Cramer: The Real Source of This Ceaseless Bid

NEW YORK (Real Money) -- Too many people are mystified by this market. I know Friday threw me for a loop because that employment number, even after the revisions, was simply awful.

I think the report can be totally explained by our Fear Monger in Chief (i.e., President Obama), who scared the heck out of everyone as he talked about the massive job losses coming from sequester. I am sure that'll be the case, but the real impact here was similar to the U.S.'s pre-cliff non-dive, when the country's business was frozen.

Surely the president must have advisers telling him the way business people think, and how everything is about confidence -- confidence needed to make a bold expansion. But they seem to have no impact on him. That old "have to meet a payroll" dynamic eludes this president, and so it will be until we get another one. The president has total empathy for the downtrodden and unemployed, but he has no real handle, or holds even downright antipathy, for those who would hire them. That, as well as a blind spot for the hiring that oil-and-gas does, contribute mightily to the marginal hiring that could be done in this country.

The stock market, by all accounts, should have gone down big Friday. But it has trouble declining even though individual companies are poised to put in earnings issues, particularly among international tech and domestic-construction businesses, as we we'll likely see this week when earnings season begins.

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However, if you strip out the individual earnings, you will see that the liquidity in the system -- and not individual earnings or government supports -- is the bid underneath that keeps giving.

Consider these sources of stock-market capital.

One: The Federal Reserve's amazingly low rates make it so that we simply can't invest in bonds or CDs and be responsible fiduciaries, either to ourselves or to pension plans. Every-day CDs from the halcyon days of the middle of the last decade, when rates were going higher, will come due -- and the dramatic decline in the rollover CDs should force that money into the stock market. Invariably I hear that this flow won't amount to a lot of money. Just dismiss these people out of hand; they are either short or ignorant.

Two: The liquidity the Fed is pumping in will soon force the hands of our banks to lend, because they can't make money off any other investment. They aren't allowed to pay out as much as they want in dividends, nor to buy back as much stock as they want, so they will lend.

Three: Cyprus was a seminal event not for what ultimately happened -- confiscation from the rich, who had thought Cyprus was Switzerland -- but for all people in European banks. It has to send chills through the rich that the European Union pondered something that is unthinkable in the U.S. That money now stands to flow here month after month after month. It was a windfall for the U.S., plain and simple.

Four: Once the money gets acclimated, the foreigners should sense the same thing we have realized -- buying stocks may be the best way to get income. So they're set to put money in the 4% yielders, now becoming 3% and so forth.

Fifth: Last week, the president put forth new rules that say the U.S. will no longer tax foreign pension funds for investment in American real estate. As a result, the most favored part of the American stock landscape -- real estate investment trusts -- will get a whole new cohort of potential buyers. The "investment-ization" of this once-minuscule area of the market has to be noticed, and REITs should be choice investments for many of you reading this.

Sixth: We speak a lot about how corporations have tremendous assets overseas, and how with breaks they would come here. I think the more important issue is how strong these balance sheets are. This is a godsend for when confidence returns, and it will return when the president and Congress either accomplish something or just cease to be important because there are no new deadlines. These manufactured crises are the only things that really stand in the way of hiring.

With earnings season upon us, we are, of course, at a critical juncture. I have seen many a survey that shows an inordinate number of warnings ahead of this quarter. I think that's an overrated statistic.

The simple fact is that we're seeing a secular change in the technology world -- out of expensive hardware, including personal computers, and into handhelds or cloud-based systems. For most companies, the change is happening too quickly to have produced a reaction. That and Europe are a killer to earnings; the latter has been a bedrock investment for our tech companies, particularly Dell ( DELL) and Hewlett-Packard ( HPQ).

What to watch for, however, is the bounce-back. Remember that when companies warn, they do bounce back now. Sometimes they climb to an even higher level vs. where they came from. That's been particularly notable in Darden ( DRI) of late, which has been on fire in a world where gasoline is too high and employment is too low but yield is just right.

So, at this very moment you may think all is going wrong for the U.S. in terms of the actual statistics that determine and gauge an economy. You may think that the economy is decelerating and that there are nothing but shortfalls ahead.

But what you should be thinking about are capital flows to the U.S. from countries that are self-destructing. Europe's doing nothing to ease the pain of the austerity mandates. There are no continental initiatives. The only real imperative that I see the governments subsidizing is renewable energy, yet the number of jobs that creates is astonishingly low, and the efficiency of it is questionable at best. The Japanese are betting that the existing less-than-wealthy depositors and investors will stay with them as they try to inflate into gross domestic product growth. But the wealthy? They would have to be nuts or incoherent to keep their money in the yen. That country is insular, but capital flows sure aren't.

We know that the wealthy in Latin America are taking no chances. It wasn't as if Hugo Chavez, the late Venezuelan president, was ever repudiated by these regimes when he was alive. There's no mass move toward capitalism.

Finally, China? What can I say? The new president, Xi Jinping, has his work cut out for him, but wealthy Chinese are anxious to put their money here.

This is not a sobering picture for the U.S. Previously, the single biggest impediment keeping people on the sidelines had been the endless parlor game of guessing which month the Fed would pull the plug on the liquidity. As we know from when sequestration kicks in, next month's employment number should be worse than this past one, so the jeremiads from the "he has to let up on the liquidity" bunch will be silent.

That's a benign moment even if you are worried about earnings -- and that moment is not going away anytime soon.

At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, had no positions in the stocks mentioned.

At the time of publication, Cramer was long ___.

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