Federal Reserve officials have to watch what they say


Part of Tuesday’s stock market plunge may have stemmed from money managers giving up on getting clarity from President Donald Trump and his administration on their policies, CNBC’s Jim Cramer said as stocks settled.

“We have maximum uncertainty. That makes people want to sell. That’s how money managers view the situation,” the “Mad Money” host said after the Dow Jones Industrial Average ended the day nearly 800 points lower.

Over the weekend, Trump struck a cease-fire on trade with President Xi Jinping of China at the G-20 summit in Argentina. But while top economic advisor Larry Kudlow and Treasury Secretary Steven Mnuchin seem optimistic about the prospect of a deal, U.S. Trade Representative and known China hawk Robert Lighthizer has emerged as a leading candidate for running the negotiations.

That sets up a battle between those who want a deal and those who would rather see China shed the title of global superpower, Cramer said.

To make matters worse, Cramer worried that the Federal Reserve was back on autopilot, content with ignoring slowdown indicators and talking up the job market so it could push through its widely expected December interest rate hike.

But with the bond market doing what it tends to do before recessions, another rate hike could “push us over the edge,” he warned, saying that the Fed’s more optimistic members “sound like they’ve lost their minds.”

“I’m concerned that the Fed just doesn’t get how important its words are. All of these Federal Reserve officials should simply hush up and let the chairman do the talking,” Cramer said. “They are sowing a lot of uncertainty, too. Talk about your region, maybe. Talk about business conditions in your states. Don’t make sweeping declarations that only confuse people.”

Click here for more of his analysis.

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