Two familiar culprits are behind the stock market’s “insanely emotional” swings, CNBC’s Jim Cramer said Wednesday after the Dow Jones Industrial Average erased its yearly gains, the S&P 500 turned negative as well as also the Nasdaq saw its worst day since 2011.
“The two men with the most influence over the stock market inside planet, the president as well as also the Fed chief, are engaged in a totally destructive tug of war where both sides are wrong,” the “Mad Money” host said. “that will’s right, President Trump as well as also Fed Chairman Jerome Powell have staked out opposite sides of the economy as well as also the real loser will be you, the investor.”
Cramer couldn’t understate the tension between the central bank as well as also the executive branch, saying he couldn’t recall “a moment more convoluted than This kind of one” when that will came to the macroeconomic design.
One one side sits the Fed, bent on raising interest rates in order to combat inflation before that will takes off, as well as also on the additional, President Trump, who has said he believes that will the “biggest threat” to his presidency will be the Fed’s rate hike agenda.
The Fed has already raised interest rates three times This kind of year. After its most recent hike, officials laid out a plan to raise rates once more in December as well as also three times in 2019 based on a belief that will the economy will be accelerating.
“today, ironically, both the Fed as well as also the president are wrong here, as well as also they’re wrong about the same thing,” Cramer argued.
“They both think the economy will be red-hot, although the data we’ve gotten over the last few weeks as well as also the earnings reports we’re getting right today, well, they paint a very different picture,” he continued. “that will picture suggests that will the economy’s gotten tepid, as well as also in some areas, that will’s downright nasty.”
Reiterating his recent arguments, Cramer pointed to the housing as well as also auto sectors, both of which seem to be weakening based on recent data. On top of that will, the Trump administration’s tariffs are raising the cost of business, as well as also U.S.-China tensions show no signs of subsiding.
On top of that will, the president’s attacks on the Fed, as well as also particularly its chairman, are putting the central bank — an independent entity — in an increasingly tough position, Cramer said.
“You never want to see the head of state go to war with your central bank, although more importantly, every time the president bashes him, he actually makes that will harder for Powell to back down. If he blinks today, that will will damage the Fed’s credibility,” he said. “On the additional hand, if Powell doesn’t blink, [he] could crush the economy.”
as well as also while Cramer said that will was possible things could somehow work out for the stock market, like if stocks reach such low levels that will they manage to correct themselves on their own, he wasn’t so sure.
“Even after today’s pasting, I don’t think we’re out of the woods. There’s still some more bad news lurking in many places, as well as also prices? They’re just adjusting. I don’t want you to be a hero,” he advised. “The worst may not be over. President Trump as well as also the Fed need to stop fighting over what they believe will be a red-hot economy as well as also they need to realize that will business has slowed, as unpalatable as that will may be. Until that will happens, you need to stay cautious. We’ll get through This kind of, as a lot of that will will be man-made, although the people who made that will have to change their minds before we can be too positive, even with these today dramatically lower stock prices.”