China's woes could signal a sea change

Unless the Asian giant sets up a trillion-dollar fund to buy its own merchandise, then we can forget about an economic comeback.

By Jim Cramer Apr 16, 2013 9:05AM

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China Brand X SuperStockIf Monday's sell-off, a meaningful one by any stretch, stays with us and changes the landscape, as so many people immediately intimated -- it surely didn't make anyone who was a bear more bullish -- then it will be the sell-off that will be known as the China Death Knell Decline.


Until Monday's stunner, a number out of China that was incrementally weaker always had an initially negative response followed by a more positive reverberation that came from the recognition that the Chinese government was totally on top of the situation and was about to release a stimulus program that would knock your socks off.


In other words, bad news was good news.


Until Monday.


Bad news was just bad news. A GDP number below 8% meant that it is all over for Beijing.


The irony was lost on no one. Instantly we heard "of course (blank) would kill for that growth." And we also got plenty of people who were saying "they have the latitude to do something even bigger."


But we didn't get any follow-through, and Chinese stocks were pounded and then pounded again, and any commodity with a China bid was just crushed.

This is not reminiscent of 2008. Then, the same stocks were flying high going into the disappointment. Then they got hit, and then they came back incredibly hard, as anyone remembers the charge back to $110 from the depths of the $21 Great Recession low by Caterpillar (CAT).


These stocks couldn't bounce to save their lives Monday.


What I find amazing is that the Chinese are, in the end, stuck with the rest of us. We let them pollute and have no labor laws to protect their public to speak of, so they can take away our jobs and then send us cheap knock-offs or low-priced goods, and -- ironies of ironies -- their biggest market, Europe, doesn't have enough money to buy their goods.


I think that is what is dawning on people. The stimulus the Chinese need isn't from China.


It is from Europe.


And they aren't going to get it. So unless China sets up a trillion-dollar fund to buy its own merchandise and then give it to the Greeks and the Italians and the Spaniards, then China can take a nothing done on its comeback.


So there is no stimulus that works -- that's the market's view, not mine -- and therefore you might as well sell everything -- again, the market's view, not mine -- which is how you got such a horrific down-volume down-price day and were not be able to bounce even before disaster struck in Boston.

 

cramer

 


Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust and has no position in stocks mentioned.

 

 

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56Comments
Apr 16, 2013 9:49AM
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Arbitrage at the volume we are talking here is shuddering cold and numbing.  How we allowed ourselves to become acclimated to cheap labor foreign made goods through the erroneously termed free trade will hopefully forever be regarded as a dumb, stupid, foolish, arrogant  business plan.  There was, is, and never will be anything free about destroying the lives of your fellow citizens.  The beliefs, dreams, attitudes, and values America became great by all have been adversely effected by this very expensive from of affirmative action.  What we mostly owe folks around the world is hope and good luck.  Being strong, self sufficient, and honest is the best gift to give your family, friends, neighbors, and anyone else around the world.  To enter a country and suppose you can implant your structure and values can easily be termed arrogant and Imperialistic. The British tried it and finally gave up. They gave the Chinese Opium.  We gave them Hopium. It will all end up the same. The villages throughout the far East that have been severely damaged by American Corporations and our Guberment is immensely shortsighted and stupid.  What we did was no different than throwing scraps of food to a starving child or popcorn to wild animals thinking it was somewhat of an act of kindness or just amusement.  Human nature can be brutal and the rest of the world will hate us even more as this entire New World Order unravels and ends up in war and misery to be spread around the globe.  Greed is not just an American thing but most of the peoples of the world regard it as a White Mans disease.  When Obama says the "rich" every one with any skin pigment knows the White Man is who he is speaking of.  And they have voted accordingly.  These International Corporations could best be described by those around the world as valueless entities which foster greed, dishonestly, and misery.  Their belief is the dollar.  How and why we have come to accept what they do to people as good is beyond me.  And yes they now; through their money and bribes, own our guberment.  We are in a mess and I have zero idea how to escape.  JMHO
Apr 16, 2013 10:07AM
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"So unless China sets up a trillion-dollar fund to buy its own merchandise"

 

Man in Chinese WalMart......... "Why everything made in Vietnam this store?"

 

 

Apr 16, 2013 12:49PM
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Yesterday was nothing more then a profit taking day.  And W/S used China as the scapegoat!!!!!  And I would love to hear someone from W/S tell me that it was not the cause for yesterday's sell-off.  If they were that worried about China, then why is the market up over 125 points?  GIVE ME A BREAK!!!!!!!
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Cramer you have things so wrong.

 

First the Chinese are a command economy and I am sure that once Xi realizes that the stupid economic theories he and other leaders of China learned are wrong he will get back on track or the other Chinese leadership will kick them to the curb.  Your economy can not go wrong when you have true thinking leaders in power who understand where real wealth comes from.

 

Second an 8 percent growth in China's economy in yuan terms swamps the 11 percent growth of China's GDP just 5 years ago merely because China's economy is a lot bigger.

 

Third this would suggest that China is getting about 100 to 150 million poor people into the lower middle class a year and with only 500 million people to go this means they have only 5 years left before they get most of their population out of poverty.

 

UNLIKE America which is growing the number of people in poverty.

 

China is not dead and buried. It's the USA that is dead and buried.

 

Bernanke is throwing about $120 billion into the stock market today in hopes of keeping it from collapse.

 

This effort will only make the crash worse

 

 

Apr 16, 2013 12:22PM
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The pounding gold took yesterday will be a positive for the market.  I certainly don't agree it was a "cool" or necessary thing to do.  Anybody thinking it wasn't crafted to hold as well as funnel folks into this market is a looney.  I always thought confidence was something that was earned. I guess I am old and showing my scars with this old fairness and morality thing.  So It is okay to club investors into buying "in" by destroying their alternatives. Everything about money and markets is now best described as Myopic or shortsighted.  The FED is soon to be passe as they are losing respect by everyone everywhere. Having the FED constantly fiddling and destroying what makes Capitalism work is like having your Plummer determine your next weeks menu by what is stuck in your drain.  Economic Leadership involves more clearly defining their role.  Just plain unfortunate.  JMHO
Apr 16, 2013 9:38AM
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years ago it was being said that China by it's shear size has enough population and internal demand for serious growth WITHOUT the usa or european markets.  i still feel that is the case. 

 

companies like CAT and Deere are involved in china's growth and until the country is "full of new roads and farms" they will do well with china related sales. 

Apr 16, 2013 9:35AM
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Jimmy just thinks everything is fine regardless of the facts. Why is that Jimmy. We are in uncharted territory concerning this massive Global Money Printing. We are in uncharted territory concerning how we destroy our Eco system even as populations soar. We are in uncharted territory concerning the Global Wealth Divide in a Modern Day Global Economy.

We are like a run away freight train heading straight for a cliff and everyone on board knows it. Yet not one person is willing to jump off the train. 
Apr 16, 2013 12:59PM
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If you haven’t seen Lesley Stahl’s report on “China’s Housing Bubble” then you have no idea just how bad things really are in the Chinese economy. It is impossible to understand unless you see it. China is building City after City after City-Cities, filled with beautiful sky scrapers and parks and highways, and absolutely no one can afford to live in them,-not one soul. Imagine standing on the edge of lower Manhattan (on the top floor of 1WTC) and all you see, as far as you can see, is empty. They are building 12-24 empty cities a year. Collectively they could house millions and millions of people. If you haven’t seen it, you must. No clever stats, financial magic or central planning can hide this coming disaster
Apr 16, 2013 10:25AM
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Yo-Yo, mon ??....today.

 

ABS....Nope I don't read all the post, just some that pertain to Market ideas, Investing and some Current events...The rest like many of mine, were/are a lot of dribble or repetitiuos in Nature.

Apr 16, 2013 2:14PM
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Just for abs and the other haters ....from Patton Oswalt!

 remember, when 9/11 went down, my reaction was, “Well, I’ve had it with humanity.”



But I was wrong. I don’t know what’s going to be revealed to be behind all of this mayhem. One human insect or a poisonous mass of broken sociopaths.

But here’s what I DO know. If it’s one person or a HUNDRED people, that number is not even a fraction of a fraction of a fraction of a percent of the population on this planet. You watch the videos of the carnage and there are people running TOWARDS the destruction to help out. (Thanks FAKE Gallery founder and owner Paul Kozlowski for pointing this out to me). This is a giant planet and we’re lucky to live on it but there are prices and penalties incurred for the daily miracle of existence. One of them is, every once in awhile, the wiring of a tiny sliver of the species gets snarled and they’re pointed towards darkness.

But the vast majority stands against that darkness and, like white blood cells attacking a virus, they dilute and weaken and eventually wash away the evil doers and, more importantly, the damage they wreak. This is beyond religion or creed or nation. We would not be here if humanity were inherently evil. We’d have eaten ourselves alive long ago.

So when you spot violence, or bigotry, or intolerance or fear or just garden-variety misogyny, hatred or ignorance, just look it in the eye and think, “The good outnumber you, and we always will.”
Apr 16, 2013 2:25PM
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Did you morons know that your internet provider gives you an IP address? Did you know this IP address is like a ZIP CODE? What country, what state, what city, what area.  It's all there in the IP address. 

  You are not as anonymous as you think. The FBI uses it all the time. Anyone with a half-brain can figure out were you are. I can deal with the bitter partisan in here but some of the rants are over the top. My father has a good saying......say what you want, say what you think, but never say it in pen and Ink.....

Apr 16, 2013 11:39AM
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"NEW YORK (Reuters) - Stocks rose on Tuesday after the worst decline since November in the prior session as gold's price made a modest recovery and government data on inflation and housing signaled an improving economy."

 

Apparently there were a million housing starts in March. The average buyer makes $8/hour and the average seller (existing homeowner) is job-less and underwater. When do we challenge this crap and lock the Kool Aid addicts out of the office? IF a million new starts sell and the credit goes South, Bernanke prints another TRILLION to offset their damage in the economy. Do any of us want that?

Apr 16, 2013 10:52AM
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No not too many "lefty leanings"....Sometimes only to balance out far right rantings..

More of a Moderate really, and a Fiscal Conservative..

Believeing in the First and Second Amendents and others..And America "first"..

Own guns and fast cars....no limos.

But believe in a women's choice...

 

Yes, I got beat up on Gold yesterday, but actually did a little DCAveraging on about 500 shares.

And picked up some ConocoPh. (COP) while it was depressed down..It's up .85 cents today. 4.6 div.

But lost my azz, at Casino last night...

My helper just arrived, got work to do.....Have a Good Day.. 

Apr 16, 2013 4:20PM
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Funniest post of the day goes to V_L

 

"You might also notice that after you command your office staff to thumb me down, my posts rise again. I speak the truth..."

 

Now that some funny shlt

Apr 16, 2013 5:24PM
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Once again, what did we learn today? That yesterday was pure and simple market manipulation by these crooks....Nothing justified a 265 point drop....When the Boston massacre occurred we were already down over 200 so do not blame it on that....Cheaters will always do their thing down here, they are unstoppable and we have to deal with it...Outdo their sorry behinds....Lets see what happens tomorrow and God Bless our fellow Americans in Boston.
Apr 16, 2013 1:19PM
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Needless to say yesterday was a complete aberration, scumbags got their way all day long and used the Boston events to bring these markets down even lower....Oh well, today is another day and we are looking a bit different...What a shocker....Still three hours to go though and plenty of manipulators on and off the floor so, always remain cautious and alert....Things can change in a NY minute...More after the close.
Apr 16, 2013 11:25AM
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Good job Re-TOG.  I picked up an additional 129 shares of Conocco at $57.74.  Could have held out for a better price, but I try not to be greedy.

 

 

Apr 16, 2013 10:58AM
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Markets "should" end up in the "black", today....Un-bearing any bad earnings..or bs.

Between +50-100, unless a run at the end..

Gold was up close to $50...pre-market and early.

Apr 16, 2013 3:08PM
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I'll   translate   for   Jim   Cramer: ---   Hey !   You  know  me.   I  never   miss   a  chance  to  reel  in  more  suckers   to  make  myself   some  dough.
Apr 16, 2013 1:34PM
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TSX up 0.9% today, slightly below the 1% on the Dow.  After yesterday glad to see it back in the black.  I totally missed the boat on gold all these years, maybe now might be the time to consider adding some?  Never owned gold before buy if this money printing continues, which it looks like it will, then it is bound to go back up.
Also Re-Tog, good to see you post occasionally, someone needs to keep us all in line.
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