• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Jim Cramer

Jim Cramer: The Birth of a Market Bottom, Part 4

Fed chief Jay Powell wasn't going to let Covid-19 bring down the U.S. economy on his watch, and a legion of small investors profited from his determination.
By JIM CRAMER Feb 19, 2021 | 08:00 AM EST
Stocks quotes in this article: TSLA, AAPL, NFLX

A year ago this week the stock market was hitting new highs and it was all aboard. Buyers had all but ignored the so-called Wuhan virus and were buying pretty much everything in sight given the strong earnings just reported during an excellent reporting season.

Underneath, though, there was a story simmering that would cause one of the swiftest bear markets in history.

This is the story of that bottom.

The financial markets were still in a coronavirus-inspired funk as March 26, 2020, approached. As highlighted in Part 3 of "The Birth of a Market Bottom," gloom prevailed as we knew what awaited us on that Thursday. It would be the worst weekly initial jobless claims report on record.

But before we could get those numbers out, something extraordinary happened. Federal Reserve chief Jay Powell went on NBC's "Today" show at the top of the hour. It was a remarkable performance.

Powell sat in front of a wall of Federal Reserve Bulletins, a bizarrely out-of-place July-December 1987 volume, The Crash of '87, to his left. He proceeded, matter of factly and unemotionally, to outline how the Fed was going to put an unprecedented amount of money to work because investors had pulled back and he was going to take up the slack supporting credit.

The Fed chief would be aggressive and forthright. He said it was not a typical downturn. The virus, he said "is going to dictate the timetable" and he was not going to offer medical advice. That was to be left to the experts. But he would not let Covid-19 dictate the employment situation and the Fed would provide a bridge to be sure it did not.

"Today" host Savannah Guthrie pushed back several times about whether the Fed had the stamina to do it. There was moment when I looked at this man, confident in his purple tie, blue suit and white shirt, and I knew he meant it when he said, "We're not going to run out of ammunition. That doesn't happen," and I knew it was over.

That was it. Unlike all the sturm und drang of 2007 to 2008, when there were more forces trying to rein in government, more timidity, more worry about moral hazard, Powell just wasn't going to go down as the Federal Reserve chairman who let a pandemic defeat the American working person.

Guthrie noted that President Trump had recently tweeted that Powell was "clueless" and "slow moving." Powell simply said his job was to serve the American people in a "non-political, non-partisan" way. At least he had his job description right.

Right on cue, though, we got the worst weekly initial jobless claims on record, 3.28 million people, and the Dow dropped 400 points even as the Senate was agreeing to a $2 trillion package with stimulus checks soon to be in the mail for some pretty large sums and extended unemployment benefits for those who were losing their jobs.

By the end of the day the Dow had gone from a 21,427 low to 22,552 close, the S&P oscillator dropped to minus 7 and the decline was over. The Fed saved the day, something the workmanlike Powell assured. His timing was about as perfectly positive as hedge fund manager Bill Ackman's was perfectly negative the week before.

The $2 trillion bill got signed the next day and we've been going up ever since, led not by the professionals, but rather by a new group of, well, call them amateurs, young people who didn't seem to realize how closely we came to plunging in the abyss.

The Robinhood revolution actually began soon after with relentless spirited buying of many stocks of companies that seemed too cheap. I speak to so many of that cohort. They were as bullish as managers were bearish and they loved individual stocks, keying on, of all things, travel and leisure, but also anything fintech and tech itself.

They were bold; managers were timid. They weren't scared; the big strategists seemed terrified. The Wall Street managers, one by one, seemed to come out of the woodwork and suggest that while there would be many long months of bad, including retests and dire moments, we would come through. Even as the disease raged, though, there were no retests and no more dire moments, just one magnificent run back to new highs.

Was it the Fed's "fault" that we had a run all the way back? I pick my words carefully. Who cares? We needed the American people to get money. The stock market is a hazard that has to happen. We shouldn't confuse things. It's just ill-advised, a waste of time.

It's really too bad what happened to so many of the regular investors, so chastened. They were blown out by fear, including TV-mongered fear. Unlike 2000, they were the ones who were blown out, listening to their own kind. The younger people, I think they are here to stay, distracted periodically, like now, by a faux revolution against less clever fund managers of a short bent. They aren't going anywhere, though. They are like the people who came into this market when we first discovered stocks back in the early 1980s as tremendous wealth creators. They do research, they know how to invest, and if left to their own devises will discover more FANGs than any of us.

Good for them for not listening or heeding the false gods of money. They have their own way of doing things and, in many ways, it will be the way of the future: individual stocks, individual ideas, the hunt for the next Tesla (TSLA) or Apple (AAPL) or Netflix (NFLX) . More power to them.

(This is the final installment of Jim Cramer's "The Birth of a Market Bottom." If you missed any of the previous installments, you can read them by clicking on the links that follow to Part 1, Part 2 and Part 3.)

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, was long AAPL.

TAGS: Federal Reserve | Investing | Stocks | Jim Cramer | Coronavirus

More from Jim Cramer

Jim Cramer: I'll Put My Money With 'Boring but Lucrative' Any Day

Jim Cramer
Sep 29, 2021 1:28 PM EDT

Let's look at that recent downgrade of 'dull' Morgan Stanley and see why exciting is best left for the stadiums and amusement parks -- and not stocks.

Jim Cramer: America's Toughest Job? Finding Workers

Jim Cramer
Sep 28, 2021 12:17 PM EDT

It's the question of our time: Where are the people willing to take on these better paying gigs? Let's see what's going on and what we need to happen.

Jim Cramer: Here's How Analysts Can Be Off By a Wide Margin

Jim Cramer
Sep 24, 2021 12:02 PM EDT

Let's look at the reactions to Nike, Costco and Salesforce to see what happens when they're viewed from a real world perspective.

Jim Cramer: It's Pure Insanity That We Don't Make Chips Here in the U.S.

Jim Cramer
Sep 23, 2021 11:05 AM EDT

While the big guns meet at the White House about the global chip shortage, the president and these companies are approaching this all wrong.

Jim Cramer: Go Ahead, Have a Cow, but I Say Powell and Xi Are Bulls

Jim Cramer
Sep 22, 2021 3:51 PM EDT

We rallied, because China's President Xi and Fed Chair Powell made decisions that they knew would lead to rallies.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 03:07 PM EDT PAUL PRICE

    Why is Wal-Mart Down Big Today?

    Besides its poor earnings report Wal-Mart (WMT) wa...
  • 07:14 PM EDT PAUL PRICE

    A New, Very Scary Movie

  • 08:51 AM EDT PAUL PRICE

    Advice From the Future...

  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login