Mad Money

Something has gone awry in market: Cramer

Market tossing out natural resource stocks
Market tossing out natural resource stocks

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

There's a trend underway in the market and Cramer doesn't like it.

Although the Dow Jones and S&P only closed modestly lower, it's what moved the market that concerns Cramer.

"Cyclicals, especially the oils were laid to waste on Wednesday, while roared higher," Cramer noted.

The trend is negative because it suggests money is rotating out of stocks that do well in an economic recovery and into stocks that do well in a slowdown.

To make the situation all the more troubling, the bond market has rallied significantly in recent days. "The gain in prices and decline in yield suggests demand for money has dropped off a cliff," Cramer said.

"The 10- year Treasury is now under 2.5%. It was about to break above 3% percent not that long ago. You simply don't get this kind of move in interest rates unless something's gone awry."

Largely the Mad Money host worries that the price action in the stock market and bond market are two signs that the global economy is about to stumble.

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And he thinks he knows why.

There's a grudging understanding that confidence in our country's been shot by the brouhaha in Washington," Cramer said. "Lots of investors believe history is about to repeat itself early next year."

"In Europe, central bankers want the banks to raise some equity. That's going to slow things down for certain," he added.

Meanwhile Reuters reported that the People's Bank of China may tighten cash conditions in China's financial system to address inflation risks. The report comes one day after the central bank refrained from supplying cash to money markets.

"It's possible Beijing thinks it's time for the economy to fend for itself," Cramer said.

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Although the Mad Money host made it clear he doesn't not think a recession is in the cards, he thinks the US, Europe and China are about to slow down.

"Think of growth in the US, Europe and China as three legs of a stool," Cramer added. "We're getting signs that the legs are developing chinks. Therefore, I expect the stool to wobble."

Call Cramer: 1-800-743-CNBC

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