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NEW YORK (TheStreet) -- The Federal Reserve may be taking center stage right now, but that's about to change, Jim Cramer told his "Mad Money" viewers Wednesday. Cramer said after the first of the year the Fed will start becoming a sideshow, and that's the time investors want to be owning stocks.
The tug-of-war between stocks and bonds was evident again today as the most recent employment and housing data were first received as bad news but then good news by the end of the day. Why the differing opinions? Cramer said it's because a transition is at hand, one where those worried about the Fed, or the "good news for the economy is bad news for stocks" crowd, is making its exit while those who know that good news for the economy is good news for earnings are beginning to pile in.
Today's housing numbers, the strongest in almost three decades, cannot be ignored, Cramer said. The Fed's policy of keeping rates low to spur activity is clearly working. Housing permits are up and banks are more willing to lend, and that can only lead to one thing -- the Fed beginning to tighten.
Cramer said the markets will likely be buoyed by money managers piling into stocks in order to beat the averages before the year ends. When January rolls around, the stock pickers will follow, as they know that all this increased activity will mean better earnings for companies in the first quarter. Bonds, on the other hand, will continue to become increasingly unattractive, as stocks with big yields and bigger earnings will garner all the headlines.
Perhaps the best thing to do with retailers this holiday season is stay away, Cramer told viewers. This group has become wildly inconsistent and offers investors nothing but a total lack of clarity.
That was clearly the case with Express (EXPR), the normally consistent retailer with 630 locations that has seen its stock up 50% for 2013. After results "did not meet expectations," shares of Express plummeted 23% in today's session. Meanwhile, Ascena Retail Group (ASNA), purveyors of Lane Bryant and Justice, had been hit or miss all year but this quarter delivered great earnings.