Heed the Fed’s Brainard Warnings and Sell Some Stocks

Investors should take Federal Reserve Chairman Lael Brainard’s comments on inflationary policy seriously and sell some assets, CNBC’s Jim Cramer said Tuesday.

“This is not a call to sell everything… In fact, health care and oil stocks are still very attractive here, and I would put more money into them if they fall. Oil due to supply issues, drugs due to I am pretty much immune to the recession imposed by the Fed. I’m just saying I’m getting more conservative,” the Mad Money host said.

“If you have something you don’t like, now is the best time to sell it. We have grown a lot. I think you will get good prices in retrospect. bird of prey, you better see it,” he added.

Cramer’s comments came after Brainard on Tuesday changed her usual stance in favor of low interest rates to a call for aggressive action against inflation. Brainard said in a speech written for the Minneapolis Fed that policy action could soon include a tightening of the balance sheet and pointed out that this year’s rate hike could outstrip the March hike by 0.25 percentage points.

Investor fears of an economic slowdown rattled markets on Tuesday following Brainard’s comments. The Nasdaq Composite fell 2.26% and the Dow Jones Industrial Average fell 0.8%. The S&P 500 was down 1.26%.

All three market indexes rose on Monday, with the high-tech Nasdaq leading the way. Cramer said the market moves this week are a sign that investors are confused.

“I don’t like it when you have a market where traders buy all the convenience foods and dump drugs on Monday, and then on Tuesday,” Cramer said. “This is a classic sign that no one knows what to do,” he added.

“I will not allow myself to ignore this wake-up call… I pull the horns and sell willingly,” he said.

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