Jim Cramer: The pandemic led to 'one of the greatest wealth transfers in history'

"I think we're looking at a V-shaped recovery in the stock market, and that has almost nothing to do with a V-shaped recovery in the economy," the "Mad Money" host said.

The coronavirus pandemic and corresponding lockdown made way for “one of the greatest wealth transfers in history,” CNBC’s Jim Cramer said Thursday.

The stock market is rising as big business rebounds from state-ordered stoppage of nonessential activity, while small businesses drop like flies, the “Mad Money” host said.

“The bigger the business, the more it moves the major averages, and that matters because this is the first recession where big business … is coming through virtually unscathed, if not going for the gold,” he added.

The comments come after Wall Street took a breather during a mixed day of trading in the midst of hopes of a quick recovery from the pandemic. The Dow Jones Industrial Average ticked up almost 12 points to 26,281.82 during the session. The S&P 500 and Nasdaq Composite both finished the day in the red by less than 1%.

Investors reacted to worse-than-predicted economic data ahead of the May jobs report Friday. The Labor Department reported on Thursday that new jobless claims the past week came in at 1.877 million, while experts expected a read of 1.775 million claims.

Despite the ongoing economic woes, the S&P index of 500 large-cap companies, which is considered a benchmark for the stock market, is within striking distance of its levels from the start of the trading year. Since bottoming near 2,191 in March, the index is up about 42%.

The tech-heavy Nasdaq 100 has recovered all of its losses from the coronavirus meltdown and set a new high on Thursday. Many investors are betting on a V-shaped economic recovery, Cramer said.

“I think we’re looking at a V-shaped recovery in the stock market, and that has almost nothing to do with a V-shaped recovery in the economy,” he said.

In order to help small businesses make it to the other side of the pandemic, the federal government needs to pass another stimulus package, given the social distancing mandates that remain in place, he added. The American Bankruptcy Institute said Thursday that U.S. Chapter 11 bankruptcies in May ballooned by 48% compared to a year ago.

“That’s that pesky real world asserting itself, but the only big bankruptcy we’ve seen int he stock market is Hertz,” Cramer said.

Cramer said it still only scratches the surface of what impact the halt in global economic activity will have on the country.

The Senate on Wednesday sent a bill to be signed by President Donald Trump to relax rules on how businesses can spend relief funds provided by the Paycheck Protection Program.

“The companies that took the money just got a big break: they only need to spend 60% on their employees to get the loans forgiven, down from the original 75%. That’s important, as most small businesses fail because they can’t afford to pay the rent,” Cramer said.

“But, in the end, the stimulus package probably won’t be enough, for one simple reason,” he said. “It’s not going to work because of social distancing.”

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[Alias_]

...It was a great transfer of wealth ...just not to the public who desperately needs it

Instead the beneficiaries were big corporations and those who own assets

[mx]

Maybe it’s hard to admit, but Jim is telling the truth.

[michaelfratipietro]

Why do people keep hating on Jim. Get lost he's entertaining!

[fhowland]

Soon you’ll be able to get your law degree from Costco.

[mikkokarkkainen]

There is no downside risk anymore! Stocks sink 1 % and the FED will step in 🤑

[uqtyqol]

We get 1200.00 they get trillions, that's fair said nobody ever

[Eastbayrob]

Your looking at this from a consumer point of view and I agree it’s terrible but what is going to be even worse is what’s about to happen to the American work force.

[hoofgripweightlifting]

WOW!! I had to do a double triple-take. There is hope. Jim Cramer SPOKE THE TRUTH.

[joshuabreeding]

I work at Costco. It’s been Christmas for 3 months now

[WebMetal]

So, this is how Taco Bell becomes the last restaurant on Earth ala Demolition Man?

[ErikS-]

I said THAT already 2.5 months ago in a twitter to Trump and the Fed!

I can still remember Cramer saying at a dow of 22k that its tricky to buy stocks. And look now,
I can recall Cramer advising 3wks ago a person calling to sell his wayfair shares at 125 dollars.
The dow may be at 27k now, but the prices of the shares behind the index shifted MASSIVELY.

[rlhaff]

2 small local business that have been round for more than a decade in my area have gone under because they could NOT get any of the Gov funds. American Entrepreneurship is going down before our eyes.

[leroyrodgers]

Jim seems calm today lol no cocaine I see.

[nzshareman]

I can just understand him when he's not drunk imho

[IknowliavUS]

This would be true but in reality people wouldn’t care about social distance in two months top.

[PassportBrosBusinessClass]

CORONAVIRUS MADE THE STOCK MARKET CHEAP ENOUGH FOR ME TO BUY INTO

NOW I OWN BANK STOCK, BIG OIL, CRUISE LINES AND AIRLINES

I made $3500 this week alone

[skippyzk]

I've discovered it's cheaper for me to get food from Costco delivered on instacart than go to the stop and shop, trader Joe's or whole foods

[johnfromflorida]

O.k. stock market 101...investing in stocks is 'supposed' to be investing in shares of a business or simply put 'an investment in abusiness'....when airlines were running at 12% of capacity, retail stores close, car and truck sales slow...point made....the market 'should' reflect the true state of the economy, but instead it reflects an image of what rhe big investment companies and biggest holders of stocks and bonds want us to see! Where do you put your trust? Do the research...

[Curt_Randall]

I think the major wealth just transferred to itself.

[freeroamer]

The corner store was at one time a common entity throughout urban America. Not that long ago, it would have been hard to find a residential neighborhood that didn't have a corner carryout within a 2-3 block radius. The corner store died out with the coming of 7-11, UDF, and local gas station food marts. Other than kids having to find another place to hangout, I never noticed any sense of mourning over their disappearance. Times change. Times will always change. Sometimes for the good, sometimes for the bad.