Inflation won’t ease soon if Tuesday’s rally goes on, warns Jim Cramer

CNBC’s Jim Cramer said the Federal Reserve needs to ease Tuesday’s market gains to beat inflation as quickly as possible.

“Right now, the best outcome would be for the average to come down rapidly, so [Fed Chair Jay Powell] Can put an end to it,” he said.

“Powell had better hope the race wouldn’t last, or else the beach house prices, new construction, lenar Homes, processed food stocks and oil prices aren’t going down and are staying down anytime soon,” he said in his latest earnings call, referring to the homebuilder’s warning that buyers will continue to buy existing housing with sales slowing in some markets. Has pushed back against prices.

Shares up on Tuesday After the market is closed on Monday due to the holiday of June. While the rally was a welcome respite for investors after last week’s fall, many fear the return will be short-lived as Wall Street looms large.

Cramer said that while he generally favors higher stock prices, the Fed needs a market drop to make up for the drop in inflation. This, he said, is because a bearish market will curb spending and keep people in the labor market.

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

“If Powell can get this market to go down and stay at the bottom, negating much of those gains, then the rich are less likely to spend aggressively and have many more people in the workforce. are more likely to stay when they might otherwise retire.” He added.