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NEW YORK (TheStreet) -- The markets can't afford to lose the consumer, Jim Cramer told his "Mad Money" TV show viewers Wednesday. He spoke after Macy's (M) reported disappointing earnings, raising doubts the American consumer could continue to bolster stocks.
Cramer called Macy's a national barometer for the health of the consumer, so when sales are sluggish there it's only natural that stocks from Home Depot (HD) to Sherwin-Williams (SHW) and Whirlpool (WHR) would fall in sympathy.
The slump at Macy's may only be temporary, said Cramer, but given how many hurdles the consumer is facing, from rising payroll taxes and interest rates on mortgages to fears over Obamacare and higher gas prices, it's easy to see why the markets are spooked.There are still bright spots in the markets, though, mainly Europe, China and Japan, along with specific stocks such as Boeing (BA). But those may not be enough to keep stocks at their lofty levels, especially if more bad consumer news begins to emerge, said Cramer. Cramer said the Macy's news should cause investors to be more cautious as things may continue to worsen before they get better.
Make Derivatives TransparentWithout a spotlight on the markets, it's too easy for those looking to commit fraud to cover their tracks, said Cramer, as he opined on the indictment of two former JPMorgan Chase (JPM) employees. JPMorgan is currently a stock Cramer owns for his charitable trust, Action Alerts PLUS. Cramer said that every case of fraud that's exposed is a deterrent. But what's most disturbing about this case is so many smart people simply had no idea the fraud was occurring. That's what happens when derivatives are traded in opaque markets with no oversight, he said. JPMorgan did the right thing and reported the fraud as soon as it was found, he noted, but by then there were already huge losses. Cramer once again made the case that all derivatives must be traded in public markets with complete transparency, eliminating much of the guesswork in evaluative exactly what these mysterious pieces of paper are actually worth on any given day.
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