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Cramer: How can the market be this stupid?

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

If you're having trouble making sense of the market, don't despair. It's not you.

It's the market.

So says Jim Cramer as he looked at developments and how they're moving stocks. Specifically, the "Mad Money" host was baffled at the way in which investors viewed interest rates.

On Wednesday, the yield on the 10-year Treasury ticked higher and immediately, investors started to buy stocks.

"Can the market honestly be this stupid? Just to let you in on how dumb that is, if I told you higher mortgage rates were better for the consumer, would you believe me? Of course not."

But that's how the market traded with the retail stocks attracting investment and finishing the session in the green.

"Let's face it," Cramer said. "The stock market's in a particularly moronic phase right now. Higher interest rates hurt business activity and function as a tax on consumers and businesses alike. Bulls should favor more economic activity and more purchasing power, not less, which is why for the 35 years I've been in this business, anything that's sent rates up has also sent stocks down. Until now."

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Of course, Cramer advocates making money. And he realizes shareholders win when stocks advance. However, he also wants the market to make sense to individual investors, and he fears the recent price action could be off-putting if not downright confounding.

The reason higher rates were greeted with enthusiasm, Cramer said, is that there's a contingent in the market that fears the nation is slipping into a recession. "We have almost no data whatsoever that shows we're going into a recession. We don't even have data showing we're going into a slowdown. Yet, recession is all they can think about."

It's this contingent that reacts to even the tiniest move in bond yield, he said. Higher rates discredit the recession thesis because higher rates go hand-in-hand with global growth.

Therefore, the higher rates triggered interest in buying.

And, then, relatively strong earnings from Lowe's, Target and Tiffany, all released on Wednesday, were interpreted as confirmation of that thesis and then the bulls were off to the races.

Conversely, Cramer noted, on Tuesday the market sold off as Treasury yield declined and lackluster earnings from Staples, TJX, and others spooked the Street.

Therefore, on Tuesday, lower rates empowered sellers.

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Cramer isn't sure how long this unusual dynamic may last. "One day we'll be through with this ridiculous nonsense," he said.

But until then, Cramer says it's only prudent to view the market as resetting every morning at the open. Eventually, higher rates will not be embraced by the bulls. But until then, "Every day is a standing start."



Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

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