Jim Cramer rejects Treasury Secretary Yellen’s inflation assessment

Jim Cramer rejects Treasury Secretary Yellen’s inflation assessment


CNBC’s Jim Cramer on Tuesday resented Treasury Secretary Janet Yellen’s suggestion that rising inflation could justify a hike in interest rates.

“At the moment, although I can totally see and feel the inflation from all sides, I remain with Jay Powell as a quarterback,” the “Crazy moneythe host said, referring to the Federal Reserve Chairman. Cramer noted that Powell insisted that a rate hike is unlikely until the labor market recovers from the downturn in the last year.

“For Yellen, I think it is reminiscent of his worst call to the Fed, when it decided to tighten in December 2015 after years of low rates,” Cramer added. “She said she wanted to contain inflation; in six weeks inflation had collapsed and it was causing real damage to the economy.”

The Treasury Department did not return CNBC’s request for comment.

Yellen said earlier today, rates may need to increase “somewhat to keep our economy from overheating.” These comments contributed to a volatile session on Wall Street.

the Dow Jones Industrial Average eked a small gain, rebounding from a drop of 347 points earlier in the session. the S&P 500 and Nasdaq Composite ended Tuesday’s session down 0.7% and 1.9%, respectively.

Tuesday’s moves and Yellen’s remarks come as commodity prices – a leading indicator of inflation – are on the rise. Oil prices in the United States, for example, have risen more than 17% in the past three months and have jumped nearly 12% last month.

Rising commodity prices are bad news for most companies, but investors can tailor their portfolios to stocks that can benefit the environment, Cramer said.

“I need you to recognize that we are in a forgiving market. Investors like to buy high quality stocks that go down,” he said. “There will be winners and losers. It’s our job to try to pick the winners, just like the buyers picked the manufacturers at the bottom of today’s market.”

Meanwhile, Cramer came up with ideas for actions that could benefit from rising commodity costs. These winners include the Copper Company Freeport-McMoRan and steelmakers Cleveland-Cliffs and Nucor. Shares of Cleveland-Cliffs climbed nearly 12% on Tuesday. All three stocks are up about 40% or more this year.

“They are doing the same thing they always do, but their selling prices keep going up,” he said. “This gives them what is called operating leverage, where any increase in income produces a gigantic increase in profits.”

Cramer also indicated that actions like Kroger and Albertsons could hurt if inflationary pressures continue. He added that soaring gross costs have hit companies like DuPont difficult.

Disclosure: The Cramer Charitable Trust owns shares of DuPont.

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