Cramer: What you need to know about rising rates

What Cramer wants you to know about rising rates
What Cramer wants you to know about rising rates   

If you are one of those investors who thinks that if interest rates go higher, that it means to sell everything—then Jim Cramer thinks you are brainwashed. Sorry.

"That's why I want to spend some time on the notion that when positive things happen to economies around the world, you tend to get markets that go higher, not lower," the "Mad Money" host said.

Higher interest rates are good! Cramer explained his reasoning when he shared that he likes to start his day by monitoring the German bond market. Right now German bonds are going down in price, which means their interest rates are going up. This has caused major worldwide market turmoil.

Yet about a month ago the German bond yield was so low, that you had to be crazy to buy these bonds and hang on to them for ten years. Now that it has gone up tremendously, those investors holding the bonds are panicked, thus causing S&P futures in the U.S. to get hit hard.

Ultimately the wave of selling on Tuesday subsided during the day and the averages managed to regain some of the losses, which show that some of the panic subsided.

"We could freak out that our interest rates hit six month highs, but I have the benefit of age and I can tell you that rates have plenty of room to rise before this economy gets derailed," Cramer added.

Read MoreCramer: Don't worry about rate swings...Here's why

Tim Armstrong, chairman and CEO of AOL
Melody Hahm | CNBC
Tim Armstrong, chairman and CEO of AOL

Sometimes we make picking stocks much more difficult than it needs to be. Cramer saw a classic case of this scenario with AOL and Verizon.

On Tuesday morning, Verizon announced that it would be buying AOL for $4.4 billion, or $50 a share. (Tweet This) And despite the fact that last week AOL reported an amazing quarter that showed all of CEO Tim Armstrong's hard work paying off, Wall Street still wanted nothing to do with the stock even though the positives were staring at it right in the face.

AOL proved that it has reinvented itself, with a transformation from an old dial-up internet provider into a company with various attractive online properties. These include the Huffington Post, TechCrunch and Engadget websites, which would help to give Verizon the edge in video that it is looking for.

In the company's release Armstrong shared how AOL has managed to grow its consumer base strongly, especially in the area of video, mobile and programmatic advertising. This might sound like typical CEO conference call jargon to some, but Cramer recognized that perhaps AOL is on its way to be a real alternative to Google when it comes to advertising technology that works with video.

"In other words, Armstrong cracked the code of how to make money from video online," he said.

Read More Cramer: AOL & Verizon will crack the code on this

After years of underperformance, Cramer decided to take a closer look at IBM to see if maybe it has started to turn things around. Investors know that Warren Buffett has a large position in IBM, and he continues to buy the stock on the premise that it has a great buyback and a growing dividend.

"I think that after the last quarter, which was better than expected, things are improving for this company because it's reinventing itself," Cramer said.

Part of that reinvention involves IBM's latest venture in an analytics ecosystem that uses cognitive thinking under a rubric called Watson. Its cloud-based platform can actually learn and reason utilizing huge amounts of data to help provide the insight needed.

Cramer spoke with IBM's CFO Martin Schroeter to learn how Watson can transform not only industries such as healthcare but can also interpret Twitter and create delicious food recipes.

"What Watson really is at its very core, is a terrific example of what IBM as a company does, which is build solutions to solve our client's most difficult problems," Schroeter said.

Read MoreIBM's new supercomputer unveiled—A needle mover?

Ben Kaufman, CEO, Quirky
Scott Mlyn | CNBC
Ben Kaufman, CEO, Quirky

Cramer has always understood the importance of highlighting the next big market themes that could drive innovation. That is why "Mad Money" has been on a mission to help investors find the major forces behind the market, by profiling private companies that could be the future of business in its "Off The Tape" segment.

On Tuesday, CNBC launched its third annual Disruptor 50 list, which highlights the most revolutionary startups in business. Making its third appearance on the list and moving up from number 18 to 15 is Quirky.

Read MoreMeet the 2015 CNBC Disruptor 50 companies

Quirky gained its start as a platform for people to submit ideas. The company would then take the best inventions from the idea stage to store shelves around the world.

What makes Quirky unique is the community foundation that is associated with its business model. The company works based on in-house designers and engineers that collaborate with a community for development. The community member submits an idea, and then the community votes to decide which products will be advanced.

Could Quirky be the future of the internet of things? To find out Cramer sat down with the founder and CEO of Quirky, Ben Kaufman.

The CEO explained that his company started out as a small startup in his apartment in New York City and has grown over time to include larger partners. Before Quirky existed, people spent their life savings trying to create invention. That is how Kaufman started when his parents put a second mortgage on their house to support his idea.

"The best ideas in the world aren't actually in the world, they're locked in people's heads and we want to unlock them," Kaufman said. (Tweet This)

One odd thing Cramer noticed is that even though the price of oil has rebounded nearly 50 percent from its lows in March, the larger commodity indices have not. These indices are heavily weighted towards oil, yet they have barely moved.

What the heck is going on?

To find the answer the "Mad Money" host turned to technician Carley Garner, the co-founder of DeCarly Trading and author of "A Trader's First Book on Commodities", and Cramer's colleague at RealMoney.com.

Garner noted that despite the fact that generally there is a strong correlation between crude oil and the broader commodity indices, that's not happening right now. However, she thinks that eventually they will pop.

From Garner's perspective, the newfound weakness in the dollar and recent rebound in oil suggests that the whole commodity complex is ready to run.

"If Europe continues getting better, and it is, while China eventually turns around, then Garner will turn out to be very right about nearly every commodity under the sun. I'm with Carley, I think she's going to be very right," Cramer said.

In the Lightning Round, Cramer gave his take on a few caller favorite stocks:

McCormick & Company: "We love McCormick. We think that company is terrific. It's just a great staple that keeps doing well."

Linn Energy LLC: "I'm not recommending Linn, so when I say you're fine that means someone's going to say Cramer loves it. I don't think you need to take the big loss right now. I think it can percolate a little bit higher."

Read More Lightning Round: Great staple that keeps doing well