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Global undercurrents behind big selling: Cramer

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

With jobless claims dropping substantially on Thursday, shouldn't the market have rallied?

Jim Cramer says it would stand to reason.

After all, not only did the number of Americans filing new jobless claims tumble by 32,000 down to 300,000, it dropped to levels not seen since 2007. "Yep, we're finally back to where we were before the Great Recession."

Let's be clear on that, before the Great Recession.

Yet the market declined. And that's not all.

Also on Thursday, new data showed the budget deficit shrank to $37 billion in March from $107 billion in the same month last year. That's the lowest read for the month of March in 14 years.

Still, in the face of a rapidly shrinking budget deficit the market declined.

What on earth is behind the weakness?

Demek | Vetta | Getty Images

The host of "Mad Money" says there are undercurrents in the market that have everything to do with China. And although weakness had been feared for quite a while, overnight new data confirmed the worst.

"Last night, we got a 6.6 percent drop in exports and an 11.3 percent decline in imports. I gulped when I read these figures," Cramer said.

"To me, those hideous numbers craft a thesis that says China has fallen off the global grid. China's an export nation that isn't exporting. It's a traditional importer of raw goods that has stopped importing."

That's enough to strike fear in the hearts of even the biggest bulls. But there's more.

Also Cramer said developments in Greece exacerbated the weakness, albeit indirectly, by sending money into bonds.

"Last night the Greek government sold about $4 billion dollars in five year bonds with a yield of 4.75%. That's very little yield for a ton of risk," Cramer said. "As a result money went into bonds from the U.S., the return may be nominal but investors felt at least the nation has a shrinking deficit."

In turn the rotation into bonds sent interest rates lower, which triggered a ripple across the market. "The selling of the non-yielders for high-yielders made the market feel like quicksand," Cramer said, as investors cashed out as quickly as they could.

"And that's how you get this kind of debacle," Cramer explained.

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"Frankly, this was without a doubt one of the most mystifying days we've had in ages. I believe that if our country traded in a vacuum, the S&P would have been up, not down," Cramer said.

But we don't trade in a vacuum. Therefore, "On a day when the jobs picture looked bright and the deficit appeared to be improving substantially, we declined."

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