This market thrives on certainty and certainty is exactly what we got with the first phase of the trade deal, Jim Cramer told his Mad Money viewers Monday. The trade deal matters a lot to the stock market, and even if, ultimately, the Chinese go back of some of their promises, there is money to be made here in the short term.
Cramer said he's bullish on this tentative deal for a few reasons, the first of which is pork. It's been estimated that African swine fever has wiped out a third of China's pig population. China is home to half the world's pigs and its pork industry consists largely of backyard farms. They have been ill-prepared to deal with this epidemic and that means the country has a a big incentive to negotiate on trade issues.
The second reason Cramer was bullish on the trade deal was that, this time, there are real enforcement measures for noncompliance.
Third, he said, with so much manufacturing leaving China for Vietnam and other countries, China has no choice but to cut their losses by striking a deal.
In the short-term, Cramer said this is great news for the semiconductor makers like Texas Instruments (TXN) - Get Report, Skyworks Solutions (SWKS) - Get Report, Advanced Micro Devices (AMD) - Get Report and Nvidia (NVDA) - Get Report. He was also bullish on the financials, which may soon be allowed to operate inside of China without needed partnerships. He recommended JPMorgan Chase (JPM) - Get Report, Visa (V) - Get Report and MasterCard (MA) - Get Report.
Finally, Cramer said, when the global economy picks up, investors look toward oil, including companies like Schlumberger (SLB) - Get Report. He also endorsed the retailers most hurt by tariffs, namely Macy's (M) - Get Report and Kohl's (KSS) - Get Report. Lastly, there are the cloud computing stocks, like Splunk (SPLK) - Get Report, which may be poised for a quick rally.
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Love her or hate her, the stock market is scared of U.S. Sen. Elizabeth Warren (D.-Mass.), Cramer told viewers. When trying to evaluate where stocks might go in 2020, one thing is clear, Cramer said: investors need to set some cash aside in their portfolios to use as Warren insurance.
Cramer said while he believes Warren is neither a socialist nor a wealth distributor, and won't be as bad as many fear, he admitted that he is in the minority. Warren is seen as a wildcard in the stock market and the market hates uncertainty.
Cramer noted that while Warren has already backed off her "healthcare for all" plans, she still hasn't reconciled with the healthcare or the financial industries, both of which are frequent targets of Warren.
Even if she did get elected, Cramer said, a divided Congress would still make any of Warren's sweeping changes unlikely. But for most investors, that doesn't matter, which is why investors need to proceed with caution in 2020.
Know Your IPO
After a chilly spell, the IPO market is heating up again with some high-quality companies. In his "Know Your IPO" segment, Cramer dove into Bill.com (BILL) - Get Report, which came public last week with a strong debut.
Cramer explained that Bill.com helps small businesses automate their billing by digitizing their processes and moving them to the cloud. While many software as a service
(SAAS) companies focus on the lucrative enterprise market or the consumer market, Bill.com operates between, focusing on 20 million underserved small businesses that need help with their accounts payable and accounts receivable.
Bill.com planned to offer 8.8 million shares between $16 to $18 a share. The offering ultimately ended at 9.8 million shares between $19 and $21, thanks to strong demand.
Cramer applied the "Rule of 40" to the stock, adding its 67% growth rate to its -9% operating margins to end up with a score of 58, well above the minimum number needed (40). But even after passing this test, Cramer said the valuation for Bill.com is still too high and the stock needs to pull back under $32 a share before he'd be a buyer. The stock closed Monday down 6.67% at $36.38.
Executive Decision: S&P Global
For his "Executive Decision" segment, Cramer sat down with Doug Peterson, President and CEO of S&P Global (SPGI) - Get Report, the global ratings agency that keeps an eye on a lot more than just the S&P 500 index.
Peterson explained that with full employment and low interest rates, the U.S. economy is strong, and that's great news for S&P. With services like privately held Robinhood energizing a whole new generation of investors, S&P has been hard at work with new ratings and products surrounding environmental, social and corporate governance issues.
For example, in industries like cruise ship companies, 2020 will bring new regulations on sulfur emissions, Peterson said, and S&P will rate cruise companies based on how well they comply. The ratings agency always focuses on facts and transparency for the issues that matter most, Peterson added.
S&P is also growing in China, Peterson said, and operates a 100% U.S.-owned ratings agency.
Finally, when asked about the securitization of auto loans, which has raised red flags from some investors, Peterson said S&P is watching the auto loan industry closely, looking for similar patterns to the mortgage securities that led to the financial crisis.
Executive Decision: Livongo Health
For his final "Executive Decision" segment, Cramer sat down with Glen Tullman, founder and executive chairman of Livongo Health (LVGO) - Get Report, the digital health coach with a stock that's had a wild ride since its IPO in July. Shares peaked at $45 each before plunging to lows near $15 in October. The stock closed up 2.55% Monday, at $26.56.
Tullman said nearly 90% of all healthcare costs stem from chronic conditions, yet our healthcare system was built for acute care. By using technology and data science, Livongo is helping patients change behavior and ultimately get results.
For chronic conditions like diabetes, Tullman said that condition is often linked to hypertension, and hypertension is often linked to weight issues. By helping patients to solve their weight issues over the long term, everything up the chain can improve.
Ultimately, Livongo is successful because they can show positive outcomes, he said. They improve patients' health and they save healthcare providers money.
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Here's what Jim Cramer had to say about some of the stocks that callers offered up during the Mad Money Lightning Round Monday evening:
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At the time of publication, Cramer's Action Alerts PLUS had a position in NVDA, JPM, MA, SLB, KSS, BMY.