Jim Cramer: Economy on Verge of "Significant Slowdown"

Market maven and CNBC’s “Mad Money” host Jim Cramer said the protracted U.S.-China trade war could result in negative ramifications for the stock market in the long-term horizon.

“I think we could be on the verge of a significant slowdown in the U.S. economy if something doesn’t change soon,” the “Mad Money” host said. “Consumer and corporate confidence [is]waning. Things just don’t feel right in this country.”

On Wednesday, the Dow Jones Industrial Average fell over 200 points as investor fears of a prolonged U.S.-China trade war tamped own enthusiasm for the capital markets. The S&P 500 also slid 0.7 percent while the Nasdaq Composite fell 0.8 percent.
Even Cramer was warning investors that diving back into the markets wasn’t the best course of action given the latest volatility. Instead, the former money manager said it’s best for investors to wait and pick their spots.

“You’re damned if you do and you’re damned if you don’t,” he said. “Be patient. Don’t pay up for anything here. Wait for your pitch. Right now, in most sectors, it’s still too early to take a swing.”

Late last year, Cramer was already citing an important trade deal meeting between the U.S. and China as a prime factor in the health of the capital markets. In particular, the G-20 Summit in Buenos Aires would ignite the comeback the stock market needed, especially if a meeting between U.S. President Donald Trump and China president Xi Jingping materialized into something positive.

As for the next market trigger event, it could come from the 2020 Election, but Cramer doesn’t see a market play developing anytime soon.

“What the heck are they supposed to do here? Simple, they do nothing. They wait this out to see who wins in 2020,” he said. “But if they do nothing … huge job-producing [initiatives]go out the window.”

As investor fears of a global economic slowdown and trade wars rise, it’s stoking the fire for more gains for bulls. As such, traders can look at plays like the  Direxion Daily S&P 500 Bear 3X ETF (NYSEArca: SPXS).

The S&P 500 already fell below 2,800, which was a key level watched by traders.

“The topping pattern is crystal clear,” Frank Cappelleri, executive director at Instinet, wrote in a note. He added that other stock indexes across the globe were also showing topping patterns. “The equity advance through April was broad, which helped keep the uptrend intact. Now, with so many areas sporting bearish patterns like this, if one breaks, the odds are it will have company.”

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