Monday, the stock market got decked by a one-two punch of Omicron and the collapse of President Biden's Build Back Better legislation, but Jim Cramer told his Mad Money viewers not to panic, as he expects stocks to bounce back quickly.
The news that Omicron continues to spread so quickly should've come as no surprise to investors. After two years, we're no stranger to how COVID operates. But the real surprise is that even for those with vaccines and boosters, it may not be enough.
Earlier Monday, Cramer announced that he tested positive after attending a party last week. Despite everyone present having a negative PCR test earlier that day, Omicron was able to infiltrate and spread. Cramer, who has received two vaccine shots and a booster, told viewers his symptoms were mild and he's well on his way to recovery. He was grateful for his three Moderna (MRNA) - Get Moderna, Inc. Report shots, without which, things could have been a lot worse.
So what's next for stocks? Cramer said he's still hopeful a late-month Santa Claus rally will materialize, which is why he suggested only waiting until the end of tomorrow before buying some tech stocks. Those are typically the first names to recover and this time should be no different.
"Stay the course," Cramer concluded, as he was still unwilling to bet against a year-end rally.
Omicron Update for the Holidays
In his first interview, Cramer checked back in with Dr. Eric Topol, founder of the Scripps Research Translational Institute, for an update on the Omicron variant and what it means as we head into the holiday season.
Dr. Topol explained that the Delta variant is not a challenge for our three-shot vaccines, but Omicron looks different enough to our immune systems that it is seeing five times the number of breakthrough infections. Most of those cases thus far have been mild, like Cramer's has been, but Topol cautioned that we still don't know what percentage of cases will be severe.
The good news is that not many patients are reporting loss of taste or smell, as with the original COVID. It also appears that Omicron has more trouble seriously infecting the lungs. However, the virus ramps up quickly from undetectable to infectious. That's why no one at Cramer's event tested positive before the event, but were still able to transmit it at the event. "We can't fully rely on rapid testing," Topol said, which is part of why Omicron is so contagious.
Safety Stocks With Real Earnings
Going into next year, investors should be looking for safety stocks with real earnings and catalysts for growth. That's why Cramer recommended three pharma stocks, all with breakup plans, to unlock value.
First was Bausch Health (BHC) - Get Bausch Health Companies Inc. Report, which plans to split itself into three companies. Cramer spoke with CEO Joe Papa on Mad Money just last week and learned about their plans for the eye care, medical aesthetics and pharma divisions. Cramer valued the sum of the parts at $10.4 billion, or 17% higher than where shares currently trade, even after the stock's 3.4% rally Monday.
Next was GlaxoSmithKline (GSK) - Get GlaxoSmithKline Plc Report, which recently announced that its bountiful 5% dividend will only be reduced by 31% after it completes its spin off. Cramer was a fan of this deal especially since activist investor Elliott Management is involved.
Finally, there's Johnson & Johnson (JNJ) - Get Johnson & Johnson Report, which also has breakup plans, although Cramer noted that investors will need to be patient, as this deal will take awhile to complete. J&J currently trades for just 16 times earnings however, considerably lower than the 24 times earnings seen by its peers. Shares of J&J do pay a 2.5% dividend yield however while you wait.
Executive Decision: FTX
In his "Executive Decision" segment, Cramer spoke with Sam Bankman-Fried, founder and CEO of FTX, a cryptocurrency exchange built for traders.
Bankman-Fried explained that FTX is a place where traders can buy, sell and hold their crypto assets. The company is currently based offshore but does have a U.S. entity for domestic investors to use.
When asked about regulation, Bankman-Fried said it makes a ton of sense for the crypto industry to be regulated. He said the only way for crypto to become truly mainstream and gain consumer trust is for them to know the regulators have their backs.
Right now, however, regulators seem to be hung up on whether crypto is a currency, commodity or a security. But Bankman-Fried noted that in reality, crypto acts like all three, which is why he proposes that instead of trying to classify crypto, just write regulations that make sense.
Turning to the topic of the plethora of new coins being created, Bankman-Fried once again said that regulation would make a lot of sense. He said some of these new coins are nothing more than memes, while others have a purpose and make a lot of sense. Investors need to know the difference.
This Is the Time for Holiday Shopping
In his "No Huddle Offense" segment, Cramer said that while no one wants to buy stocks in a market that's getting steamrolled by yet another wave of COVID, that's exactly what you should be doing.
We've seen these waves before, and in every case, megacap tech stocks were the first to bounce back. That's why names like FAANG (Cramer's original acronym for Facebook, now Meta Platforms) (FB) - Get Meta Platforms Inc. Class A Report, Amazon (AMZN) - Get Amazon.com, Inc. Report, Apple (AAPL) - Get Apple Inc. Report, Netflix (NFLX) - Get Netflix, Inc. Report and Alphabet (GOOGL) - Get Alphabet Inc. Class A Report), along with Microsoft (MSFT) - Get Microsoft Corporation Report, are all great bets at this point in the cycle. Cramer also added Take-Two Interactive (TTWO) - Get Take-Two Interactive Software, Inc. Report and chipmaker Nvidia (NVDA) - Get NVIDIA Corporation Report to the group as a way to play gaming.
All of these stocks trade for less than those small, speculative names without any earnings, which is why they should be bought into the COVID weakness.
In the Lightning Round, Cramer was bullish on Enterprise Products Partners (EPD) - Get Enterprise Products Partners L.P. Report and MGM Growth Properties (MGP) - Get MGM Growth Properties LLC Class A Report.
Cramer was bearish on Aeva Technologies (AEVA) , COMPASS Pathways (CMPS) - Get COMPASS Pathways Plc Sponsored ADR Report, Doma Holdings (DOMA) , Inovio Pharmaceuticals (INO) - Get Inovio Pharmaceuticals, Inc. Report, and TPG Pace (TPGY) .
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