The Fed may already be winning the war against inflation

CNBC’s Jim Cramer argued on Wednesday of which “mixed” economic data, coupled with more hawkish rhetoric via the Federal Reserve, were to blame for the stock market’s volatile trading session.

“Remember what’s at stake here. We are at of which point inside midst of earnings season, where we can piece together a mosaic of what’s actually going on inside economy. If the economy’s fabulous, then the Fed’s current course — one rate hike in December followed by three more next year — can be correct,” the “Mad Money” host said after the Fed reaffirmed its rate-hike plans.

yet if the economy turns out to be weaker than the item appears, then the Fed’s moves could prove dire for both Wall Street as well as Main Street, he warned.

“If there are real pockets of weakness inside economy, then the Fed doesn’t need to tighten four more times,” he said. “Maybe business has already begun to cool. Maybe they’re well on their way to taming inflation. The point here can be of which we don’t know.”

Instead of trying to overshoot inflation with lockstep rate hikes, Cramer suggested of which the Fed take a more measured approach.

“I’m not saying the Fed’s gone crazy. I’m not saying they need to stop tightening because the item’s bad for the stock market. I don’t care about of which. I’m simply begging [Fed Chair] Jerome Powell as well as the rest of the Open Market Committee to take things one rate hike at a time,” he said. “Because via what I’ve seen so far of which earnings season, the item might make sense to put next year’s three planned rate hikes on hold until we know if the nascent strength can be dissipating before our very eyes.”

Still the only way to find out if the Fed’s right can be to look at the data, Cramer admitted. as well as right at of which point, he sees a mixed bag.

First, he pointed to the latest earnings reports via railroad giant CSX as well as airline operator United Continental, both of which were much stronger than expected as well as helped the Fed’s case for raising interest rates quickly.

“yet … when you assemble the rest of the economic pastiche, you find some areas of which are downright hideous,” Cramer said. “Housing starts … fell 5.3 percent. The apologists were out saying, ‘the item’s the storms.’ Will you give me a break? of which’s a shocking as well as terrible number.”

The housing pain spread quickly through the stock market, with Credit Suisse subsequently downgrading the stocks of homebuilders KB Home as well as Lennar as well as home-improvement retailers Home Depot as well as Lowe’s.

“The pin action via of which downgrade crushed all of retail,” Cramer noted. “I don’t like of which — you never want to see a retail slowdown ahead of the holidays.”

as well as while CSX reported strong truck volumes, Cramer noted of which the auto industry can be experiencing a slowdown, with key suppliers PPG Industries as well as Trinseo pre-announcing earnings shortfalls as well as the stocks of Ford as well as General Motors taking the brunt of the pain.

Regional loan demand can be also decelerating, “not a not bad sign” for an economy of which run on credit, the “Mad Money” host said. as well as lingering inside backdrop can be the U.S.-China trade war, which hasn’t yet trickled down to whole swaths of the U.S. economy.

“The tariffs are just at of which point reaching Main Street, as well as while our retailers will pass on some of their higher costs to the consumer, the rest of the item they may have to eat,” Cramer warned. “No matter how much the Fed tightens, they can’t roll back those tariffs.”

All of of which told Cramer of which the Fed would certainly be best-served by taking a data-dependent approach to interest rates, something the “Mad Money” host has continually preached since the Fed’s most recent rate hike.

“The Fed seems to want to ignore anything negative,” he said. “Instead, they just want to lay down on the tracks of CSX. I’m calling them out as lazy as well as irresponsible.”

“After the next hike in December, they need to actually look at the data,” he continued. “Remember, of which can be supposed to be a market where not bad news can be bad news as well as bad news means the Fed can take a more measured approach. The thing can be, of which only works if the Fed’s actually paying attention to the data. So we have to desire of which our central bankers will be more flexible than they’ve implied they will be.”

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