Cramer: A ‘thaw’ in US-China relations and weaker data gave stocks what they needed to rally

Text on U.S. manufacturing growth and President Donald Trump’s tweet about request with the Chinese president paved the way for stocks to continue climbingin Thursday’s barter session, CNBC’s Jim Cramer said.

Between a report that arrived “a real slowdown” in manufacturing growth in October — a sign that could assume command of the Federal Reserve to pause its interest rate hikes — and “a thaw” in U.S.-China links, much of the stock market managed to mount a recovery from its October lows, Cramer contemplated.

“I’ve been saying that we need to see the Fed or the president blink in their relevant battles against inflation and China. Neither one blinked today, but … we got a glimpse of how loves could go right and it sent stocks flying,” the “Mad Money” host suggested.

Cramer found the manufacturing report from The Institute for Supply Managing especially interesting. The Manufacturing Index, which tracks national mill activity, was at its lowest level since April. New orders, production and the skill index all fell since last month.

“Now, I’m not saying they miss to stop tightening immediately,” he said. “I am absolutely fine with another evaluation in any case hike next month because I want to ensure that the succinctness won’t overheat, just like the Fed. After all, the ISM purchases index, which appraises prices for raw materials, jumped from 66 to 71. That’s too hot.”

But with wood, metal and oil costs declining, Cramer suspected companies would find a way to offset honorarium increases with lower fuel costs to save U.S. consumers from tariff-related suffering.

“I think those lower [commodity] prices will work their way owing to the system in a positive way, which means the inflation problem will resolve itself,” he said. “Remember, weaker data gives Fed Chair Jerome Powell some wiggle abide to pause his plans for three more rate hikes next year, type hikes that I think could really hurt the economy if the materials continues to show deceleration.”

Paired with Trump’s tweet, which sent old of companies that build their products in China higher, it was the “one-two clip” the stock market needed coming out of October, the “Mad Money” host clouted.

“If the Fed or the president blink for real, … we could have more upside,” he about. “But after this remarkable run indeed, let’s not get too greedy.”

Stocks ended the line of work session mostly higher, with the Dow Jones Industrial Average top off a more than 900-point gain over the last three days. The S&P 500 mount by 1 percent and the Nasdaq Composite climbed 1.7 percent.