Stocks closed sharply higher Thursday after Reuters reported central banks from major economies are preparing to stabilize financial markets by providing liquidity and preventing a credit squeeze if the outcome of Greek elections on Sunday causes tumultuous trading.
A senior U.S. official cautioned that the Greek election will not provide "the definitive signal on what happens next" in the euro zone debt crisis, Reuters reported, but central banks are on standby to ensure enough cash is flowing through the financial system. To “Mad Money” host Jim Cramer, though, the news was nothing more than a “blind rumor.”
“The presumption is that something bad will happen in Greece and the central bankers are ready to stabilize whatever market needs stabilizing if we get a so-called bad outcome,” Cramer said. “In truth, though, we have no idea what the heck the central banks will do or if it will even matter.”
If the Greeks do vote against austerity and the central banks happen to intervene, Cramer doubts it will be enough to produce a prolonged rally. There have been instances were stocks popped following action by the central banks, but Cramer noted the rallies were short-lived. Most of the time, stocks began to fall shortly thereafter.
Europe’s debt crisis has engulfed Wall Street for some time. In the past year, Cramer said the majority of the CEOs he’s spoken to expressed concerns about Europe, regardless of whether they have exposure to the region. Some CEOs are worried about the “psychological damage” while other executives fear possible credit ramifications, he said.
In the past month, though, Cramer noticed a change in attitude. Today, many CEOs question how Europe’s debt woes will actually impact their business, Cramer said. He noted the CEOs made such comments off-air.
“These executives are begging me to tell them how their companies would be harmed because they just can't see it,” Cramer said.
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—Reuters contributed to this report
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