Cramer: Now Playing -- 'Bad News Bonds'

 | Apr 18, 2017 | 3:14 PM EDT
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Ignoring the bonds is deadly here. What are they telling us?

First, I think the 10-year seems to be hell-bent on 2%. There's just too much buying power out there and not a lot of selling.

Let's run down any and all of what this move might be saying:

  1. The economy has slipped into slow mode because the promise of tax breaks and repatriation isn't happening. I speak to a lot of bankers and the stalemate is regarded as a major setback to expansion. We know that. It isn't going away.
  2. The French election is making people nervous and you aren't being compensated for holding euro-denominated bonds considering the risk.
  3. The short position in bonds is so big that we actually have a short squeeze, which could be eliminated by the Fed if it started selling bonds instead of raising short rates.
  4. The bond buyers are anti-vigilantes; they are convinced the Fed doesn't need to raise but will anyway, causing us to go into a recession as exhibited by a flat yield curve.

It could be any or all of these, but it is just killing the stock market, too, because as we see earnings that are good, we discount them, and as we see bad ones, we exacerbate their declines.

This is all pretty obvious to the market and I am growing concerned that only an economic win by President Trump coupled with a defeat of the far left and right in France can change the fortunes of this stock market.

Further, I don't trust the commodities. As I said last week, oil moved too far too fast and the U.S. is the marginal supplier that's hurting the cause of the oil bulls, not the Saudis, who seem to be double-talking the market.

I sense real trouble if rates go to 2% and we get soft data at the same time. Right now, we don't have the kind of soft data that would make me as troubled as some other participants because hiring is so strong.

However, I think the bond move is so powerful that we can't explain it away. It's responding to bad news, not good, and until the bonds go the other way, we will not be able to capture good gains from the companies that report them.

Random musings: It would be the ideal time for the government to float the $500 billion "Make Our Infrastructure Great Again" savings bonds (thanks to Matt Horween for that savings-bonds concept).

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