The next time you look at almost everything you own look where it's made. This is the problem for the U.S. and Europe. If China implodes or explodes you might not be able to buy these products from China because it might be a mess (or maybe that would be covered up too) I don't know.
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Jim Cramer knows that no one wants to hear this, but we are China. It's true.
When Cramer got up at 4 a.m. on Monday the Chinese market was down 8 percent, a true crash, and the S&P 500 futures were flat. Sure enough, when investors woke up the futures were smashed, down 0.6 percent.
Some say that Cramer's theory is completely ridiculous; they think that the U.S. has nothing to do with China. They believe that our markets are not linked because when the Shanghai Stock Exchange Composite Index nearly doubled from November to June, the U.S. market did not double along with it.
So, why the heck would we be affected now that the Shanghai composite has fallen to 3,726 from from 5,191?
When Cramer got up at 4 a.m. on Monday the Chinese market was down 8 percent, a true crash, and the S&P 500 futures were flat. Sure enough, when investors woke up the futures were smashed, down 0.6 percent.
Some say that Cramer's theory is completely ridiculous; they think that the U.S. has nothing to do with China. They believe that our markets are not linked because when the Shanghai Stock Exchange Composite Index nearly doubled from November to June, the U.S. market did not double along with it.
So, why the heck would we be affected now that the Shanghai composite has fallen to 3,726 from from 5,191?
ChinaFotoPress | ChinaFotoPress | Getty Images
"The answer? Simple: because in a world where there is
very little growth, we need every country to do its part to get the
global economy expanding, and the stock market complex in China is doing
the exact opposite," the "Mad Money" host said.
Plus, the "floor" of support in China is completely false. The Chinese government has taken desperate measures to prop up its market, such as the 1,400 stocks that were suspended, stocks that have stopped trading, new IPOs that have been cancelled and the banning of all short-selling.
It's just plain lunacy to Cramer that the Chinese market could still be up 15 percent for the year, let alone stand on its own two feet.
So, why should investors in the U.S. care?
First, there is a huge number of large American companies that export to China. Second, because it is now widely known that the Chinese communist government is not as shrewd or masterful as once thought. And third, because the U.S. market is always held hostage by futures trading, which tends to be a reaction to whatever bad is happening overseas.
Some might think that is silly, but it's a fact of life for Cramer.
And it's not like China was doing well in the first place. All of the indicators of economic growth are trending lower. The only shred of hope that Cramer sees is that the Baltic Freight Index still holds up, but that's it.
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Read more from Mad Money with Jim Cramer
Cramer Remix: This stock has lost its mojo
Cramer game plan: My great Fed-pectations in week ahead
Cramer: Play the big trouble in not-so-little China
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"So, we are China, whether we like it or not. Let's stop kidding ourselves. We will trade with the PRC on the way down," Cramer said.
The only stocks that the "Mad Money" host thinks will propel the market higher once the smoke clears are the domestic and high-growth tech names like FANG—Facebook, Amazon, Netflix and Google.
Investors got used to it with Greece, and now Cramer says to get used to it with China. Until things turn around in the U.S., or Cramer starts to see signs that the Chinese economy is more resilient than its stock market, our market will be held hostage to China. End of story.
Plus, the "floor" of support in China is completely false. The Chinese government has taken desperate measures to prop up its market, such as the 1,400 stocks that were suspended, stocks that have stopped trading, new IPOs that have been cancelled and the banning of all short-selling.
It's just plain lunacy to Cramer that the Chinese market could still be up 15 percent for the year, let alone stand on its own two feet.
So, why should investors in the U.S. care?
First, there is a huge number of large American companies that export to China. Second, because it is now widely known that the Chinese communist government is not as shrewd or masterful as once thought. And third, because the U.S. market is always held hostage by futures trading, which tends to be a reaction to whatever bad is happening overseas.
Some might think that is silly, but it's a fact of life for Cramer.
And it's not like China was doing well in the first place. All of the indicators of economic growth are trending lower. The only shred of hope that Cramer sees is that the Baltic Freight Index still holds up, but that's it.
----------------------------------------------------------
Read more from Mad Money with Jim Cramer
Cramer Remix: This stock has lost its mojo
Cramer game plan: My great Fed-pectations in week ahead
Cramer: Play the big trouble in not-so-little China
----------------------------------------------------------
"So, we are China, whether we like it or not. Let's stop kidding ourselves. We will trade with the PRC on the way down," Cramer said.
The only stocks that the "Mad Money" host thinks will propel the market higher once the smoke clears are the domestic and high-growth tech names like FANG—Facebook, Amazon, Netflix and Google.
Investors got used to it with Greece, and now Cramer says to get used to it with China. Until things turn around in the U.S., or Cramer starts to see signs that the Chinese economy is more resilient than its stock market, our market will be held hostage to China. End of story.
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? madcap@cnbc.com
end quote from:
http://www.cnbc.com/2015/07/27/cramer-we-are-china-lets-stop-kidding-ourselves.html?
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? madcap@cnbc.com
end quote from:
http://www.cnbc.com/2015/07/27/cramer-we-are-china-lets-stop-kidding-ourselves.html?
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