Jim Cramer on Slowing Economy

by Laura Ehrenberg-Chesler on November 16, 2018

in Credit Crisis,Earnings,Economic Indicators,equity market,Fed policy,interest rates,Investment Strategies

Jim Cramer; from comments today posted on the CNBC website:

There are degrees of slowdowns that, nonetheless, can cause an awful lot of havoc and cost a lot of jobs, and that’s what we’re on the verge of here,” he said. “That’s what the markets are saying. That’s what the CEOs are worried about offline.”

The situation reminded Cramer of when, on the cusp of the 2008 financial crisis, his corporate sources confided in him that the Fed “seemed to be out of touch … with what was happening” on Wall Street, he said. That led to his now-famous “They know nothing!” rant blasting the Fed for its lack of diligence.

If the Fed and Trump stay the course on their policies, the weakness will feed into the stock market as it did on Thursday, the “Mad Money” host warned. The action in shares of Walmart, Home Depot and Macy’s told the story, he said: all three companies recently reported strong quarters, but subsequently saw their stocks plummet on economic fears.

“This end-of-cycle logic raises its head everywhere,” Cramer said. “Everything was good, so good that it can’t ever be better because we’re at the end of the cycle. ‘Late-cycle.’ It’s become almost circular reasoning. The stock can’t go higher because it’s the end of the cycle and it’s the end of the cycle because the stock’s down.”

That, combined with the chief executives’ warnings, told Cramer that stocks can’t possibly be safe while the bearish narrative about debilitating economic weakness reigns supreme.

“If the Fed changes course and says ‘No more rate hikes … next year unless the data gets more positive,’ or if President Trump gets a trade deal with China or even does this kind of truce, then the end-of-cycle proponents may have to change their tune and the market can rocket higher,” he said. “Otherwise, though, rallies like today are going to be used to re-position portfolios because the bears have the late-cycle microphone and they just will not let go.”

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