The Dow on Wednesday fought back from an early 92-point loss to close just 20 points down, while the S&P 500 regained 0.8 percent from its low to finish the session lower by just about two points. Cramer during Mad Money offered viewers an explanation for the turnaround, saying that two big heavy weights – Washington and Beijing – finally may be giving investors a chance to breathe.
President Obama’s renewed focus on Wall Street, and its anger-rousing bonuses, has hurt share prices of late, as has China’s insistence that it would reduce some of its stimulus efforts. Communist Party authorities fear a commercial real-estate bubble and as a result promised to slow its lending. But Cramer said he saw today signs of change in these market drivers.
First of all, Obama seemed to balk during an interview, when he admitted that top CEOs like JPMorgan Chase’s Jamie Dimon and even Goldman Sachs’ Lloyd Blankfein may deserve their high compensation because plenty of professional ballplayers earn more and never make the World Series. Whether or not that means the White House will ease up on the Street remains to be seen, but Cramer thought that it definitely played a role in today’s action.
The perception of China, meanwhile, seemed to change when Australian metals company BHP Billiton reported that, stimulus or not, the country’s growth should continue. And at a rate that’s well above average, with China’s commodities consumption remaining strong. Arcelor Mittal chimed in, too, predicting that we’d see still more demand from the Middle Kingdom. Cramer said these announcements led traders to believe that the fears of China’s slowdown may have been overblown.
There were other positives today as well. A major snowstorm forced Federal Reserve Chairman Ben Bernanke to cancel his testimony before Congress, but his statement to the House Financial Services Committee was still released. In it, Bernanke said the central bank wouldn’t raise interest rates until the economy improved. While stocks declined at first on the news, Cramer praised the Fed chief for his work.
Lastly, Cramer said he expects stimulus spending to kick up in here in the States, specifically from what could be a bipartisan package soon to emerge from Congress. He called the legislation a big deal, saying it would focus on job-producing industries like infrastructure.
All of this could mean big changes ahead, as Washington and Beijing lose their power over stocks. Or it could be just a quick breather in an otherwise downward-trending market. Regardless, Cramer said, the lesson for investors is that there is always some sign that the bulls are at work.
Cramer's charitable trust owns Goldman Sachs and JPMorgan Chase.
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