Game Plan: A Big Swing and a Miss for U.S. Stimulus

The Dow lost 83 points on Friday, as the market snubbed President Obama’s much-touted, and intensely debated, stimulus plan. Cramer wasn’t surprised, though, because the $787 billion bill offers none of the help the U.S. economy so desperately needs, he said.

The infrastructure spending is far less than promised, there’s no solution for the housing crisis, no plan to save the banks, and the market knows it. That’s why the only stocks that moved today were related to China. A country, Cramer said, that got its stimulus plan right.

Just compare the two: U.S. interest rates are effectively at zero, the money’s running low, and Obama’s bill is more pork than productive. China, on the other hand, holds $2 trillion in reserves and is throwing cash at everything from housing to health care, education to infrastructure, energy conservation to environmental protection. Sure, the threat of proletarian revolt is one heck of a motivator, and no doubt the Chinese Communist Party’s last bit of legitimacy rests solely on its citizens’ upward mobility, but regardless – the CCP is delivering, and Washington is not.

Consider every sector’s performance since Lehman Brothers’ September collapse. Retail? Awful. Autos? Yikes. (GM could be bankrupt as early as next week, Cramer said.) Not even inventory reductions can help housing, not without the stimulus package, that is.

Aerospace is down. A strong dollar’s hurt the drug companies. Agriculture’s no good. Except for Terra Nitrogen , but that’s because Chinese demand has stabilized the fertilizer market.

Tech growth beyond smartphones has stalled, though Qualcomm, Hewlett-Packard and Cisco Systems should benefit from China’s $40 billion telecom build-out. The industrials are weak, but Cramer thinks orders from the Middle Kingdom could jumpstart Caterpillar, Honeywell and United Technologies.

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Even the supposed recession-resistant stocks are shaky. Coke good, Kraft bad. General Mills OK, Kellogg not so much. Pepsi’s great, too. But again, that’s due at least in part to the China exposure. The company announced Friday that it’s building three new plants there.

Here are the only industries doing well that are not under China’s umbrella: the restaurants, thanks to lower commodity and labor costs, as well as cheaper gas; medical-device makers and health-care cost containment companies; biotechs; and, believe it or not, investment banks. Goldman Sachs, Credit Suisse and Knight Capital are all showing signs of strength.

You seeing the trend here? China, China, China. That’s what’s driving this market. As for the U.S., “we’re worse off than we were four months ago,” Cramer said. And until we solve our core problems – housing, jobs, the banks – things won’t get any better.

Cramer's charitable trust owns Cisco Systems, General Mills, Goldman Sachs, Hewlett-Packard, Pepsico and Qualcomm.

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