Jim Cramer, the famous investor, disagrees with Scott Bessent, the US Treasury Secretary Scott Bessent about continued weakness in US stock markets.
Bessent is comfortable if the benchmark S&P 500 index has declined by more than 10% over the last month, since corrections are normal and healthy”.
A former hedge fund manager disagrees, as the typical explanations do not apply to the continuing decline in US stock values.
Why the 2025 market correction won’t be normal or healthy
Cramer believes that the correction in this year is not related to “the new administration’s transition to a more conservative spending philosophy.”
He argued on Mad Money last night that the US equity market is actually suffering losses due to recession concerns – fears “caused” by the President of United States.
Cramer attributed this to “mercurial postings and the scattershot approach of trade policy” adding “I ask you, Mr Secretary, with 35-years experience, is that normal?” Is it healthy?
The former hedge fund manager also said that the current uncertainty is unlikely to subside until the White House starts to provide some certainty to the American people.
The benchmark S&P 500 Index is currently at around 5,600 levels compared to its high of 6,150 in February 19 thTHESTREET
Top reasons for an economy to crash into a recession
Market corrections are often caused by geopolitical instability or a change in Fed policy. Hyper-optimism can also lead to overvaluations.
Jim Cramer says that the main reason for the decline in the stock market this year is because Americans are not receiving any assurances from the Trump administration.
The famous investor, who is a supporter of President Trump, said that he supports his use of tariffs in order to get better trade deals. However, the rhetoric has been so erratic, he said, that it has shocked investors.
Cramer has not yet received a response from the White House or the US Treasury Secretary.
The worst stocks to own in a recession are bank stocks
The former hedge fund manager, who has accused President Trump several times of trying to “manufacture”, a recession in recent weeks, is still not convinced that there will be one.
In a recent CNBC interview, he said that if the United States is indeed in recession by the second half of 2025, as many people believe, the banking industry will be the most affected.
Jim Cramer advises you to sell bank stocks if your bet is on a recession.
Why? Why? Because people and businesses tend to refrain from taking out loans during economic downturns.
Plus, an increase of defaults is also a characteristic of a recessionary time.
These developments can make it difficult for bank stocks to rise during economic downturns.
On the plus-side, however, they are mostly dividend payers, providing good passive income sources in difficult times.
This post Jim Cramer & Treasury Secretary Scott Bessent hold opposing views on market correction could be modified as new developments unfold.
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