The US Federal Reserve recently paused interest rates – now the next interest rate decision is imminent. Stock market expert Jim Cramer recommends investors to hold off until the Fed raises the key interest rate again.
• US Federal Reserve has paused interest rates – priced in continued stable interest rates
• Jim Cramer sees some “split” between company value and share price
• Stock market experts recommend that investors wait for the next interest rate rise
The Fed’s interest rate decision is imminent – stable interest rates are expected
In September, the US Federal Reserve left its key interest rate unchanged in a range of 5.25 to 5.5 percent. After eleven increases within 16 months, the important interest rate is now at its highest level in 22 years.
US Federal Reserve Chairman Jerome Powell kept the door open for further interest rate increases about two weeks before the Fed’s upcoming interest rate decision. During an appearance at the New York Economic Club, he explained that the decision on further monetary tightening would depend on economic data, the outlook and risks.
While there are further indications of strong economic development Interest rate increase According to Powell, a rise in Treasury yields could make a rate hike less necessary – and yields have risen significantly in recent weeks. The yield on ten-year US government bonds recently rose to over five percent at times, reaching a 16-year high.
However, in view of the risks, the Fed will proceed “cautiously,” according to the US central bank chief.
The US Federal Reserve’s interest rate meeting takes place today (October 31) and tomorrow (November 1). The result will be announced tomorrow. As the Dow Jones news agency reported, the futures markets are assuming that the Fed will not raise the key interest rate any further. A stable interest rate level is priced in at 92 percent.
Cramer recommends investors wait for the next interest rate rise
Stock market expert Jim Cramer recently recommended that investors hold off on buying stocks until the US Federal Reserve raises the key interest rate again and stock prices fall as a result.
In his opinion, there is currently a “division” between the actual value of certain companies and the market price of their shares. He pointed to figures from Coca-Cola, 3M, RTX, General Electric and Verizon and explained that, with the exception of GE, these companies appeared to be performing poorly, but stock prices showed recovery according to the figures. According to Cramer, these gains were partly due to the low expectations that investors had.
And so he recommended to investors on his CNBC show “Mad Money” “given the nature of this market […] “Just wait until the averages have fallen again” before buying stocks. “I bet there will be another opportunity,” said Cramer. According to the stock market expert, it’s not worth the risk “on a beat-and-raise quarter,” which may depend on the performance of the S&P 500 Future.
“Right now, your best bet is to wait for the next interest rate rise that will trigger the next sell-off in stocks – then buy,” Cramer said. “If you’re able to think long-term, you can do well with companies that are doing well, but you have to be willing to stay the course.”
Editorial team finanzen.net
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