Jim Cramer, a well-known stock market expert, recently warned of the current turbulence in the stock market, describing it as “artificially created”. He argues that the downturn is independent of the economic strength of the companies and is instead driven by political and economic uncertainties. Cramer draws parallels to the Euro crisis of 2011, when the intervention of the European Central Bank (ECB) under Mario Draghi calmed the markets, even though corporate profits were also strong at that time.
Main Reasons for the Turbulence
- Domestic Political Risks in the USA: Cramer emphasizes that domestic political risks, such as Donald Trump’s criticism of Fed Chairman Jerome Powell and the looming dispute over the debt ceiling, could shake investor confidence. This could even lead to a downgrade of U.S. creditworthiness, similar to 2011.
- U.S. Tariffs and Geopolitical Tensions: Discussions about U.S. tariffs and geopolitical tensions also contribute to the uncertainty and weigh on the markets.
- Unpredictability of Politics: Cramer also warns about the unpredictability of politics, particularly by Donald Trump, which overwhelms the markets. Emotions instead of facts drive prices, leading to further volatility.
Recommendations and Predictions
- Reduction of Holdings: In light of the market turbulence, Cramer has recommended reducing holdings in certain companies, such as NVIDIA, as their stocks have lost significant value.
- Further Setbacks Expected: Cramer predicts that investors must prepare for further setbacks, although he believes the downturn will ultimately be temporary.
- Political Signals for Stability: He emphasizes that clear political signals for stability are necessary to calm the markets and reduce volatility.