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Cramer: Why are recession stocks rallying?

(Click for video linked to a searchable transcript of this Mad Money segment)

In a bad tape, Jim Cramer likes to identify stocks that buck the trend and rally. On Monday, however, the stocks that rallied were kind of scary.

"Some of the best performing stocks on Monday were Procter & Gamble, Clorox, Kimberly Clark, Coca-Cola, Verizon and AT&T," Cramer said.

Of course, they're all perfectly good companies; in fact they're fantastic companies whose names are recognized the world around.

"But they're also companies whose stocks are widely associated with recession," Cramer said. And to see strength in all these names, all at once, was kind of jarring for the "Mad Money" host.

Vincent Besnault | Photolibrary | Getty Images

Typically these stocks rally when the economy is facing serious headwinds. That's because sales and ultimately profits aren't as damaged by an economic slowdown. (People still drink Coke and still need diapers in a recession.)

From the price action, it would be reasonable to conclude that the stock market is preparing for something serious.

Jim Cramer, however, doesn't think that's what's going on.

Instead, he thinks the gains in these so-called recession plays are all about interest rates.

"Never forget that as big as the stock market is, the bond market is even bigger. And at this very moment, bonds are being bid up furiously, sending interest rates down," Cramer said.

That's something money managers largely didn't expect.

And with interest rates again falling to levels that make it almost impossible for money managers to generate gains, they are again putting money to work in relatively safe stocks with yield.

"And the very same stocks that are recession plays also tend to have excellent dividends that give you a yield well in excess of Treasury bonds after taxes," Cramer said.

Therefore, Cramer believes it's the quest for yield that's driving gains in so-called recession stocks and not worries about a slowdown.

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That's not to say Cramer isn't concerned by the broad market decline—he is.

It's simply that he doesn't think the gains in consumer staples are a sign of anything as serious as recession.

"I don't think that's even a possibility," Cramer said.

"Retail sales are too strong. Home sales aren't bad. Manufacturing is looking up. Employment's coming along, albeit slowly," Cramer said. "Recession? Again, I don't think that's even a possibility."

Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

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