Oil Rout Spooks Stocks: Cramer's 'Mad Money' Recap (Tuesday 4/21/20)

Jim Cramer says investors shouldn't take their cue solely from oil futures, but rather should focus on restarting the economy.
Author:
Updated:
Original:

The selloff in oil futures, which continued for a second day, isn't the end of the world, Jim Cramer reassured his Mad Money viewers Tuesday. The markets had gotten overbought and were due for a correction. Investors got a little ahead of themselves after the $2 trillion stimulus package was announced, Cramer added -- but that doesn't mean there aren't good things to look forward to.

The collapse in oil prices clearly spooked the markets, Cramer admitted, with investors selling everything related to oil, including the banks that lend to oil producers. 

But individual investors shouldn't take their cues from oil futures, which are still trading for over $40 a barrel a few years out. In most industries, when demand plummets, supply soon follows. But that's not the case in the oil market, where it takes bankruptcies for oil producers to cut back their output. 

Oil futures are controlled by oil ETFs, like the United States Oil Fund  (USO) - Get Report, Cramer said. These are instruments which manipulate the market and never should have been allowed in the first place, he said. The USO controlled 23% of the contracts that imploded Monday -- a clear sign of how flawed the ETF really is. 

What matters most to the markets is reopening our economy and that's a delicate balance between health and economics, Cramer concluded. There is light at the end of the tunnel if we remain patient. 

Cramer and the AAP team are looking at everything from earnings and tariffs to the Federal Reserve. Find out what they're telling their investment club members and get in on the conversation with a free trial subscription to Action Alerts Plus.

Executive Decision: Puritan Medical Products

For his "Executive Decision" segment, Cramer checked back in with Timothy Templet, CEO of the privately held Puritan Medical Products. 

Templet explained that over the weekend, President Trump evoked the Defense Production Act, which compels Puritan to manufacture as many nasal test swabs as possible to meet the unprecedented demand. He said in partnership with a local construction company, the Maine-based company will outfit a new factory to be up and running in just five or six weeks. That new factory will allow the company to produce up to 50 million swabs per month and employ a staff of up to 130 people.

When asked how they're able to respond so quickly, Templet said they are a family-owned company and they are nimble. Their construction partner is outfitting the factory while the government is helping to guarantee their investment will be profitable. 

On Real Money, Cramer keys in on the companies and CEOs he knows best. Get more of his insights with a free trial subscription to Real Money.

Off the Charts

In his "Off The Charts" segment, Cramer checked in with colleague Larry Williams, a commodities and futures trader, to examine data patterns related to Covid-19 and how the spread might be slowing. 

Williams first noted that in South Korea, it took 32 days for the virus to peak and a similar 32 days to decline to where the economy could reopen. He saw a similar pattern in Italy, where new cases peaked in 34 days and appear to be declining as the country heads toward a May 12 reopening.

In Germany, a similar pattern is unfolding, with a peak in 33 days, and a decline pointing towards a May 5 reopening.

Back in the U.S., Williams noted the peak on April 10, which was 31 days after the first cases appeared. Given the current trajectory, Williams felt that our economy might be able to reopen around May 12.

Executive Decision: Inseego

In his second "Executive Decision" segment, Cramer spoke with Dan Mondor, chairman and CEO of Inseego  (INSG) - Get Report, the 5G wireless hot-spot provider that saw its shares cut in half in mid-March, only to rally to new highs.

Mondor said that Inseego was originally known as Novatel Wireless and has been around for over 25 years. The company is now working with wireless carriers around the globe to bring 5G wireless to even the most remote places.

When working with carriers, Mondor said that after winning the initial design phase, there will be a testing trial to prove the technology is compatible with their network before commercial deployments to customers. Inseego is currently working with over 20 different carriers, including Vodafone  (VOD) - Get Report, Telstra, AT&T  (T) - Get Report and Verizon  (VZ) - Get Report.

We live in an untethered society, Mondor explained, and there are over 20 million households that don't have broadband access, but do have cellular signals. Inseego will help to bridge that gap with the coming 5G revolution.

Top Stocks on Robinhood

In his "No-Huddle Offense" segment, Cramer opined on the top 10 stocks being bought by primarily younger investors on the Robinhood platform. 

Topping the list was Inovio  (INO) - Get Report, followed by Ford  (F) - Get Report, Walt Disney  (DIS) - Get Report, Microsoft  (MSFT) - Get Report, American Airlines  (AAL) - Get Report, Boeing  (BA) - Get Report, Carnival Corp.  (CCL) - Get Report, General Electric  (GE) - Get Report and finally, Tesla  (TSLA) - Get Report

Cramer said this list is perfect for younger investors. It's betting on a long-term recovery for stocks like American Airlines and Walt Disney, while speculating on biotech with Inovio. He said there's nothing not to like about stocks like Microsoft and Tesla has proven it can defy gravity time and time again.

Lightning Round

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: 

World Wrestling Entertainment  (WWE) - Get Report: "No, when it comes to entertainment, let's stick with video games like Take-Two Interactive  (TTWO) - Get Report."

Dow  (DOW) - Get Report: "I think you have to hold off from buying it."

Dover Corp.  (DOV) - Get Report: "This is an excellent industrial but it needs the economy to come back." 

New Mountain Finance  (NMFC) - Get Report: "This one yields 19% and that's a red flag."

Broadcom  (AVGO) - Get Report: "I like Broadcom very much. " 

Laboratory Corp. of America  (LH) - Get Report: "These have been good investments, but I prefer Abbott Laboratories  (ABT) - Get Report." 

Datadog  (DDOG) - Get Report: "This is a fabulous company with a funny name."

Bed Bath & Beyond  (BBBY) - Get Report: "They can survive for a little monger, but look at how hard the big boys are doing." 

Dave and Busters  (PLAY) - Get Report: "It's too hard to figure out how social distancing is going to work for restaurants."

Introducing TheStreet Courses: Financial titans Jim Cramer and Robert Powell are bringing their market savvy and investing strategies to you. Learn how to create tax-efficient income, avoid top mistakes, reduce risk and more. With our courses, you will have the tools and knowledge needed to achieve your financial goals. Learn more about TheStreet Courses on investing and personal finance here.

Search Jim Cramer's "Mad Money" trading recommendations using our exclusive "Mad Money" Stock Screener.

To watch replays of Cramer's video segments, visit the Mad Money page on CNBC.

To sign up for Jim Cramer's free Booyah! newsletter with all of his latest articles and videos please click here.

At the time of publication, Cramer's Action Alerts PLUS had a position in MSFT, DIS, GE, ABT.