CNBC's Jim Cramer and the "Squawk on the Street" crew discuss how the May jobs report shows the markets had a better read on the economy than many thought.

Following a “superb” jobs report, Jim Cramer said hedge funds managers who made big bearish predictions about what the coronavirus pandemic would do to the market and economy were wrong.

And the relentless higher price action that many doubted was right.

“The market got it right,” CNBC’s Cramer said on “Squawk on the Street” on Friday. “The big hedge fund guys who told us that this was going to be the highest and worst and most dangerous since 1999, well they made an ill-advised prediction.”

Stocks soared Friday on news the U.S. added 2.5 million jobs in May, the biggest increase on record, demonstrating the economy has already started to recover from the coronavirus crisis. The unemployment rate declined to 13.3%, according to Labor Department data that was far better than economists had been expecting.

Numerous big-name hedge fund managers have been skeptical of the stock market’s swift bounce back from its March low, arguing equity levels weren’t pricing in the horrible economic data yet to come and the uphill battle of developing a cure for Covid-19.

“There were so many people who thought we had to retest the bottom,” said Cramer.

Billionaire hedge fund investor David Tepper told CNBC in May the stock market is one of the most overpriced he’s ever seen, only behind 1999. Hedge fund manager Stanley Druckenmiller said in May “the risk-reward for equity is maybe as bad as I’ve seen it in my career.”

At one point in March, Pershing Square’s Bill Ackman said, “hell is coming” and that hotel stocks could go to zero, before going long as lockdowns were implemented by states.

Cramer, instead, is listening to the CEOs of beaten down industries for guidance on where the market is headed. Cramer said they are seeing “pent up demand.”

“People want to travel,” said Cramer. “If people want to shop and people want to fly, and they’re going to get that opportunity as we open, it will take only a second wave of the pandemic that can slow this things down.”

The Dow surged more than 700 points Friday morning.

The S&P 500 is now up more than 44% from its March low.

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