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Jim Cramer says stock market will ‘blast’ past current levels if trade questions are resolved

CNBC’s Jim Cramer said Thursday that resolutions to a pair of major trade issues would be a boon to the stock market, arguing it’s time investors factor positive conclusions into their strategy.

“What happens to the stock market if Larry is right and we get a new trade deal with Mexico and Canada before Thanksgiving and we see concrete results from our negotiations with China?” the “Mad Money” host said, referring to White House top economic advisor Larry Kudlow. “In that case, I think stocks will blast right through these levels and go much higher.”

In an interview earlier Thursday on CNBC’s “Squawk on the Street,” Kudlow said there is real momentum to build off the preliminary trade agreement with China. He also suggested the U.S.-Mexico-Canada Agreement — a replacement for North American Free Trade Agreement — could be signed into law by Thanksgiving.

While Cramer conceded he’s not a neutral observer, since the two men co-hosted a TV show in the early 2000s, he said he really believes Kudlow in this instance.

“I thought he might be blowing smoke, so I gave him a chance to dial the whole thing back, take back his comments by asking about both points a second time,” Cramer said of his former CNBC colleague.

But since Kudlow said his comments had been “checked off” by U.S. Trade Representative Robert Lighthizer, Cramer said he feels more confident.

“Lighthizer and Kudlow are typically in opposite camps when it comes to the trade war,” Cramer said, with Lighthizer holding more hard-line principles.

“Now normally when Larry says something positive, the hardliners shoot him down a few days later,” Cramer said. “If they’ve already signed off on his statements, though, while doesn’t that make it a very different story?”

And this time, the story could spell positive news for the stock market, Cramer argued.

That’s because the uncertainty around both these trade issues is holding back the economy — “and thus the market,” Cramer said.

“We could get a really positive domino effect if we pass the NAFTA replacement bill and then start getting even small concessions out of China,” Cramer said. “In that scenario, earnings will explode for the weakest part of the economy, the industrials.”

Beyond that, Cramer said long-term interest rates should begin to inch higher, putting a stop to the inverted yield curve and the need to “worry so much about” the actions of the Federal Reserve.

“Will Larry be right? I don’t know, but it’s a real possibility,” Cramer said. “And after this morning, you need to start factoring it in before you start doing a lot of selling right into this market.”

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