Avoid names losing money after Powell’s tough stance on inflation

CNBC’s Jim Cramer said Monday that investors whose portfolios include losing companies should prepare for more downside in light of Federal Reserve Chairman Jerome Powell’s speech in Jackson Hole last week.

“Until Friday, I didn’t know if Powell had the guts to pressure the economy with relentless rate hikes. But just by signaling that he won’t stop, like he did on Friday, Powell could have a chilling effect on all banks fearful of making dodgy loans, especially companies that cannot tap public markets — which means pretty much all financial institutions worried about all lending,” the lender said. host of ‘Mad Money’.

In a much-anticipated speech on Friday, America’s top central banker warned that the US economy could face “some pain” as the Fed remains determined to stamp out the highest inflation in four decades. Shares plunged on Friday as investors digested Powell’s brief but hawkish speech, and selling continued on Monday.

While some on Wall Street hoped the Fed could afford to take a less aggressive stance in the coming months, Cramer said investors now know that “Powell is all about business.” Ultimately, Cramer said he thinks investors want inflation to come down, adding that some pockets of the market will feel the Fed’s action more directly.

“If you have stocks of companies that have good balance sheets and lots of cash…you’ll do just fine,” Cramer said, noting that investors in dividend-paying stocks should also do well. “But what if you own the stocks of companies that are losing money? Powell’s message is to start selling now before you completely close the door on their financing.”

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