Cramer gets ‘a little cautious’ about the Fed’s effect on the economy

CNBC’s Jim Cramer has been a stock market bull for a long time, but even he has moments when he gets a little bit cautious.

“Sometimes we need to do a little reassessment,” the “Mad Money” host admitted on Tuesday. “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.”

And while he insisted that this market moment is nowhere near as dire as, for example, the beginning of the financial crisis in 2008, he did feel the need to reevaluate.

“Do not get me wrong. I’m saying this right up-front: I am not saying you should sell everything,” he told investors. “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.”

“But when it comes to a number of individual stocks, things have suddenly gotten a lot more risky,” he said.

Cramer started getting concerned when Federal Reserve Chair Jerome Powell spoke last week about the need to continue raising interest rates, all but cementing the central bank’s plans to hike rates once more in 2018 and three times in 2019.

The “Mad Money” host hoped Powell would employ former Fed Chair Janet Yellen’s data-dependent policies when it came to raising interest rates, but the new chief’s goal of definitively curbing inflation could end up hurting the stock market, he said.

“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.”

Doubling down on his earlier remarks that CEOs across industries are worried about an earnings slowdown, Cramer listed the many potential pain points in the broader market: a pause in housing; higher fuel costs; a slowdown in the data center space; the declines in economic bellwether FedEx; the earnings miss at massive car paint maker PPG Industries.

“[That] brings me full circle back to the Fed. If all of these industries are having issues, if PPG … is to believed — and there is absolutely no reason not to — then 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,” the “Mad Money” host continued. “We probably won’t even get an actual recession. But the universe of companies that are doing well is growing smaller.”

And with added pressure from the U.S.-China trade dispute and the International Monetary Fund’s recently dimmed global growth outlook, Cramer wondered how well the still-strong stock market would hold out in the near term.

“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.”