• US inflation eased somewhat in July
• Jim Cramer: “Peak Inflation” is undeniable
• Reached nirvana for equities
The momentum of price increases in the USA slowed down more than expected in July: compared to the previous year, the US inflation rate was 8.5 percent. In June, inflation in the world’s largest economy was still 9.1 percent – the highest level in more than 40 years. For “CNBC” moderator Jim Cramer it is clear: “This is what ‘Peak Inflation’ looks like”.
No all-clear for companies, but good prospects for shares
In his program “Mad Money” Jim Cramer warned that the economy is not yet out of the woods and could still slide into recession, even if the price increase is now slowing down. At the same time, however, he expressed his belief that the peak in inflation could help boost stock prices even during an economic downturn. “Some companies will be absolutely hurt by the coming recession, but others will see their stocks soar because they are worth more in an environment where inflation may finally be under control,” he said.
Cramer: Peak Inflation Means “Nirvana” for Equities
That inflation has peaked is just “great for stock valuations,” Cramer said. He also cited the price development of the major US indices, which had all gained significantly after the publication of the latest US consumer prices on August 10th, as evidence of this. “Today’s move looks like what peak inflation looks like and that can be nirvana for many different stocks,” gushed the CNBC host. In Buddhism, “Nirvana” means a state of perfection that roughly corresponds to the paradise to be striven for.
According to Cramer, recently unpopular stocks such as fast-growing tech companies, financial stocks or cyclical consumer goods could now pick up again. “If you’re active in the stock market and picking stocks, this is heaven,” Cramer said on his show. “That means you can buy everything from Microsoft to Wells Fargo to Target and even Disney,” the Mad Money host said.
Inflation development is no surprise for Cramer
Cramer, however, was not surprised that US inflation may have peaked. “The stock market […] Absolutely saw the peak of inflation coming,” the analyst said. “I think you had to be willfully dull to miss that as commodity prices collapsed some time ago,” Cramer added “undeniable” – and with it the good prospects for shares.
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