Jim Cramer: recent crash in Brent is not a sign of recession


Brent is back under $100 a barrel on Wednesday – a 12% decline within 48 hours that famed investor Jim Cramer says is not a sign of recession.

Cramer’s outlook on the oil price

U.S. economy has already had a quarter of negative GDP. But the recent plunge in oil, as per Cramer, was related only to the price that was overinflated and not to a recession. On CNBC’s “Squawk on the Street”, he said:

The reason why interest rates continue to go down is not because of a recession, but because there’s a collapse in commodities. Everyone’s saying it must be recession; no, it’s because the commodities got overinflated.

Much like Pioneer Natural Resources and Devon Energy, Cramer sees further downside in Brent to around $80 a barrel, which would mean another 20% decline from here.

Cramer likes Lennar Corp here

Mortgage rates have also been slipping down recently, which, as per Cramer, could mean good news for select stocks like Lennar Corporation (NYSE: LEN) that’s down more than 30% year-to-date. He noted:

It is entirely possible that we may be seeing the beginning of something good, not for all stocks but for the stocks that sell at five times earnings; a Lennar Corporation is bottoming here.

Last month, the home construction company reported its results for the fiscal second quarter that handily topped experts’ forecast. Wall Street, on average, sees about a 15% upside in the stock from here.

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