I wouldn't say Cramer is entirely sanguine about the markets.
Wrong! Dispatches from the Front: Watch the Bond Market
By James J. Cramer
10/23/98 10:27 AM ET
People, the bond market is bigger than the stock market. The problems are
in the bond market, not the stock market. Right now, the Fed could give a
%^$#&^^#%&^# about the stock market. If it saves it, that's a moral
hazard that the Fed will have to pay the price for. It will.
I keep reading that the worst is over. It may be in the stock market. But the
bond market? Heck, it is just beginning. That's where the layoffs and the
shutdowns are occurring. That's where the market that has ceased to
function.
Let me write that again: ceased to function.
As that market is only about 10 times as important to the U.S. economy as
the stock market, we should not gauge the stock market's strength as a
measure of whether the Fed should be worried.
If this freeze continues, a month from now, you could go to the
fixed-income floors of the major firms on Wall Street and turn them into
bowling alleys. There is still no liquidity. No credit. Nothing.
So, if you think the Fed is done easing because the market rallied 1,000
points, you are looking at the wrong market. It's the fixed-income market,
stupid. That's what you should be paying attention to.
If it still exists. |
