<div id="readability-page-1"><div><div><p>CNBC’s<strong> Jim Cramer </strong>declared Thursday that a recent spike in bad bank loans is the signal the Federal Reserve needs to begin cutting interest rates, arguing that the “credit cavalry is right on time” to rescue the market.</p><h2><strong>Credit Issues With Banks To Motivate Fed’s Rate Cuts</strong></h2><p>Cramer explained on “Mad Money” that these credit losses, while painful for the banks, are a definitive sign of a slowing economy that will motivate the Fed to act swiftly.</p><p>“Nothing motivates the Fed to move faster than credit losses because they’re a definitive sign that the economy is going south,” Cramer said.</p><p>He pointed to recent sour loans reported by <strong>Zions Bancorporation NA</strong> (NASDAQ:ZION), which announced on Wednesday evening that it had incurred a sizable charge due to bad loans to a couple of borrowers. Meanwhile, <strong>Western Alliance Bancorp</strong> (NYSE:WAL) alleged on Thursday that a borrower had committed fraud.</p><p>Cramer called the defaults “cockroaches” that prove a wider credit issue is emerging, a theory previously mentioned by <strong>JPMorgan Chase &amp; Co.</strong> (NYSE:JPM) CEO <strong>Jamie Dimon</strong>.</p><p>After the bankruptcy of Tricolor Holdings, Dimon said, &#34;When you see one cockroach, there’s probably more,&#34; raising red flags across the sector.</p><h2><strong>Cramer Believes Banks Can Contain The Bad Loans</strong></h2><p>He argued that the pain from these bad loans will be largely contained within the banking sector. The ultimate effect of lower interest rates, however, will boost the “real economy” stocks—the service and industrial companies that have struggled.</p><p>Cramer explained, lower rates make housing more affordable, business expansion easier, and dividend stocks more attractive compared to bonds. He suggested that consumer-packaged goods companies like <strong>Campbell’s Co. </strong>(NASDAQ:CPB) and <strong>General Mills Inc. </strong>(NYSE:GIS) are already showing signs of bottoming out in anticipation of this shift.</p><h2><strong>Cramer Warns ‘Ring the Darn Register’ On Speculative Stocks</strong></h2><p>While championing the prospects for the real economy, Cramer issued a stark warning to investors in speculative stocks. He urged those who have made significant money in high-flying sectors like quantum computing, rocket companies, and critical metals to “ring the darn register” and sell at least part of their holdings.</p><p>Comparing the current environment to the 2021 meme stock mania, he cautioned that insiders will eventually sell, and these parabolic moves will not last. “You don’t make money in a stock until you ring the register,” Cramer concluded. “Never confuse stocks with cash.”</p><h2><strong>Price Action</strong></h2><p>The S&amp;P 500 index ended 0.63% lower at 6,629.07 on Thursday, whereas the Nasdaq 100 index dipped 0.36% to 24,657.24. On the other hand, Dow Jones fell 0.65% to 45,952.24.</p><p>On Friday, the futures of the S&amp;P 500, Dow Jones, and Nasdaq 100 indices were trading lower.</p><ul> <li><strong>Regional Banks Suffer Worst Drop Since Trump’s Tariff Shock: Are Credit Fears Back?</strong></li> </ul><p><em><strong>Disclaimer:</strong> This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.</em></p><p><em>Image via Shutterstock</em></p></div></div></div>

ZION

<p>Jim Cramer predicts that the Federal Reserve will cut interest rates due to a rise in bad bank loans, indicating a slowing economy. He cites recent issues at Zions Bancorporation and Western Alliance Bancorp as signs of broader credit problems. Cramer believes the impact of these bad loans will be contained within the banking sector, ultimately benefiting real economy stocks. He advises investors in speculative stocks to sell part of their holdings, warning against the risks of parabolic stock movements. The S&P 500 and other indices closed lower amid these concerns.</p>

- Jim Cramer suggested that a rise in bad bank loans indicates the Federal Reserve should cut interest rates to address a slowing economy.  
- He highlighted recent credit losses from Zions Bancorporation and Western Alliance Bancorp as signs of broader credit issues, which could ultimately benefit the real economy by making housing and business expansion more affordable.  
- Cramer also warned investors in speculative stocks to take profits, comparing the current market to the 2021 meme stock frenzy, emphasizing the importance of realizing gains.

Jim Cramer Predicts Fed Rate Cuts As Regional Banks Stumble: 'Credit Cavalry Is Right On Time'