What do you do if Washington can accomplish nothing? What do you do if President Trump's tax plans really are dead on arrival, as the conventional press seems to have concluded even as the President tweets that all is ahead of schedule?
You end up buying stocks like Amazon (AMZN) , that's what you do. Why Amazon? Am I singling it out just because it touched $1000 today and has become a storied member of the era of single-stock greatness, instead of the single-stock risk that many firms keep saying you should be scared of?
Kind of, well, yes.
That's because Amazon is the ultimate non-Trump stock. What does Trump stand for? First, lower corporate taxes. That doesn't mean all that much to Amazon, which could decide tomorrow that it doesn't even need to make money for a couple of years because it wants to start dominating India, and perhaps even China -- although it will have tough rivals in Alibaba (BABA) and Tencent.
Second, it stands for repatriation of assets overseas at lower tax rates than companies would currently pay. Amazon truly has no desire to send money back here. It is more interested in developing over there. You will find that the companies that want to bring back money tend to be the ones that want to buy back stock and boost dividends, because they don't have the growth prospects overseas that companies like Amazon have.
And Trump wants to deregulate to get rid of the red tape. Here's one promise that conceivably could mean something to Amazon if it were being blocked by the federal government for extending its reach, but if anything I think that the President's hardline stance against some of our trading partners, mainly Germany, makes it so there could be some sort of tax put on Amazon from foreign countries as a punitive measure.
So, in other words, Amazon is a stock that does better when Trump is incapable of getting anything done -- and the status quo of slow growth with two interest rate hikes is put into play, including one next month when the Federal Reserve meets.
And what about the $1000 price tag for Amazon? What does that mean? Is that something to be worried about?
This crossing of the $1000 barrier is something that's psychologically what I could call a red flag. When I meet with people who are of my age and have seen many markets, they point to something like the Nifty Fifty, which is an elite group of growth stocks that went up well past their fundamentals in the 1970s, and that ultimately gave up the ghost as people realized that their prospects weren't as rosy as initially thought.
This Nifty Fifty concept went hand and hand with a blue chip, buy-and-hold philosophy that said you didn't need to touch these stocks, as they would just keep going higher. Well that was sure wrong -- and those who didn't sell felt the pain for years and years. It wasn't like the Dotcom crash. It was a more insidious decline, more like the death of a thousand cuts. But it's part of the conversation, and my "Squawk on the Street" morning partner duly noted that we could be in the Nifty Fifty II era.
That is how Amazon's stock "feels." So, by the way, does the stock of Alphabet (GOOGL) which is also challenging $1000. Both hitting the $1000 mark at the same time does raise the alarm bells of overvaluation.
I say, though, that we are being premature if we think Nifty Fifty status has arrived. We are reacting to the stock price more than the prospects, but I am conscious that we have gone up too far too fast and I am going to address this issue further over the course of the coming days, if not weeks, given the monumental runs -- Amazon up 33%, Alphabet up 25%, on top of years of gains -- that we have seen just since the year began.