Jim Cramer: The Stimmy Crowd, Cathie Wood, and Elon Musk – RealMoney

Stimmy versus bonds. That's what this market has become. The stimmy is the stimulus money that comes into the market because of the checks from the Feds. That money's for younger investors to buy exciting stocks and perhaps bitcoin. The bonds? That's shorthand for the people who sell exciting stocks because they fear interest rates going higher, a signal that inflation is coming and that destroys the long-term value of the exciting stocks. It doesn't hurt bitcoin, but that's another story.

Young investors have had little interest in following Treasury's because interest rates to them mean nothing about the fundamentals of the stocks they are buying.

Case in point? Tesla (TSLA) . This stock is the ultimate growth vehicle and has been a beacon for so many younger investors who want to bet with Elon Musk, the CEO and founder of the company.

However, the stock's been stalled and has fallen from $900 to about $650 until this weekend when the most important person in the stock business, the person the younger people connect with most, Cathie Wood, the manager of ARK Innov (ARKK) , the best performing fund last year, said it's worth far more than that. She thinks Tesla can go to $3000 in 2025, although that's just her base case. Her bull case if $4000. Even her bear case of $1500 is still more than a double from here.

Younger investors have flocked to the stock today because of Wood, who talks about how Tesla could be making five to 10 million cars at a low cost, and there might be fully autonomous cars and Tesla robo-taxis by then. All the intriguing concepts that could truly catch young peoples' fancy. Let's throw in that perhaps Musk reinvents the electric grid in the country, with a gigantic solar farm somewhere in the Northwest of Colorado that powers everything and is owned by Tesla, then you have something worth a lot more than the stock sells for. If you disintermediate the whole national electric grid and create autonomous driving cars you might have something that gets you a much higher stock.

But investors who take their cue from the bond market are taking the other side of this trade betting that the stock will fall if interest rates, which are going down today, reverse direction and head higher as they have the last seven weeks.

The decline in bonds and concomitant rise in rates has led to wholesale destruction of all tech, and is the proximate cause for Tesla's fall from grace. To the majority of big gun managers I bet they think today is just a respite from the selling and they believe that rates are headed higher no matter what. So they want to short Tesla or dump it along with all of the other high growth stocks.

They don't just disagree with Cathie Wood's vision. In fact they don't even care about it because if inflation rages Tesla's stock just isn't worth all that much and certainly less than it is selling for which is about $700 billion, far more than any car company.

Will Tesla's stock start going up now? I think only if rates stop going higher. I just don't think there are enough stimmy checks out there to budge it. I think the younger crowd isn't powerful enough to fight the interest rate-related selling.

Look, I don't want to put the knock on Wood. She's too good. But I think that if you are going to get a multitrillion dollar valuation Musk is certainly behind schedule and the 2025 timeframe might not matter to the stock if the inflationistas win out.

In the end we have a battle not about inflation but about the size of the new cohort that's doing the stimulus check buying. This group managed to take GameStop (GME) from $15 to $483. Who's to say it couldn't do the same thing to Tesla with its concentrated stimmy buying. With Cathie Wood's backing, it's not an insane thought. In fact, it might be the best call of the year. But only if the stimmy crowd keeps throwing money at Wood and is hooked on stocks and can't get enough of what Musk's selling.

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Jim Cramer: The Stimmy Crowd, Cathie Wood, and Elon Musk - RealMoney