Unemployment’s at a two-year high, and still the Federal Reserve is worried about inflation. No wonder the Dow dropped 257 points on Friday.
It’s not like we couldn’t see this coming, though, Cramer said. Well, he did anyway. But Bernanke and gang played it conservative, and here we are.
“I almost have to believe this Federal Reserve wanted to write a dissertation on a recession that it created itself,” Cramer told viewers, alluding to the central bank’s academic predilections. “Well, summa cum laude to Ben Bernanke.”
And that talk of injecting liquidity into the markets: “joke, joke, joke – all of it,” Cramer said. “These bums simply don’t know how it works. They've never traded.”
The Fed’s “incrementalism” has Cramer thinking “they’re going to take us into a recession right around election time.”
The only bright spot the Mad Money host sees is the extremely negative sentiment among hedge funds, causing low valuations in infrastructure, oil, agriculture, defense and gold – and that’s it.
So now Wall Street’s in recession mode, and Homegamers should be, too, Cramer said. This is the time when Pepsico [PEP
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], Coca-Cola [KO
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] and Altria [MO
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] go higher. The same goes for healthcare names like Hologic [HOLX
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], Inverness Medical [IMA
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] and Medco Health [MHS
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]. Remember the rule: Supermarket and drugstore stocks work in a downturn.
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Forget about tech, though. Only companies that can meet their quarterly estimates should earn investors any money, Cramer said. Think Microsoft [MSFT
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].
His message for the foreseeable future: Buy the recession stocks, oil, infrastructure, agriculture, gold, healthcare cost containment and defense because “everything else has been poisoned by the Fed.”
Jim's charitable trust owns Altria, Hologic and Inverness Medical.
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