- The stock market has brushed off a lot of bad news because public companies are poised to thrive as the pandemic threat recedes, “Mad Money” host Jim Cramer said on his Thursday show.
- “This is the first recession where big business … is coming through virtually unscathed, if not going for the gold,” he said.
- However, small businesses are “dropping like flies,” leading Cramer to describe the pandemic as “one of the greatest wealth transfers in history.”
- Large retailers and restaurants can more easily follow public-health measures such as social distancing and requiring customers to wear masks than their smaller rivals, Cramer added.
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The stock market has shrugged off an economic slowdown, historic unemployment, mass protests, and more than 100,000 coronavirus-linked deaths to regain most of the ground it lost earlier this year.
Its swift recovery reflects the fact that the largest public companies – which drive the indexes – are emerging from the pandemic in strong shape, CNBC “Mad Money” host Jim Cramer said during his Thursday show.
“The market doesn’t represent the economy, it represents the future of big business,” he said. “This is the first recession where big business … is coming through virtually unscathed, if not going for the gold.”
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However, smaller companies are in much worse shape, Cramer continued.
“Small businesses, the ones that aren’t publicly traded, they’re dropping like flies,” he said. “It’s been one of the greatest wealth transfers in history, and it’s a wealth transfer that was mandated by the state.”
“It will have a horrible effect on our country, and we’ve barely begun to see the impact,” he added.
Cramer pointed to the 48% surge in bankruptcies year-on-year in May, despite only a handful of public-companies going bust, as proof of the uneven playing field. He added that public-health measures only worsen that imbalance.
“Social distancing has become the real bane of small business, and a boon to the larger ones,” he said.
Cramer gave the example of Costco, arguing its mask requirements and massive aisles mean customers feel safe shopping there. Meanwhile, its smaller rivals are exiting the pandemic in debt, behind on their rent, and with fewer customers as they can’t compete with Costco on pricing and safety.
“Go aisle by aisle, and what you see is the destruction of nearly every small to medium-sized retailer right there in front of you,” Cramer said.
The “Mad Money” host added that many restaurants will also struggle to survive if they can’t pack their premises.
While big chains can afford to partner with the likes of UberEats and Grubhub, independent eateries “get crushed by delivery because the real money’s at the bar, and delivery takes a chunk of their profits,” Cramer said.
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