[video] Jim Cramer: Moment of Truth for the Fed Obsessors


NEW YORK (Real Money) -- If it weren't for this week's Federal Reserve meeting, is there any doubt in your mind that the market wouldn't be appreciably higher? Think about what has happened in the last few days. We've had several terrific analyst meetings and presentations that have told us things were going well or improving in banking and in retail.

Remember that full-day Home Depot (HD) meeting in which management indicated that things are much better than expected? Recall that sit-down I did with Macy's (M) CEO Terry Lundgren, who said the holiday season's going well, something echoed by Manny Chirico at PVH (PVH)?

How about this? There isn't just one takeover in the air -- there are two. Reports say Charter Communications (CHTR) will soon make an offer on Time Warner Cable (TWC), and word also has it that Sprint (S) is considering a bid on T-Mobile (TMUS). For each of these, both the potential acquirer and the potential target have been climbing higher in the process.

Or how about that the biggest fear of January, the potential for a government shutdown, has been taken off the table? Isn't that huge? How about the idea that we won't be looking at a U.S. debt default because the ceiling might be raised by Republicans, who are giddy with the health care snafus and don't need to try to rein in costs in a losing effort that would only hurt sales, corporate profits and therefore the stock market? Nothing's a done deal in Washington, but there does seem to be a short-term cessation in rancor -- perhaps until the election?

But it really doesn't matter, does it? All that people really think they care about is the Federal Reserve's decision on Wednesday. If the central bank changes its tone -- if it says the Fed is getting close to slowing bond buying, and that it has accomplished much of what it thought it could accomplish -- then, to read the blogs and listen to the commentators, we will see an immediate decline of some magnitude. What magnitude? Judging by the chatter, it would seem to merit at least 5%, no?

The real question is: How could it not? How could this most talked-about event when it comes to the stock market not produce that kind of decline? If it doesn't, can I ask you, what was the point of the whole dialogue?

Think of it like this. For the past 35% of the S&P 500's increase, we have been told that a tapering of bond buying would cause an excruciating selloff. Isn't that why we talk about it so much? We clearly don't prattle about it endlessly because of what it will do to bonds, although that's what it's supposed to be about.

We care about what it will do to stocks.

Now: If this is what we have been so worried about, how could it not repeal a substantial chunk of what was not supposed to occur if the Fed had been tapering? How could it not wipe out a good deal of the advance that would never have happened if we had simply listened to the cause-and-effect folks chatter on inanely about a stock market that they know little about?

I will go one step further. If the market doesn't take at least a 4%-to-5% hit on the beginning of a tapering, then we'll have spent a serious amount of time discussing something that has not been materially important to the advance. At the very least, it has not been as important as the metrics I always harp on, like sales, earnings, dividends, restructurings, management, execution and secular themes.

In other words, it is put-up-or-shut-up week for those who have held so many hostage with their sword of tapering. If the Fed does announce they'll cut back on bond-buying, and if the market doesn't then get hit at least 5%, will they fall on that sword?

Or will I have to run them through with it?

Oh, and we should get this straight. Let's say it is business as usual at the Fed because the U.S. is not yet at 6% unemployed. Let's say the housing market is shaky as you would think, if you had listened to Toll Brothers (TOL) last week, and that retail is still in the doldrums, if you've taken your cue from Wal-Mart (WMT) and Target (TGT). If all of this is the case, then all that good news I just mentioned? Let the buying floodgates open for all who will want in now that the big bad event is behind us.

At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, was long M.

Editor's Note: This article was originally published at 7:16 a.m. EST on Real Money on Dec. 16.

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