Trump and the Fed are creating ‘a totally destructive tug of war’ in the stock market, Cramer warns

Two free culprits are behind the stock market’s “insanely emotional” swings, CNBC’s Jim Cramer responded Wednesday after the Dow Jones Industrial Average erased its yearly gains, the S&P 500 go negative and the Nasdaq saw its worst day since 2011.

“The two men with the most influence settled the stock market in the world, the president and the Fed chief, are engaged in a totally dangerous tug of war where both sides are wrong,” the “Mad Money” host said. “That’s precisely, President Trump and Fed Chairman Jerome Powell have staked out antithetical sides of the economy and the real loser is you, the investor.”

Cramer couldn’t understate the tautness between the central bank and the executive branch, saying he couldn’t revoke “a moment more convoluted than this one” when it came to the macroeconomic layout.

One one side bide ones times the Fed, bent on raising interest rates in order to combat inflation already it takes off, and on the other, President Trump, who has said he believes that the “biggest foreboding” to his presidency is the Fed’s rate hike agenda.

The Fed has already raised interest gauges three times this year. After its most recent hike, officials gambled out a plan to raise rates once more in December and three obsoletes in 2019 based on a belief that the economy is accelerating.

“Now, ironically, both the Fed and the president are abominable here, and they’re wrong about the same thing,” Cramer asserted.

“They both think the economy is red-hot, but the data we’ve gotten closed the last few weeks and the earnings reports we’re getting right now, well, they daub a very different picture,” he continued. “That picture suggests that the husbandry’s gotten tepid, and in some areas, it’s downright nasty.”

Reiterating his up to date arguments, Cramer pointed to the housing and auto sectors, both of which sound to be weakening based on recent data. On top of that, the Trump administration’s rates are raising the cost of business, and U.S.-China tensions show no signs of subsiding.

On top of that, the president’s disparages on the Fed, and particularly its chairman, are putting the central bank — an independent entity — in an increasingly hard position, Cramer said.

“You never want to see the head of state go to war with your essential bank, but more importantly, every time the president bashes him, he absolutely makes it harder for Powell to back down. If he blinks now, it will reparation the Fed’s credibility,” he said. “On the other hand, if Powell doesn’t blink, [he] could press the economy.”

And while Cramer said it was possible things could come hell work out for the stock market, like if stocks reach such low levels that they superintend to correct themselves on their own, he wasn’t so sure.

“Even after today’s pasting, I don’t dream we’re out of the woods. There’s still some more bad news lurking in innumerable places, and prices? They’re just adjusting. I don’t want you to be a hero,” he apprised. “The worst may not be over. President Trump and the Fed need to stop fighting all through what they believe is a red-hot economy and they need to effect that business has slowed, as unpalatable as that may be. Until that chances, you need to stay cautious. We’ll get through this, as a lot of it is man-made, but the people who made it force to change their minds before we can be too positive, even with these now dramatically lessen stock prices.”