An economy that's closed doesn't need a lot of fossil fuels, Jim Cramer told his Mad Money viewers Monday, after crude oil prices plunged into negative territory for the first time. No, oil is not actually worthless, Cramer explained, but today's trading in crude proves that without real demand, a lot of things can go very wrong.
Monday's negative oil prices had all of the hallmarks of a broken market, Cramer said. Very little oil actually traded today and the futures for oil to be delivered next month are still north of $20 a barrel. This was merely a financial distortion.
Typically, when oil prices plunge, a big chunk of our economy rallies. But in a COVID-19 world, the airlines, cruise lines and even gas stations have more oil than they need, which is why storage plays like Nordic American Tankers (NAT) - Get Report surged as the oil industry fills up every available storage option.
COVID-19 is also what sent technology stocks soaring today, with stocks like Amazon (AMZN) - Get Report and Shopify (SHOP) - Get Report continuing their gains, as they're the only retailers equipped for a stay-at-home world.
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: IBM
Krishna said he was very proud of the quarter IBM just posted, especially given that 95% of IBM's workforce is currently working from home. He said IBM continues to power critical systems for their customers, such as credit card processing, banking and research, and the company's strong balance sheet and liquidity continues to secure IBM's dividend.
Krishna has been credited with IBM's strategy toward hybrid cloud services. He said that cloud penetration is only at 20% and IBM plans to extend cloud services to the remaining 80%, which represents a $1.2 trillion opportunity. IBM's recent acquisition of Red Hat has yielded $1 billion in revenue this quarter and Krishna noted that Red Hat's growth is accelerating.
IBM is also betting big on artificial intelligence. Krishna noted that they recently partnered with Children's Hospital in Atlanta and created an intelligence assistance for parents with questions about COVID-19. Krishna said that the assistant has already fielded thousands of queries from parents, freeing up nurses and other hospital staff to focus on other areas of their pandemic response.
Executive Decision: Robinhood
For his next "Executive Decision" segment, Cramer checked in with Vlad Tenev, cofounder and co-CEO of Robinhood, the commission-free trading platform that has been focusing on younger investors.
Tenev said that Robinhood has been investing heavily to meet demand and rectify the service outages that occurred earlier this year. He said these are historic market conditions and Robinhood is seeing trading volumes up 300% from just a few months ago.
Investors are adding more money to their Robinhood accounts and are buying and going long on stocks, Tenev explained. The top 10 stocks on their platform include pharmaceuticals and vaccine makers like Inovio Pharmaceuticals (INO) - Get Report and video conferencing companies. But, Robinhood customers are also buying stocks they feel are oversold, including Walt Disney Co. (DIS) - Get Report, American Airlines (AAL) - Get Report and even Carnival Corp. (CCL) - Get Report.
Cramer said this is the moment for Robinhood and the company continues to deliver what younger -- and older -- investors are looking for from a trading platform.
Oil Markets in Real Life
For an expert opinion on the day's oil action, Cramer turned to longtime oil insider Rusty Braziel, CEO of RBN Energy, for help.
Braziel explained that what happened Monday had nothing to do with the physical market for oil, it was simply a paper market problem. Oil contracts for April expire Tuesday, he said, and those holding those contracts must close their positions or take delivery. Some traders waited too long to sell, he said, and found themselves with no way out.
But while today's issue had nothing to do with the physical markets, Braziel cautioned that this might not always be the case. The whole world has too much oil, he said, and we're quickly running out of storage capacity. Even if the government wanted to divert all excess oil into the strategic petroleum reserve, that process would take weeks or months to physically happen. "No one can keep up with this level of excess oil," Braziel noted.
When asked for the reasons for the glut, Braziel pinned about 15% of the blame on Saudi Arabia and Russia, but the rest on COVID-19 sharply reducing demand for fossil fuels. He said if things return to normal in weeks, the market can recover. But if it drags on, what we saw today on paper could happen in the physical world.
Stay Smart, Stay Safe
In his "No-Huddle Offense" segment, Cramer said there's no upside in being unsafe right now. We're in an era of needing to be very, very careful. As someone over the age of 65, Cramer said he doesn't want to become a statistic, which is why he's been forgoing gatherings with friends and even postponed celebrating his fifth wedding anniversary.
Cramer said until we have ubiquitous testing, we need to assume everyone has the virus until proven otherwise.
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 AMZN, DIS, CLX.