Jim Cramer has a warning for investors. On his September 11 Mad Money segment, the host said today’s market looks similar to the fall of 2018, a stretch that ended in one of the worst stock selloffs in years.
Oil trades above $100 a barrel, and the 10-year Treasury yield just hit 5%. Inflation also remains above the Federal Reserve’s target. Cramer wants investors to get ready for a possible crash, and he has a plan for how to do it.
Jim Cramer sees 2018 warning signs in today’s market
Cramer detailed the parallels on his CNBC show. Both 2018 and 2026 fall in the second year of a Trump presidency. Stocks rallied strongly in each.
Oil prices and Treasury yields climbed in both periods, and inflation sat above the Fed’s 2% target. In late 2018, that combination helped drive the S&P 500 down about 20% between its September peak and Christmas Eve.
Cramer said there are “eerie similarities” between now and the fall of 2018. He says the situation is close enough to watch carefully, even though he does not expect an exact repeat.
On recent shows he has flagged the same pressures, and he named higher oil prices and long-term bond yields as the main forces behind stock moves right now.
Why $100 oil and a 5% Treasury yield are raising everyday costs
Crude oil has risen above $100 a barrel and briefly traded near $104 on Monday, its highest in four months. When oil rises, the cost of shipping and manufacturing follows, and companies pass on much of that increase to the prices people pay.
Borrowing costs are also rising. The 10-year Treasury yield, which helps set mortgage and auto loan rates, hit 5% on Monday, its highest in years, before falling back slightly.
That move followed the August inflation report, which showed consumer prices up 3.4% over the year, and the energy index up 16.3%, according to the Bureau of Labor Statistics.
Why Kevin Warsh could keep 2026 from turning into 2018
Cramer pointed to one big difference between the two years. The Fed is now run by Kevin Warsh, who replaced Jerome Powell as chair in May and used his Jackson Hole debut to take a hard line on inflation.
Warsh is a former Fed governor who served through the 2008 financial crisis, so he knows how policy missteps can deepen a downturn.
Cramer thinks that experience helps.
He said Warsh was around in 2018 and is unlikely to repeat Powell’s mistakes. Back then, Powell kept raising rates into a weakening market, and the selling got worse before he changed course.
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