Jim Cramer warns investors not to bet too early on a soft landing

CNBC’s Jim Cramer warned investors Tuesday not to assume the Federal Reserve will engineer a soft landing for the economy.

“Fair-weather bulls, who everyone thought we were headed for a severe recession two months ago … are now rushing to declare a soft landing way too early,” the “Mad Money” host said. “Listen, I believe in the possibility of a soft landing, but the Fed still has a lot of work to do.”

Stocks have recovered slowly in the second half of the year after soaring inflation, the Fed̵[ads1]7;s interest rate hikes and Russia’s invasion of Ukraine rattled markets in the first six months.

Cramer has credited the price of oil for helping to track the market to the bottom in June. More recently, softer-than-expected consumer price index and producer price index readings for July signaled that inflation may be peaking, helping to boost stocks further.

The turning point in the market has led some investors to believe that the Fed will be able to curb inflation without triggering a recession or, at most, creating a mild one.

However, Cramer cautioned that these previously bearish investors who chose to flee the market at its worst should be wary of betting on a soft landing now that stocks are on the rise — especially given that employment remains high.

He added that markets tend to lose money when investors start chasing rallies, underscoring the need for caution.

“The bandwagon is usually dangerous for a while when you jump on a month too late, when so many medium and small companies have already emerged,” he said.

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