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Look East, Investors

The very industries President Obama’s spending plan was designed to help all rallied Thursday: oil, minerals, agriculture, the rails. But the White House deserves none of the credit, Cramer told viewers, because China led that charge, and not the U.S.

Cramer went so far as to call Obama’s stewardship of our much-needed stimulus package “a complete and utter disappointment.” He’s letting congressional Democratic leaders Nancy Pelosi and Harry Reid fill the bill with pork instead of the $300 billion to $400 billion in infrastructure spending we expected. No, for building bridges and roads, we got just $30 billion instead. The jobs that were supposed to be created and the business that was supposed to be “stimulated” – all of the above-mentioned sectors and more – aren’t happening here at home. At least not yet. So there had to be another reason for today’s gains.

Enter China. Under the threat of social unrest – because the Chinese Communist Party’s last bit of legitimacy hangs solely on delivering upward mobility to its citizens – leaders have taken a “kitchen sink” approach to rejuvenating its ailing economy. And in addition to that “by any means necessary” mentality is an open wallet. China’s spending more on updating just its telecommunications infrastructure than the U.S. is on its entire infra build-out. That’s why Cisco Systems was up despite a downbeat outlook and Qualcomm recovered so quickly from the Goldman Sachs downgrade. Right now, China seems to outweigh any problems here at home for these companies.

The same kind of action can be seen in oil and agriculture. U.S. oil companies say that crude’s decline is done, but it isn’t our demand that put the floor in. Agriculture firms aren’t getting grain orders from domestic poultry and beef producers, but Bunge is seeing strength in soybeans. As a result, all of the fertilizer, seed and agriculture-equipment stocks are up. Who’s to blame? Cramer says China.

But that’s not the only proof that China’s on the move. The Baltic Freight Index, which is a good indicator of China’s commodity demand, has more than doubled since the beginning of the year. The Chinese stock market is up 15% over the same period. (And if China’s market predicted an economic slowdown six months before it happened, why wouldn’t that market predict an upturn?) The demand for minerals is rising, which might explain the bottom in copper. The Chinese are also ordering iron ore, a market from which they’ve long been absent. And the recently announced power shortage could mean they’ll build more power plants, boosting business for our coal and steel companies. Maybe that’s why those stocks have been doing so well lately.

It’s not that the U.S. is devoid of any stock market leadership. But Cramer feels more confident about Mosaic , Deere , Nucor , Schlumberger, even the iShares FTSE/Xinhua China 25 ETF, the China plays, than he does about Wal-Mart, Mastercard, Visaor his Four Horsemen of Tech – Apple, Research in Motion, Google and Amazon.com. These more pure American plays, so to speak, just don’t have the government sponsorship that China’s offering right now. Even though that’s what President Obama has been promising since he got elected.

Therefore, because China is behind everything that’s working in this market, “it's China we should be focused on,” Cramer said, “not our leaders in Washington.”










Cramer’s charitable trust owns Qualcomm.

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