Heed warnings from Fed’s Brainard and offload some stocks, Jim Cramer says

Investors should take Federal Reserve Governor Lael Brainard’s inflation policy comments to heart and sell some holdings, CNBC’s Jim Cramer said Tuesday.

“This is not a sell everything call. … In fact, the health care stocks and the oils are still very attractive here, and I’d put more money in it if they come down. Oil because of supply issues, drugs because they’re pretty much immune to a Fed-mandated recession. I’m simply saying that I’m getting more conservative,” the “Mad Money” host said.

“If you own anything you don’t like, this is as good a time as any to sell it. We’re up a lot. I think you’re going to get good prices in retrospect. When the Fed’s biggest dove turns into a bird of prey, you’d better take notice of it,” he added.

Cramer’s comments come after Brainard on Tuesday pivoted from her usual stance favoring low interest rates to calling for aggressive action against inflation. Brainard said in a speech written for a Minneapolis Fed discussion that policy action could include tightening the balance sheet soon and indicated that interest rate hikes this year could be more than the 0.25 percentage point increase implemented in March.

Investor fears over an economic slowdown roiled the markets on Tuesday following Brainard’s comments. The Nasdaq Composite fell 2.26%, and the Dow Jones Industrial Average dropped 0.8%. The S&P 500 decreased 1.26%.

All three market indices gained on Monday, with the tech-heavy Nasdaq leading the way. Cramer said the market’s moves this week are a sign that investors are confused.

“I don’t like it when you have a market where, on Monday, traders buy all the semis and dump the healthcares, and then on Tuesday” they do the opposite, Cramer said. “That’s a classic sign that no one knows what to do,” he added.

“I won’t allow myself to be oblivious to this wake-up call. … I am pulling in my horns and selling with alacrity,” he said.

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