At the close of Monday’s surprising bull run, famed analyst Jim Cramer’s take on the market was welcoming, but restrained, on a CNBC segment. He pointed out that stock prices are very volatile because they depend on expectations. These expectations focus on the White House’s strategic decisions yet to come. Cramer emphasized what has been happening in the last few trading days. Perhaps no one has been more impacted than them by rapidly shifting perceptions of the U.S.-China bilateral trade relationship.
Cramer noted that the administration’s new tariffs are responsible for downswings in multiple major U.S. companies. These companies are very dependent on international supply chains. He cited Gap and Apple as central examples of companies impacted by these tariffs. This confluence of events has raised fears over their profits and future growth prospects.
People who are thinking about investing should prepare for the “chop” that can be expected soon, Cramer said. He underscored that the forecasts of some Wall Street analysts are still sanguine about President Donald Trump’s effect on large corporations. The truth is far more complex. Shares have fallen in part due to fears that the administration aims to crack down on federal contractors, threatening tighter regulations.
“This administration is perfectly willing to disappoint the stock market…to advance their agenda, and it’s foolish that you should believe otherwise,” – Jim Cramer
Cramer explained that many federal contractors purchase equipment from companies vulnerable to the administration’s policies, amplifying the scope of market uncertainty. In addition, he has commented that macroeconomic fears still have a dampening effect on stocks across the board.
And for a moment, Wall Street was intensely optimistic. A Trump Administration official, speaking to reporters on background, said that the meeting is very important because President Trump will be meeting with Chinese President Xi Jinping later this month. Cramer noted that this news prompted a dramatic shift in market sentiment, stating, “With one report, the market did an entire 180.”
Cramer raised the question of whether President Trump would really want a true trade deal with China. He found investors are drunk on optimism. They are counting on Trump to come around, loosen the new semiconductor export restrictions to China, which will increase growth in both markets.
“We’re always one posting, one whisper away from rallying or declining,” – Jim Cramer
Cramer’s predictions paint a colorful picture of an exuberant, yet perplexing and fickle market. Political maneuvering and trade policy shape this fast-paced climate. Therefore, as investors each of these issues play out, one needs to stay on watch and be ready for possible surprises.