Jim Cramer: The pandemic led to 'one of the greatest wealth transfers in history'

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Jim Cramer: The pandemic led to 'one of the greatest wealth transfers in history' 4.5
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"I think we're looking at a V-shaped recovery in the stock market, and that has almost nothing to do with a V-shaped recovery in the economy," the "Mad Money" host said.

The coronavirus pandemic and corresponding lockdown made way for “one of the greatest wealth transfers in history,” CNBC’s Jim Cramer said Thursday.

The stock market is rising as big business rebounds from state-ordered stoppage of nonessential activity, while small businesses drop like flies, the “Mad Money” host said.

“The bigger the business, the more it moves the major averages, and that matters because this is the first recession where big business … is coming through virtually unscathed, if not going for the gold,” he added.

The comments come after Wall Street took a breather during a mixed day of trading in the midst of hopes of a quick recovery from the pandemic. The Dow Jones Industrial Average ticked up almost 12 points to 26,281.82 during the session. The S&P 500 and Nasdaq Composite both finished the day in the red by less than 1%.

Investors reacted to worse-than-predicted economic data ahead of the May jobs report Friday. The Labor Department reported on Thursday that new jobless claims the past week came in at 1.877 million, while experts expected a read of 1.775 million claims.

Despite the ongoing economic woes, the S&P index of 500 large-cap companies, which is considered a benchmark for the stock market, is within striking distance of its levels from the start of the trading year. Since bottoming near 2,191 in March, the index is up about 42%.

The tech-heavy Nasdaq 100 has recovered all of its losses from the coronavirus meltdown and set a new high on Thursday. Many investors are betting on a V-shaped economic recovery, Cramer said.

“I think we’re looking at a V-shaped recovery in the stock market, and that has almost nothing to do with a V-shaped recovery in the economy,” he said.

In order to help small businesses make it to the other side of the pandemic, the federal government needs to pass another stimulus package, given the social distancing mandates that remain in place, he added. The American Bankruptcy Institute said Thursday that U.S. Chapter 11 bankruptcies in May ballooned by 48% compared to a year ago.

“That’s that pesky real world asserting itself, but the only big bankruptcy we’ve seen int he stock market is Hertz,” Cramer said.

Cramer said it still only scratches the surface of what impact the halt in global economic activity will have on the country.

The Senate on Wednesday sent a bill to be signed by President Donald Trump to relax rules on how businesses can spend relief funds provided by the Paycheck Protection Program.

“The companies that took the money just got a big break: they only need to spend 60% on their employees to get the loans forgiven, down from the original 75%. That’s important, as most small businesses fail because they can’t afford to pay the rent,” Cramer said.

“But, in the end, the stimulus package probably won’t be enough, for one simple reason,” he said. “It’s not going to work because of social distancing.”

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💬 Comments on the video
Author

...It was a great transfer of wealth ...just not to the public who desperately needs it

Instead the beneficiaries were big corporations and those who own assets

Author — Ric's Flicks

Author

This video didn't even age more then a day LOL

Author — Joromo84

Author

Soon you’ll be able to get your law degree from Costco.

Author — Fred Howland

Author

We get 1200.00 they get trillions, that's fair said nobody ever

Author — 1 2

Author

Greatest robbery in history criminal government officials and rigged court system

Author — cattigereyes1

Author

Maybe it’s hard to admit, but Jim is telling the truth.

Author — Super man

Author

There is no downside risk anymore! Stocks sink 1 % and the FED will step in 🤑

Author — Mikko Kärkkäinen

Author

So, this is how Taco Bell becomes the last restaurant on Earth ala Demolition Man?

Author — Shawn Porter

Author

I can just understand him when he's not drunk imho

Author — NZShareman

Author

Why do people keep hating on Jim. Get lost he's entertaining!

Author — Michael Fratipietro

Author

One of the greatest wealth transfers “ on purpose “. Get rid of most small/ medium stores/ companies so the big ones have less competition. Meanwhile you destroy multimillion jobs and lives. Welcome to the “ NEW NORMAL “.

Author — Jim Schuman

Author

He pretty much told you the future of America. A nation run be a few powerful businesses. A nation run by oligarchs.

Author — Donny Kiles

Author

I work at Costco. It’s been Christmas for 3 months now

Author — Joshua Breeding

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Red eyes and slurring his words like a drunk lmao

Author — Cary Sontag

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All this rhetoric means nothing as long as the "invisible hand" is at work. The FED. Market dumps 1%, the hand jumps in! Party like its 1999 baby!

Author — Jeffrey D

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Jim seems calm today lol no cocaine I see.

Author — Leroy Rodgers

Author

Thanks for the infomercial on Costco. I hope they're padding your wallet.

Author — Andrew Bennett

Author

this show is actually good today, is a cold hard truth, government cares way too much about their big corp friends and their retirement profolio

Author — ORIENTAL EXPRESS

Author

This would be true but in reality people wouldn’t care about social distance in two months top.

Author — Liav Horwitz

Author

Am I the only one who can’t understand his words when he talks😐?

Author — Mel Smith