Jim Cramer: These are the alternative universes of the economy

There are two universes. There is a booming economy and a declining economy, and the fantasies of each other may be the reality – even if they are bleeding sometimes.

That's what I feel after looking at this series of extremely positive news about the results of gigantic retailers such as Walmart (WMT) last week, Home Depot (HD) on Tuesday and now Target (TGT) and Lowe's (LOW) Wednesday, as opposed to tarnishing it drove the market off a cliff barely a week ago.

The question is which of the two is right, the sturdy one we saw this week or the shaky one we visited a few days ago – the one who invited me to last week's "Today Show", in which one should not panic, again, panic was on the agenda?

Let's dissect these two worlds, because they are certainly in collision.

The first scenario, the one that sharply reduced equities last week, is about bond market machinations, that short-term rates – those controlled by the Federal Reserve – are higher than long-term rates. This strange inversion always precedes a recession, no if. It's still a sign that the US Federal Reserve is irrelevant and that the Fed has caused a lot of recession, including the most severe, big recession of just 10 years ago.

Therefore, we probably can not conclude anything, but a recession awaits us. It is unavoidable.

The reason? Simple: the world is slowing down and it is now on our doorstep because of the global trade war. The President of the United States decided that it was worthwhile to slow down our economy if it meant we were preventing China from destroying our jobs, stealing our intellectual property, spying on us, sending us killer fentanyl and to do everything, but to throw bricks from the Great Wall of China.

All this makes so much sense. The yield curve has been reversed, because of our commercial intransigence, the slowdown in trade and a Fed that has no idea what it was, to quote our president. After all, did not the rates help to cause the Great Depression? You can do away with the coming recession and it's time to fill up on spam and Velveeta for the dark days ahead. How could the market not collapse?

Now let's take a look at Wednesday, which brought the market back to where the first universe took its toll.

The day began with the profits of Lowe's and Target, both strong enough to confirm what Home Depot and Walmart had said before them: The consumer is good and actually stronger. The rates? They are not a factor. Nobody is awesome, I guess. Price inflation? What about deflation? Traffic is rising, a classic sign of a distraught consumer and, at the end of the quarter, purchases have accelerated.

Entrepreneurs, in particular, have accelerated their purchases, partly because of extremely low rates. Consumers, convinced that jobs are plentiful – and rare workers – have been encouraged to invest in their homes, which are gaining in value as they become more affordable as mortgage rates fall.

The leaders of both companies were informed of work-saving initiatives that helped keep prices down. These initiatives are often launched in Silicon Valley – we spend a lot of time in California to learn about these new technologies that naturally lead to deflation.

As soon as we learned these positive results, Brian Moynihan, CEO of Bank of America, explained that the reason for our lowest possible interest rates is the demand for our bonds issued abroad, and not because of the weakness of the economy.

Why not? As he said, if you earn less than nothing with the possession of German bonds at age 30, why would not you buy dollars then our own 30 year bonds that yield more, if you are able or allowed to do it?

The inability of Europeans to grow their economy is at the base of their low rates and they do not make our economy down, do not hurt jobs and trade – they drive down our rates, accelerating our economy in the most generous way.

In fact, the only thing holding us back, the president said, is that Federal Reserve Chairman Jay Powell is so impertinent that he does not want our rates to be as low as those of the Germans, without any reason other than this one. he is wrong.

Yes, the alternative universe is in a good mood, save the rates, and Home Depot has taught us not to be terrified because all their suppliers are leaving China, so they can not sink us.

Which universe is right? The one where our rates show a dramatic decline in activity and we import weaknesses overseas, which will plunge us into a recession, which still causes problems of unemployment and credit?

Or is it the one where the biggest problem is finding workers to meet the demand of a booming economy?

It's funny, I'd like to say that the optimistic alternate universe – one we should not fear, is too optimistic, to quote my former partner, Chief Economic Advisor Larry Kudlow – to all the chances of taking it away.

But experts are constantly talking about "no if, but when" there will be a recession, because the president is not going to lower tariffs, Chowderhead Powell will not lower rates fast enough – something that the minutes of the Fed seemed indicate were released at 2 pm today – and we could have another performance reversal at any time.

This discourse fuels fear, which undermines confidence, causing a pause for those who want to build or hire, which will lead to a slowdown in consumer spending and investment.

It is easier to fear than to defend. Worse, most experts reject the comments of Walmart, Amazon (AMZN), Target, Costco (COST) and Home Depot as anecdotal, but the yield curve is evangelical and if you reject it, you are doomed to look like a fool when the recession occurs. Once again, the inescapable word comes to mind.

You know what's a pity? WATCH, my acronym for big, successful retailers, is anything but anecdotal. These companies are probably behind the behavior of almost every family in this country. Those who can not afford it go to the dollar stores and they are booming too.

Not only that, but the WATCH companies are so powerful that they have all dismissed tariffs as virtually meaningless. Lowe's, who has an excellent neighborhood, has not even had any questions about fares, as this horse has already been overworked.

Me? I do not want to spread fear.

But it does not bother me to spread knowledge and we know that if the president calm down the rhetoric about China and just say "we're talking, I'll let you know", rather than bragging about them as a kind To speak wide receiver – and if advanced head economists would learn to trade currencies and bonds as I did – we would be much less fearful and much more confident.

We do not just have nothing to fear, but the fear itself, we have the fear that comes from angry rhetoric, scary jeremiads and people who do not read or listen to the calls in conference, because they think they are irrelevant or because they are. so boring.

It's a pity.

Maybe if they made the calls more exciting, the fearsome economists and Fed officials could understand the fragility and get into the bullish program.

Amazon and HD are assets in Jim Cramer Action Alerts PLUS club member.