Inflation won’t come down any time soon if Tuesday’s rally lasts

CNBC’s Jim Cramer said Tuesday’s market gains needed to come down so the Federal Reserve can beat inflation as soon as possible.

“Right now the best outcome would be for the averages to drop quickly, so [Fed Chair Jay Powell] can end it,” he said.

“Powell better hope this run doesn’t last or else these beach house prices, new construction jobs, Lennar homes, processed food stocks and oil prices won’t come down and stay. not low anytime soon,” he added, referring to the homebuilder’s warning in its latest earnings call that buyers have pushed back current home prices as sales slow in some markets.

Shares rose on Tuesday after the market closed on Monday due to the June 16 holiday. While the rally was a welcome reprieve for investors from last week’s declines, many fear the comeback will be short-lived as recession fears loom on Wall Street.

Cramer said while he normally favors rising stock prices, the Fed needs the market to go down for inflation to come down as well. The reason, he said, is that a falling market will dampen spending and keep people in the job market.

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“In recent years, abundant stock market gains have allowed winners to spend like crazy,” he said.

“If Powell can drive this market down and stay down, reversing a lot of those gains, then the wealthy are less likely to spend aggressively and a lot of people are more likely to stay in the workforce when they would have otherwise retired,” he added.

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