Jim Cramer informs that the stock market could ‘toast’ if oil prices keep rising

Jim Cramer informs that the stock market could ‘toast’ if oil prices keep rising
  • “If you want the rest of the stock market to keep growing, oil has to stop going higher, or we’re toast,” Jim Cramer warned on Monday.
  • The host of “Mad Money” warned that continued increases in fuel prices could harm the economy as a whole.
  • “For sure, it hasn’t happened yet… but it could,” he remarked.

Disturbances in Stock Market

On Monday, Jim Cramer predicted that the stock market would be unsettled by the oil rally. “If you want the rest of the stock market to keep growing, the oil needs to stop moving higher, otherwise we’re toast,” the “Mad Money” host stated on Monday after the price of West Texas Intermediate (WTI) crude touched $83.87, the highest level since October 2014.

While attempting to call attention to what he believes is paradoxical behavior in the markets, Cramer stated that the price is “far too high for my taste.”

“Oil stocks and their contemporaries account for less than 10% of the S& P 500. “When they shout, it is just a disaster for other 90%,” Cramer explained. “However, here’s the problem. Despite the constant price hikes, oil’s growth has had little effect on the stocks of any of the major energy consumers, while it has boosted the stocks of energy producers.”

Cramer’s Notings

Cramer cited airlines and other travel and leisure-related sectors as examples. “These companies’ stocks have been extraordinarily good,” Cramer continued, “particularly — and this is the real problem — the hotels.” “If you compare Marriott’s chart to any oil stock’s chart during the last seven weeks, they look remarkably identical.” That doesn’t make any sense.”

Similarly, Cramer stated that equities in the transportation industry have been “performing very well, too,” implying that they should be sensitive to fuel costs as well. “Once again, that should not be the case. “This is a zero-sum game; when oil triumphs, transportation lose,” Cramer explained.

Oil output must expand, according to Cramer, to fulfill rising demand during the COVID-19 pandemic recovery. If it doesn’t, he predicts even higher prices, “and that would be a lose-lose [situation] we’re concerned about.”

Some have forecast that oil may reach $100 per barrel, at which time “it may price itself and destroy demand,” he said. “It would imply that oil has suffocated the entire economy.” “For sure, it hasn’t happened yet… but it could,” he remarked

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