CNBC’s Jim Cramer said Monday that stocks will jump if the Federal Reserve puts a lid on interest rate increases and the Trump administration does not back away from hiking tariffs on China. Wall Street is anticipating Fed Chair Jerome Powell’s comments Wednesday on monetary policy and President Donald Trump’s final decision on a planned Dec. 15 tariff hike on items, including laptops and smartphones, assembled in China.
“If Powell says nothing about tightening and the president holds off on the next round of tariffs, this market will soar,” the “Mad Money” host said. “But if they both go the other way, stocks are going to sell off, and you have to be ready to buy them into weakness caused by the perennial pessimists who dominate, endlessly, our airwaves.”
There is “no reason” for Trump to step away from his threat to put more pressure on the Chinese government in the ongoing trade war, Cramer argued.
Last week, he suggested that the White House could leverage the health of the U.S. economy, as evident in November’s strong jobs report, to issue higher tariffs and force China to give more concessions. On “Squawk on the Street” Monday morning, Cramer labeled China’s move to ban foreign hardware and software, including Microsoft, Dell and HP, from its state offices a “provocation.”
“I think they’re looking for creative ways to retaliate against the tariffs ... but whatever their motivation, these are not the actions of a government that’s eager to make a deal,” Cramer said. “I say fine, the trade war’s hurting China a lot more than it’s hurting us. Don’t believe the conventional media, they’re wrong — they haven’t done the work.”
Negative trade war news will cause stocks to sell off, he said. The stock markets will also plunge if Powell signals that there is chance for an interest rate hike in the future, the host added.
The current benchmark target rate sits at 1.50% to 1.75%.
“I’m making it my mission to prepare you for that combination or anything that could bring out the Negative Nancies,” Cramer said.
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