Mad Money

Cramer: Janet Yellen fooled us again

Cramer: The impact of higher rates

Just one week after Janet Yellen spoke in unity with Federal Reserve members in favor of higher interest rates, she changed her tone.

"She fooled us, again, or maybe we are just choosing to be fooled?" the "Mad Money" host said.

On Tuesday, Yellen made it clear that the Fed chair believes in a cautious approach. Yet, the same crowd that was so noisy calling for higher interest rates clearly forgot the impact of what happened when they raised in December.

Cramer refreshed their memories.

The simple truth is that things need to measured, there is no hurry.
Jim Cramer

The first implication was that the dollar spiked, which caused an erosion of U.S. companies competitive advantage, along with terrible currency translations around the world.

And after that rate hike in December, the wealth effect for the stock market disappeared.

Read more from Mad Money with Jim Cramer

Cramer Remix: 2 ways to confirm a market rally
Cramer: Don't be fooled! Spotting a phony rally
Cramer: Booyah! Finding stocks ready to explode

The third impact was that the oil and gas market collapsed. Some of that was due to fear; some of it was due to short-sellers betting on a decrease in oil prices.

"Whatever, when the Fed raised rates, we began to hear about the horrendous losses the banks were going to experience, which, to me, was a tightening in its own right," Cramer said.

The fourth impact was on foreign debt, specifically in Brazil, which could have caused a tremendous implosion. European banks were in the hot seat, too.

Fifth, the companies with the most overseas business basically threw up the red flag, as they understood that there was nothing they could do to compete with the strong dollar.

"Yellen's speech, regardless of what happens with Friday's employment number, allows us to breathe easier going into earnings season," Cramer said.

The last impact was on retail sales, which were actually good back in December. However, it turned out that the number back then was too high and a revision took away the one piece of good news.

"The simple truth is that things need to measured, there is no hurry, especially because with the exception of hiring, everything is softer than it was the last time the Fed tightened," Cramer said.

Cramer was thankful that unlike some members, Yellen has a brain and was willing to use it.

Questions for Cramer?
Call Cramer: 1-800-743-CNBC

Want to take a deep dive into Cramer's world? Hit him up!
Mad Money Twitter - Jim Cramer Twitter - Facebook - Instagram - Vine

Questions, comments, suggestions for the "Mad Money" website?