Editor's Note: This article was originally published at 7:05 a.m. EDT on Real Money on June 20. To see Jim Cramer's latest commentary as it's published, sign up for a free trial of Real Money.
NEW YORK ( Real Money) -- Tapering vanished as a theme yesterday. Just take it off the table. The bond market called the tune, even as most of the commentators insisted in looking at the stock market because they have forgotten which is bigger.
When the 10-year traded to 2.3% as stocks were still waffling about the direction -- that's off a point -- it was as close to a lay-up short trade as I have ever seen.
I have been leaning long for most of this whole move, but it is time to move to neutral and here's why:
- The bull market in bonds ended. That doesn't mean bonds can't have moves up in price and down in yield, but those are now minor chord.
- Companies without growth or minimal growth -- the REITs for instance (not the mortgage REITs, which have been disastrous because they were caught on the wrong side not of the taper, but of the real market, which is now very different) have very little growth -- must now be priced lower to where their growth takes them, not their yield.
- Most emerging markets will continue cratering as they were being bought by the misinformed and those reaching for yield. Anyone who reached for yield will be a casualty here.
- The Fed, perhaps deliberately, is letting the market decide when tapering is over. The data are too good to keep the program in place. So all that matters is you watch the 10-year Treasury, which will now reflect the growth of the economy. If it slows, rates go down as it is self-fulfilling, and if it strengthens, where bonds stop nobody knows.
- Real-economy stocks with growth do better after the S&P futures mow everything down to levels where they are cheap.
- The rest of the world is hurt far more than our country over our higher rates because they were either trying to stabilize (Europe) or sinking (emerging markets, including China, which is very worrisome).
- People who have been in the market for a decade don't understand the power of bonds because they have had a benign impact. They ought to go get a bond terminal.
- All interest-rate-sensitive stocks will now be killed until they tell us how they are doing in this new environment. They are wrongly in the blast zone, but who cares.
- High-growth stocks will do fine as long as the rates don't move with great velocity. They always are.
- It will be hard to part with the stock-centric nature of the market, but that's now over until all participants recognize bond supremacy.