whats the rush . Be happy. Be healthy. To build or not to build, that is the question. Or to put it in less shakespearean terms, the market is wondering what will happen to housing. Did we just hit a speed bump on the road to a multiyear bull market or a retaining wall . Perhaps a stoplight. Im a big believer in housing, but i know we need to collect some evidence. And the way i do my research is by listening to what individual companies with boots on the ground have to say. Take Owens Corning, the best maker of Building Materials like insulation, roofing shingles, fiberglass composites. Gets 54 of the sales from north American Residential and new construction. But rallied 6 yeartodate. Now, Owens Corning reported this morning, numbers came in shy of wall street estimates, delivering 12 cents miss off a 69cent basis, the revenues declined, 100 million below the consensus. The stock barely moved. More important, though, looking beneath the headlines, you get the sense that both roofing and especially insulation are expected to improve in the second half. Insulation in particular is projected to experience higher volumes and higher prices. Lets check in with the straightshooting chairman and ceo of Owens Corning. Welcome back to mad money. Well, thanks for having me, jim. Great to be back. Im trying to figure it out. Theres so many levers. And in the Conference Call, youve got them. The price of raw materials, youve got whether theres storms, new housing, hey, youve got europe, youve got asia. If you had to look at why this stock acted so well in the face of what analysts said is a shortfall, is it that you personally and your team believe that the second halfs going to be stronger than the first . Yeah, today we reported that we were actually very happy with the progress we made in the first half. We came into the year looking for improved pricing and volumes in insulation, improved margins in our roofing business and Financial Performance of our composites business and we reported all of that in todays quarter. The miss to the extent there was a miss is really timing of roofing volumes. Last year, we had very, very strong first half roofing volumes and quite disappointing second half roofing volumes. We think this year, well get a more natural progression of roofing volumes where well have some good volume in the second half. Our revenue this year in the Second Quarter wasnt quite as strong as it was in the Second Quarter of last year. But we think thats left good volume for us in the second half of the year. We expressed a lot of optimism that the price volume gains that we see in insulation will continue in the second half, roofing should have great margins and good volumes in the second half and, in fact, composites is beginning to make progress in terms of its operating leverage and getting some of the operating performance through to the bottom line. Were happy with the second half outlook we put out today and were actually happy with how that builds momentum into 2014 and beyond. Okay. I had a discussion with a terrific strategist, known him for 25 years, he was on squawk and he was saying, jim, the biggest worry i have is margin improvement. I present your company as exhibit a, that you can have margin improvement with revenues being okay. Across the board margin improvement. Yeah, you know, i think at least in our Building Materials markets, the rate of change of the market is very important to the confidence of our customers, to the confidence of their customers. I think were all seeing house prices go up. So we know that theres some ability for the market to absorb some pricing, some ability for our customers to pass that along. And as long as we feel like demand is going to continue to grow kind of each month in a fairly predictable way, then i think the Inventory Management practices and the things you need to do in order to put price increases through, in order to get your margins improved can happen. Where we tend to have challenges is when theres a disruption in the market. And even though currently housing is at very, very low levels relative to history, it has been progressing nicely now for 12 or 18 months and we think thats a really positive trend if we can keep that going. Youre not concerned with a little blip up in Interest Rates, 1. 6 to 2. 6 , moving Mortgage Rates to 4. 4 , 4. 5 . Youre not concerned like so many others that this means housing has to take a big step back . No, im not. You know, relative to history, Mortgage Rates are still very, very low. And to a certain extent, an increase in Mortgage Rates might bring buyers into the market where they feel nows a time they need to buy a house so that Mortgage Rate increases could be a bit of a catalyst. I think with house prices increasing now, you know, really surprising to the upside for two years, increasing at double digit rates. If you can buy an asset thats appreciating at 10 and borrow your money at 4 , its still a wonderful transaction. Id like to see stability in the mortgage market. I think important would be mortgage reform so the credit gets easier in the Housing Market and certainly with rising housing prices, thats something to look forward to. They talked about maybe doing a little bit more origination mortgage bonds today which would be terrific. Theres a thing on page 13 of my transcript. The chinese have been the bane of a lot of our Great American companies existence. The first time i heard it, feels like the chinese have flown a white flag and are not being the predator pricer we usually discover they are. I think saying theyve thrown up a white flag might be a little bit more optimistic than we were on todays call. But what weve said is weve seen a dramatic change in the investment profile of our chinabased competitors really since the financial crisis. And that there has been a bit more discipline around the rate of capacity expansions and waiting for some demand to come in and fill in capacity. We actually think recently tight credit in china is causing more discipline around return on capital and the need to make returns. In our composites business, weve seen a dearth of investment over the course of the last three or four years and the growth in the market is starting to improve utilizations glob