Investment guru Jim Cramer admits he’s “a little cautious” that Federal Reserve’s "autopilot nonsense" intention of continuing to hike rates will eventually hurt companies and the economy.
"Do not get me wrong. I'm saying this right up-front: I am not saying you should sell everything," he told investors Tuesday night on CNBC.
"If you've been saving up for your retirement by putting money in an S&P 500 index fund, something that everybody should do, you don't need to touch that position," he said.
"But when it comes to a number of individual stocks, things have suddenly gotten a lot more risky," he said.
"Sometimes we need to do a little reassessment," Cramer said. "I'm starting to get a tad concerned about the health of more and more industries here. The universe of potential winners does feel, at least to me, [like] it's getting smaller," he said.
The Federal Reserve last raised interest rates in September and left intact its plans to steadily tighten monetary policy, as it forecast that the U.S. economy would enjoy at least three more years of economic growth.
The Federal Reserve is mandated by Congress to aim for low inflation and low unemployment. Currently U.S. consumer price inflation is above 2 percent annually and the unemployment rate is the lowest in about 40 years.
POWELL
"When I hear that the Fed is going to keep tightening until the cows come home, it makes me think that the cows are actually headed to the slaughterhouse, so I grow concerned," Cramer said. "Powell's game plan sounds curiously like what [2006-2014 Fed Chair] Ben Bernanke did during the lead up to the Great Recession," he said.
“What the heck is the Fed doing with this autopilot nonsense?" he asked.
"Again, this is not a 'they know nothing' moment like 11 years ago, where the Fed was dead wrong about the economy and I had to shout it from the rooftops," Cramer said. "We probably won't even get an actual recession. But the universe of companies that are doing well is growing smaller," he said.
"Call me a little cautious," he said. "I think we can go higher, but the stocks taking us higher are the wrong stocks if you believe the economy's in good shape. They're the right stocks if you believe, well, that I'm right and we could have a Fed-mandated slowdown. I sure hope I'm wrong, but on a day like this where we get some dire news from PPG, I'm feeling right as rain."
Cramer is in good company in his apprehension about the central bank.
President Donald Trump on Tuesday again criticized the Fed, telling reporters the central bank is going too fast in raising rates when inflation is minimal and government data points to a strong economy, Reuters reported.
"Well, I like to see low interest rates. The Fed is doing what it thinks is necessary but I don't like what they're doing because we have inflation really checked, and we have a lot of good things happening," Trump said to reporters on the White House lawn before departing for an Iowa event. "I just don't think it's necessary to go as fast," Trump said.
"Also, very importantly I think, the numbers we're producing are record-setting," Trump added. "I don't want to slow it down, even a little bit, especially when you don't have the problem of inflation. And you don't see that inflation coming back. Now, at some point it will and you go up."
Trump has publicly stated his concerns before, but on Tuesday said he had not discussed them personally with Federal Reserve Chair Jerome Powell, explaining that "I like to stay uninvolved."