Jim Cramer says the Fed action is great news for high-growth tech stocks, which should be among the first sectors to recover.
Fed chair Jay Powell made one thing clear Wednesday, he’s willing to crush inflation by any means necessary, Jim Cramer told his Mad Money viewers. And if history is any guide, that means this is the beginning of a great buying opportunity.
Cramer said for as long as he’s been investing, the market has always had a love-hate relationship with the Federal Reserve. Fed chiefs are always criticized at the time, but remembered fondly years after they stop down.
Powell will likely be no exception. It’s easy to say today that Powell was too slow to act, but years from now he will be remembered as the one who took a tough stance on inflation and issued the biggest interest rate hike in nearly 30 years to put it to rest once and for all.
Powell signaled that he’s not worried about unemployment and will risk job losses in order to cool the economy. That tough stance gave the Fed a lot of credibility, which is why bond prices immediately responded to the news.
Powell is betting that job losses will be followed by a quick job recovery, but only after inflation is stopped in its tracks. Historically, that’s great news for high-growth tech stocks, which should be among the first sectors to recover.
One sector that should also recover, but didn’t Wednesday, is the banks. The banks will be making a lot more money with higher interest rates, and loan losses are likely to remain low as the consumer is, by and large, in great shape.
The markets demanded that Powell get inflation under control, Cramer concluded, and that’s exactly what history will remember him for doing.