Mad Money host Jim Cramer now expects the U.S. Federal Reserve to lift rates by 25 basis points tops in its meeting next week.
That paints a rather rosy picture for the S&P 500 which added another 2.0% on Thursday.
Remember that the Fed Chair Jerome Powell had spurred fears of a 50-bps hike as he testified on Capitol Hill last week. But now that the Silicon Valley Bank has failed, Cramer noted, a bigger increase in interest rates is out of question.
We thought Powell was going to hit us with a 50 basis points hike because inflation refused to be beaten. Now we know he doesn’t need to do anything to beat inflation – those bank runs will do it for him.
The benchmark index is still down about 5.0% versus its year-to-date high.
What’s also noteworthy is that the regulators have now closed Signature Bank as well. On Mad Money today, Cramer said:
Sure, the bulls didn’t get it the way they wanted it, with a soft landing and a gradual reduction in oil prices, but they got what they needed, with the stunning flameout of first national bank of wretched excess and a few banks more.
Credit Suisse had also flagged liquidity issues in recent days but has now secured a lifeline as Invezz reported HERE.
Also on Thursday, a consortium of big banks injected $30 billion into First Republic Bank to calm fears that it might go under as well.
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