Fed’s fight against inflation will beat ‘shaking’ stocks

CNBC’s Jim Cramer said on Friday that the Federal Reserve’s efforts to lower inflation by raising interest rates will inevitably also dampen “stocks that used to fly high” — even those that were “legitimate” company.

The stock market is “a great risk to contain inflation. It is not only collateral damage, but also one of the [Fed Chair Jay Powell’s] targets. Not every stock, but certainly those with volatile valuation backgrounds are trading normally in terms of sales or even orders,” he said.Crazy money‘ said the presenter.

“While we wait for the Fed to put the brakes on, stocks that have been high with no earnings and little sales will continue to drift lower and lower, because they also represent a more front” in controlling inflation.

Shares fell on Friday, albeit to a lesser extent than Thursday’s decline, with both days surpassing the rally that followed Wednesday’s Fed meeting.

Fed interest rate increase increased by 50 basis points and noted that undertaking larger rate hikes “is not something the committee is actively considering” to control inflation.

“I don’t think Powell is intentionally trying to downplay irrational exaggeration in specific stocks like Shopify or … HubSpotor Grill or Bill.com. They’re all legitimate companies, it’s just that their valuations are too high and that contributed to the over inflated IPO and SPAC bubbles,” he said, referring to the offerings. IPOs and special purpose buybacks.

Still, Cramer said that high-quality companies with real products, profits and shareholder value have performed well during Fed tightening, and he believes the economy as a whole is strong enough to be able to survive. raise interest rates even 100 basis points.

“Powell has ruled out a 75 basis point rate hike. I see that as a mistake. …For me, it’s better to get over the pain as quickly as possible,” he said.

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