Investors need to remain skeptical of big market rallies, Jim Cramer told his Mad Money viewers Tuesday. Many investors are pinning their hopes to a quick, V-shaped recovery to the coronavirus pandemic, but Cramer said frankly, "it's not going to happen."
Tuesday we saw some semblance of normalcy, as Major League Baseball outlined its plans to still have a baseball season, only without fans in the stands. But Cramer cautioned that despite baseball working its way back toward normal, our economy still has a long way to go.
Cramer said we simply can't go back to normal until we have an effective way to treat COVID-19. We also can't be normal until we have a way to stop spreading the disease. Social distancing is apparently working to flatten the curve, but send people back to the streets and we'll be right back where we started.
The best we can hope for is a slower, U-shaped recovery, Cramer told viewers, as it will take months before treatments and vaccines become available to beat COVID-19.
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Executive Decision: Prologis
Continuing with his focus on specialty REITs, Cramer checked in with Hamid Moghadam, chairman and CEO of Prologis (PLD) - Get Report, the warehouse REIT that supports many ecommerce operations. Shares of Prologis were up 9% Monday after the company reported a 44% surge in short-term leases with a modest rise in deferrals and defaults.
Moghadam said the current environment is nothing like the financial crisis in 2008 and Prologis is a very different company. Today, Prologis has one of the top two balance sheets in the industry, Moghadam said, and occupancy is very strong, with only 4.6% availability, the lowest in his career.
Moghadam noted that some customers have asked for assistance in paying their rents, but there are just as many customers who are looking for more space to expand their ecommerce operations.
Moghadam continued by saying that Prologis isn't affected by the trade war. They don't care where products are made, he said, only where they are consumed. As long as people continue to live in places like New York and Los Angeles, retailers will need warehouse space close by. Nearly 2.5% of global GDP flows through a Prologis distribution center, including many necessities and essential items.
Off the Charts: VIX
In the "Off The Charts" segment, Cramer checked in with colleague Mark Sebastian for the latest read on the CBOE volatility index, known as the VIX.
Under normal circumstances, the averages and the VIX are the inverse of each other. As fear rises, the averages decline and vice versa. But Sebastian noted that during last week's choppy action, the S&P 500 fell and so, too, did the VIX. When this happens, it typically means that fear is subsiding and the markets are poised to rally higher. That is certainly what happened Monday.
Sebastian noted that a similar pattern played out during the financial panic in 2008. After the initial shock, the averages drifted lower without triggering a spike in the VIX. Our recent move mimics this pattern, only faster, which is why Sebastian and Cramer agreed that being patient and buying the dips is the prudent move.
Off the Tape : Riverbed
In his "Off The Tape" segment, Cramer spoke with Rich McBee, CEO of the privately-held Riverbed, a technology company helping to make working from home easier.
McBee said that Rivedbed's technology helps make business applications run faster at home by using the same technology that powered branch offices years ago. With Riverbed, multiple family members can share network resources for maximum productivity. McBee said even large video or computer-aided design files can be downloaded with ease using Riverbed.
McBee said they've seen a surge in usage over the past weeks as more employees work from home. He said they are the right technology at the right time, which is why companies and government agencies alike are deploying their technology.
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Appetite for Debt
In his "No-Huddle Offense" segment, Cramer said there's a big difference between our current crisis and the finance crisis of 2008. This time, companies that need money are able to get it.
Back in 2008, there was no money to be had, Cramer said, forcing banks to resort to finding their own benefactors or agreeing to government-sanctioned mergers. But today, Carnival Cruise Lines (CCL) - Get Report was able to raise money while cruise ships aren't sailing.
Cramer said if a cruise line can find money when their ships can't even come leave port, then we must be doing something right.
Then there's Slack (WORK) - Get Report, the workplace communications platform that has many competitors nipping at its heels. Slack was able to raise $750 million worth of debt to fund its continued operations.
Here's what Jim Cramer had to say about some of the stocks that callers offered up during the Mad Money Lightning Round Tuesday evening:
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At the time of publication, Cramer's Action Alerts PLUS had no position in the stocks mentioned.