Jim Cramer: The President's Strategy as 'Manufacturer in Chief'

 | Jul 11, 2018 | 2:24 PM EDT
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President Donald Trump on Wednesday slammed Germany as being captive to Russia, paying billions of dollars to Moscow instead of its NATO dues so it can get a safe source of natural gas.

Now this isn't fake news. Germany spends about half of what it is supposed to spend to fund NATO, according to 2016 figures. Countries are expected to contribute 2% of the GDP on defense. Germany spent 1.19%; the U.S. spent more than three times that amount.

The president's been trying to withdraw from the role of playing the world's policeman. He's got a point that NATO's meant to check Russia not help it so the natural gas pipeline from Russia does make the country more hostage than most, particularly because it's phasing out both coal and nuclear power plants.

But sometimes I wonder if Trump isn't also playing the role of Manufacturer in Chief because if you are going to spend more of your GDP on defense, those orders are more than likely to go to Lockheed Martin (LMT) , Northrop Grumman (NOC) , Raytheon (RTN) and General Dynamics (GD) . How easy it would be to appease the president -- I know that's terrible word but it's Germany that would do the appeasing -- by putting in an order for Raytheon's Global Patriot Solutions unit for missiles. Perhaps the president would be happy with a huge order for the Abrams tanks made by General Dynamics. Lockheed Martin's ready with as many F-35 joint strike fighters. We saw how important that plane is to the Pratt & Whitney division of United Technologies when we went to a plant that makes them a few years ago.

But it doesn't have to be just with munitions. Germany could wean itself off of Russian natural gas if it were to simply place orders for North American LNG, an export market we have created that is really taking off.

We are familiar with this business because we have long been a follower of the work of Charif Soukhi, the man who virtually created this market when he had a vision that the U.S. would become a natural gas powerhouse and he could build facilities to export it. While he no longer runs it, his brainchild, Cheniere Energy, is our nation's largest exporter and it along with Dominion Energy's Cove Point have become major forces in supplying the world with liquefied natural gas.

Soukhi, who is now the chairman of Tellurian, a company with ambitions to be our biggest exporter, although it is still at an early stage, informs me that this trend is in its infancy and, just today the CME announced that it will start quoting a Gulf Coast price to facilitate trading in the fuel.

There's only one issue. Even as we are flaring more natural gas than we use, even as we are now the world's low cost producer because we have so much of it, all of the facilities are sold out, mostly to Mexico but then to South Korea followed by China. Yep, the same China that we are so concerned has the upper hand in all trade negotiations. As Soukhi told me "the European players need to actively pursue U.S. opportunities to compete with Asian demand."

Yep, I am giving Germany a path to get out of the hostage situation. Just place a lot of orders with American companies.

Look, I am not about geopolitics. But I am about stocks. There's a way to profit from the rhetoric. It's just that Germany's stubborn. They want to sell us cars but they seem to not want what we have to offer. Who knows? Maybe today's tough talk will make a difference. Either way, longer term our defense and LNG industries are winners and it's not to late to buy stocks in either.

In fact, judging by the vociferous nature of our president's strident tone, it's early.

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