×

Cramer explains how the Afghanistan bombing threw a wrench in the market

Despite Thursday's flurry of stellar earnings reports from JP Morgan, Wells Fargo, Citigroup, and PNC, Jim Cramer said the U.S. bombing Afghanistan confused the entire market.

"The moment we learned of this news, all the bank stocks plunged and anyone who bought them was underwater," the "Mad Money" host said. "It didn't matter what Jamie Dimon or Mike Corbat or Tim Sloan or [PNC CEO] William Demchak ... had to say. Not at all. Because the mother of all bombs took out their stocks, an odd set of collateral damages."

What does a Massive Ordnance Air Blast, also known as the "Mother Of All Bombs" or MOAB, have to do with bank earnings? How did the drop in Nangarhar ricochet back to Wall Street?

"I think it's because nobody was thinking about the Afghanistan conflict, it wasn't on the radar screen, and now the U.S. is dropping the mother of all bombs on some ISIS headquarters," Cramer said.

Watch the full segment here:

Rather than highlighting the banks' true strength, the bomb hit their stocks hard, creating a perception that they did poorly when earnings told a very different story, Cramer said.

"In fact, this is a classic example of how I'm always telling you to wait for some exogenous weakness to give you a chance to buy great stocks at lower levels," he suggested, adding that his charitable trust promoted Citigroup to a "buy" because its stock is too cheap.

Cramer said this ripple effect stemmed from the market's setup, effectively a day-to-day referendum on President Donald Trump and his administration.

"Right now, investors are confused about Trump," Cramer said. "A man who ran on the idea that America comes first, that China hurt our country with its currency manipulation, that interest rates may be too low, that Fed chief Janet Yellen is toast, that NATO's no longer relevant and that the Export-Import bank is a boondoggle for big companies, suddenly repudiated every single one of those principles in a single 24-hour news cycle."

And while Trump's reversals were actually "music to Wall Street's ears," his willingness to backpedal so swiftly worried investors and voters alike, Cramer said.

"If the president can change his mind so easily, if he can just abandon his hardcore, hard-fought principles while at the same time escalating the war in Afghanistan, then what else can he do?" Cramer asked. "Investors, they do like a little predictability, and Trump is anything but predictable."

France's upcoming election could have also affected the bank stocks' slide, even though the "Mad Money" host insisted that on its own, a foreign election has nothing to do with U.S. stocks.

"But taken as an overall piece of the puzzle, it says, 'Hey, I've got to take some stock off the table here. This is getting a little too crazy for me, especially ahead of a three-day weekend,'" Cramer said.

Now, it seems that if some company reports a bad quarter, stocks could get hammered and analysts could get cold feet and start downgrading, throwing the market into uncertainty.

"When it doesn't matter how good the earnings are because there's so much other noise drowning them out, then you've got to keep some powder dry. Let stocks come down until the setup improves," Cramer said.

"How will you know when we get a better setup? Simple: when stocks go up, not down, on good news," the "Mad Money" host continued. "Don't laugh. That's called a bottom. We're not there yet."

Questions for Cramer?
Call Cramer: 1-800-743-CNBC

Want to take a deep dive into Cramer's world? Hit him up!
Mad Money Twitter - Jim Cramer Twitter - Facebook - Instagram - Vine

Questions, comments, suggestions for the "Mad Money" website? madcap@cnbc.com