NEW YORK ( TheStreet) -- "The U.S. stock market is different from the U.S. economy," Jim Cramer told his his "Mad Money" TV show viewers on Thursday, going on to explain that it's this disconnect that explains why equities can continue to rally even if the recovery stateside continues to flounder. "This lesson is the same as it's been for the last 6,000 points," he said. He argued that since the majority of large-cap U.S. companies on average only book 30% to 40% of their sales from the U.S., it's a mistake to expect their performance to move in lockstep with domestic economic data. He said selling companies like United Technologies ( UTX) or Norfolk Southern ( NSC) because initial jobless claims were poor is the wrong move. The economic picture abroad is improving, according to Cramer, who noted that central bankers in other countries have been talking about impending victories over inflation. He then laid out the three keys to a continued rally in equities, saying the market needs to see China stop tightening its monetary policy, Japan come back online, and the Greece crisis be resolved. On the homefront, Cramer acknowledged that getting a deal done on the debt ceiling was important, but he also said there's growing evidence that inflation will be held in check, such as the recent decline in oil prices since the surprise strategic reserve release, and declines in grain and cotton prices. He added that exports can't be the whole answer for the market, noting that a bounce in housing was needed as well, but he maintained the importance of understanding the role the global economy plays in how U.S. companies fare, stating that China's central bank is actually more important to the recovery in America than the Federal Reserve. "The essence of this rally is the overseas bounty and the ability of these companies to take advantage of it," he said, referring again to the multi-national, large-cap names. Cramer said he sees big money flowing into the industrials next, He also said investor consternation has been an impediment for some to participating in this rally, so he was happy to see the Fed's $600 billion bond-buying program come to a close on Thursday. Cramer also mentioned Joy Global ( JOYG), and PPG Industries ( PPG) as two companies that understand America has become a "miserable place to do business" and were acting accordingly. "International exposure is key," was Cramer's mantra as the segment drew to a close.
Robust PipelineIn the "Executive Decision" segment of the show, Cramer spoke to Bob Hugin, chairman and CEO of Celgene ( CELG). Cramer said health care should be a great place to look for growth stocks but it's tough because many of the established companies are facing patent problems, while the small biotechs are like lottery tickets on the FDA approval process. He then brought up Celgene, which he described as a best of both worlds-kind of drug company with established products on the market, led by Revlimid, a treatment for multiple myeloma, as well as robust pipeline of new drugs. He also threw out this datapoint, that over the past 15 years, Celgene has been the second best performer in S&P 500 without taking into account dividends. The stock is up 8,936% over that time, he said. Cramer started out the interview asking Hugin to explain Celgene's approach as a science company developing medical treatments. Hugin said the company is on the verge of capitalizing on a decade of very focused R&D. Cramer then asked about 2012, which is viewed by analysts as full of catalysts for the company. Hugin said Celgene currently has 25 pivotal or phase III trials going on right now, and that a year from now, the company will have a much more formidable solid tumor franchise, in addition to its oncology drugs. Hugin mentioned Abraxane as developmental drug that has multi-billion dollar potential, and said he feels Celgene has three or four drugs in the pipeline that could perform on the same level. Cramer also wanted more information about Celgene's international plans. Hugin said Japan could be very big for Celgene, and that they are hoping to expand in China as well with Revlimid and other drugs. As for acquisitions, Hugin said the company would be opportunistic. He said Celgene has already accelerated its buyback program and could continue to do so in the future. "The data that comes out in the next 18 months could be really transformational for us," Hugin said.
New Product HypeCramer then switched gears to field a viewer question about Kraft Foods ( KFT), and its new MiO water flavor additive product. The viewer wanted to know if the success of the product could translate to a bump in Kraft shares. Cramer said the quick answer to the question was a quote from the Wizard of Oz: "No way, no how." He then boiled down the query to: What does it take for a new product move the needle for a company? He explained that most products don't translate earnings unless the company is very small, using Hansen Natural ( HANS), and its successful launch of Monster brand energy drinks as an example. He moved on to say the problem is that companies put out too many press releases now that make everything sound like a big deal, so investors need to sift through the noise and recognize what really is a big deal. Investors need to work hard to divine what will actually translate to earnings, Cramer said, noting that there is nothing game-changing about MiO for Kraft because launching new products is one of the main things the company does, that every year it's getting a certain percentage of its sales from new products. In 2010, for example, 9% of Kraft's sales came from products launched in the past three years. Cramer returned to the example of Hansen Natural to help investors learn to recognize a game-changing new product because it overtook the whole company and was part of a new category of drinks. Cramer's bottom line was that investors need to be skeptical of new products, and getting caught up in the spin. He also cited Green Mountain Coffee Roasters ( GMCR) and its Keurig single-serve home coffee brewing system, and the impact of expanding into Macau for a company like Las Vegas Sands ( LVS) as examples of the kind of news that's big enough to move the needle.