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Until oil prices stabilize, don't expect any meaningful relief in the stock market, Jim Cramer told his Mad Money viewers Tuesday. That may seem counter-intuitive, Cramer admitted, but that's the market we find ourselves in.
Simply put, lower energy costs should be a boon for corporate America and the stock market. Cheaper gasoline means consumers have more money to spend at retailers and restaurants. Companies that use energy, from plastics to trucking, should also prosper from lower costs. In fact, just about our entire economy benefits from cheaper oil prices.
So why do stocks fall on every decline in oil? Well, it's largely because of the oil sector itself, Cramer explained. As oil prices fall and production declines, the oil companies are in for a world of pain. Even the oil pipeline companies, which were billed as toll roads immune to the price of oil, are finding that lower prices means less oil being drilled and less product traveling along the pipes.
While many pundits expect oil prices to quickly rebound, Cramer said his experts tell different story, one where oil prices remain at historic lows for years.
Over the long run, the benefits to our economy from cheap oil will extend far beyond just airlines and cruise ships, Cramer concluded. But over the short term, the markets just won't find a bottom without some stability in oil.
Executive Decision: Andrew Liveris
In his "Executive Decision" segment, Cramer spoke with Andrew Liveris, chairman, president and CEO of Dow Chemical (DOW) , to discuss his company's proposed merger with DuPont (DD) , especially given that Dow shares have now fallen below $45 a share. Dow is a holding in Cramer's charitable portfolio, Action Alerts PLUS.
Liveris was celebrating the inauguration of a new facility in Freeport, Texas, which converts propane from shale gas field to propylene, a vital feedstock for many other products and chemicals. Liveris said the Dow facility is the largest of it's kind in the world.
Alongside that facility is a new innovation center, Liveris continued, where over 900 scientists will work under one roof to develop sustainable solutions.
When asked about the merger, Liveris noted the $3 billion in synergies the combined companies will have. He said Dow is affected by China and other global markets, but the current negativity will pass, allowing the combined companies to flourish.
Finally, when asked whether the U.S. is now the world's cheapest producer of natural gas, Liveris said the only place to find cheaper gas is in controlled markets, and those markets are rapidly converting to free-market pricing like ours.