Prominent market commentator Jim Cramer said on Thursday Federal Reserve Chair Jerome Powell’s inflation remarks on Wednesday have confirmed that investors shouldn’t exit the market over recession fears, according to a CNBC report.
“Unless the super hawkish Fed heads who want to raise short rates to 5% to 7% are silenced, we must be ready with a quarter of one foot out the door,” he said, adding, “Yesterday, Powell … muzzled the hard-liners. To me, that’s a green light to stay in stocks.”
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Powell had said the central bank may slow the pace of rate hikes as soon as December while also observing there is a long way to go in bringing down inflation. Fired by the remarks, Wall Street indices soared with the SPDR S&P 500 ETF Trust SPY closing 3.14% higher on Wednesday while the Vanguard Total Bond Market Index Fund ETF BND ended 0.78% higher.
Cramer, however, noted that reading the “Fed tea leaves” will continue to be critical for determining which areas of the economy will be crushed by the Fed’s tightening and which will remain intact, the report said.
Crushing Speculation: Cramer also called on the Fed Chief to crush speculative stocks that became inflated during the height of the pandemic and to discourage investing in cryptocurrencies.
“It is touch-and-go until we get some indication as to whether he’ll be willing to declare victory after he crushes speculation, hoarding, profiteering and inefficiency without ruining the rest of the economy,” Cramer said.
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