Market rallies will be sporadic until inflation comes down

Market rallies will be sporadic until inflation falls, says Jim Cramer

CNBC’s Jim Cramer on Tuesday said market rallies will be short-lived as long as inflation persists.

“Sometimes you don’t need to know the price of the Dow, you just need to know the price of Kerrygold avocados or Lennar three bedrooms, said the “Mad Money” host.

“If they are down — not just from last year, but from two years ago or three years ago — then your stocks can stay, if not higher,” he added.

Stocks fell on Tuesday as investors heeded the conclusion of Wednesday’s Federal Reserve meeting when the central bank is expected to announce a 75 basis point rate hike. Traders are also watching any forecast from the Fed about how high interest rates will be.

Fed Chairman Jerome Powell is expected to reiterate the central bank’s aggressive anti-inflation stance.

Cramer reminded investors that more pain lay ahead, and that the market’s loss was Powell’s profit. Stocks represent buying power because investors can sell them for cash, and the Fed chief needs people with less of that power to quell inflation, he explained.

In addition to lowering the prices of stocks and commodities, Powell needs to reduce wage inflation, he added.

“That’s the final frontier and the Fed will continue to slow the economy until the labor market cools down,” he said.

Jim Cramer explains what needs to happen for the market to see a sustained rally

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