Investing

Cramer: 'I understand why people are buying stocks' after watching Trump's State of the Union

Key Points
  • President Donald Trump's State of the Union address helped show why investors are buying stocks, CNBC's Jim Cramer said.
  • "The president's making a strong case that there's a lot of money in the market," the "Mad Money" host said.
  • "There is tremendous wealth being created and what it's doing is making people, I think, not wanting to sell stocks," Cramer said.
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Cramer: I see why people are buying stocks after Trump's State of the Union

CNBC's Jim Cramer said Wednesday that he sees why the stock market was headed for a higher open in the first trading session since President Donald Trump's State of the Union address.

"Previous presidents have not cared about the stock market because they don't think it's that big," Cramer said on "Squawk on the Street." "But I'm listening to him and I'm thinking, I understand why people are buying stocks."

Cramer said that's because Trump spent a fair portion of his speech discussing his economic record, boasting of historically low unemployment, growth in real median household income and retirement savings.

All three major indexes were higher Wednesday morning, building on two consecutive days of gains after a coronavirus-induced sell-off last week.

The stock market is currently experiencing its longest bull market ever, beginning in 2009 under former President Barack Obama in the aftermath of the Great Recession and continuing under Trump.

Trump is making a "strong case that there's a lot of money in the market," the "Mad Money" host said. "What he's saying is $12 trillion has been created in wealth."

Cramer compared the impact of the economic story Trump is telling to that of "a major research house on Wall Street."

"He makes it so you want to buy stocks," Cramer said, arguing the president's speech was the equivalent of an analyst issuing a strong buy call.

Democrats, on the other hand, are arguing the economy under Trump hasn't helped enough people, Cramer said.

"The Democrats are saying that wealth has not so-called trickled down. It's not helping for people in transportation costs, student loans, prescription drugs," Cramer said. "It's almost like we're dealing with two different countries."

While about half of Americans own stocks, the vast majority of ownership is concentrated at the top of the economic ladder.

More than 80% of stocks owned by American households belong to the wealthiest 10% of people, according to research from New York University professor Edward N. Wolff. The study used Federal Reserve data from 2016.

"But for our purposes here, there is tremendous wealth being created and what it's doing is making people, I think, not wanting to sell stocks," Cramer said.

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Here's a recap of President Trump's 2020 State of the Union address