Cramer: Make a Deal or Face the Wheel

 | Dec 07, 2016 | 4:19 PM EST
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Give me a Trump stock! I want a Trump stock. But what exactly is a Trump stock? And what's a non-Trump stock is left to fend for itself in a miasma of possible pain.

That's exactly what this market, which hit all-time highs today, has become and we better have our Trump and non-Trump stocks down or there will be a world of pleasure and a world of pain and we want the former and not the latter.

The only problem? They are subject to change. Oh, and to be fair, they are subject to redemption. Let's go over some pure Trump stocks, ones that have been anointed by the rhetoric and by the deed.

Then let's hit the redeemable Trump stocks ... then the stocks on which Trump has no real impact beyond a rosy no-direct hue ... and then the non-Trump stocks, meaning they've woken up on his bad side and are now in purgatory.

Without further ado, the quintessential Trump stocks? The banks. Trump is trying to rescue banks from a stiff regulatory regime he thinks cut back lending and makes it difficult for the nation to grow. He wants banks to make loans and for that he needs the government out of the way.

So that's the direct gain. Banks have several collateral Trump gains, too. If you get the government off the backs of the banks you will also allow the banks to return capital. If Trump gets the economy moving then interest rates go higher and banks make money, both on the short end with Fed rate hikes and on the longer end when they make loans that have more room to mark up because rates are higher.

So living breathing example? Bank of America (BAC) , a stock that's up 31% for the year. Bank of America has the largest deposit base in the country so it can earn the most from those deposits in a rate-hike scenario like the one we are supposed to be getting next Wednesday when the Fed meets and announces its decision.

It gets better. One of the consequences of getting the regulators out of the way is that the banks can start rewarding shareholders with bigger dividends and buybacks. That's why you used to own these stocks.

Final unintended consequence? Because so many professional investors thought Trump would lose and this group would be in permanent servitude, you have a frantic shift from what we call underweight to overweight. Lots of big-time investors own no bank stocks or faux bank stocks like the credit card companies. Now they are reaching for the banks and the easiest and most liquid? Bank of America.

Next quintessential Trump stock? The metals and natural resources stocks that represent old-line manufacturing and fossil fuels and anything that abets them. Trump's not one of these "keep it in the ground" guys when it comes to fossil fuels. He wants to encourage drilling and permitting. The unintended consequence that has boosted the oils? The surprise OPEC agreement that took oil to $50, shocking so many traders. Trump could be so good for this group that the oils might overproduce and drive the price down.

There are only a few steel and metal stocks that you can own and the scarcity value has stocks like United States Steel (X) , AK Steel (AKS) , Nucor (NUE) and Freeport-McMoRan (FCX) rallying like crazy. I get it. They probably have further to go.

Remember, I said anything that aids and abets: These kinds of commodities need rails to get from Point A to Point B. The group's on fire. Without Trump who, remember, made pledges to the coal miners, these stocks would have stalled out. But you can't ship coal any way but rail. You get cold weather and you get those coal inventories down, you could have still another leg up here. They are why the transports just confirmed the rally with a record high -- the first record high in two years.

Next group of stocks? Those pure-play beneficiaries of repatriation of offshore money who will do better with lower taxes and better growth. Unlike stocks with specific tailwinds like the banks and the rails, these are just generally good stocks to own under this regime.

Now there's an issue with these stocks. Unlike, say, the banks that have near-term fundamentals on their side, this group often doesn't. The manufacturers aren't doing as well as we would like, especially with a strong dollar that comes with higher interest rates as money floods here from overseas.

You can pretty much throw darts at the industrials here to meet these criteria. Heck, even the now-redeemed United Technologies (UTX) and Boeing (BA) can be bought. What can I say? It's a Mad Max Market. Make a deal and your stock can rally. Bust a deal, face the wheel ... or the tweet, if you want to get all modern about it.

Don't forget the airlines. Southwest Airlines (LUV) had its best November ever at plus-7%. That's a telling statistic as are the rip-snorting moves in FedEx (FDX) and United Parcel (UPS) .

I would love to recommend a bunch of tech stocks, but there isn't enough money to go around except for the ancient mariners like Western Digital (WDC) and Micron Technologies  (MU) . What about FANG? Facebook (FB) , Amazon (AMZN) , Netflix (NFLX) and Alphabet (formerly Google) (GOOGL) ? They are winners from taxes and repatriation, but they aren't perceived to be Trump stocks because Trump doesn't like to be poked, and only owners of Netflix feel at peace with the man.

Better, far better, are the domestic companies that live and die by the growth and power of a strong consumer, and the lower tax rates are the more robust the consumer. That's great for the consumers so anything retail or restaurant is now flying.

You want a real live example? How about the research from BMO Capital recommending Dave & Busters Entertainment (PLAY) , the entertainment, retailer and restaurant that we have raved about so often on the show. After a spectacular quarter that has sent the stock up $8 or more than 18%, BMO's piece is entitled "Already Great Again, but is PLAY -- the Ultimate Trump Trade?"

I love this paragraph: "First, PLAY is likely among the most levered to an improvement in the consumer reflecting its discretionary nature, fully company-owned ownership mix, and nearly entirely domestic footprint." The report goes on to say, "Second, PLAY would be among the biggest beneficiaries from tax reform given its 37% average tax rate over the past few years."

Wow, that rate could be cut in half. Play with PLAY! Dave & Busters may be the ultimate, but whatever's good for PLAY is also good for any company that involves play: dining out, hotels, travel leisure all of which, by the way will benefit from deregulation as they all face lots more rules than they can handle, as I know from my own little inn and tavern.

Finally, there are the irredeemable, companies that need Fed help but don't play ball with Trump, namely the drug stocks. Trump's good to his promise and he said we are paying way too much for drugs as a nation. They better roll those prices back before he singles out one of the companies -- Valeant Pharmaceuticals (VRX) anyone? -- and makes an example of them. It could get very nasty.

You are going to have some hybrids here, some Trump-non-Trump shares like Caterpillar (CAT) , which could benefit from a pickup in U.S. activity, especially oil and pipelines, but lose out with some tough talk about China that's going to be a staple. I don't know if the Communist Party's going to be rolled. Trump's betting it will. You've got the same deal with many of the consumer product companies. They want lower taxes and financial repatriation, but they could be in the cross-hairs of Trump's policies. We used to hear about who lost China back in the 1950s after the country went Communist. You are going to hear about who lost China again if Trump makes a point that the pain of some lost international sales is just the cost of becoming a stronger country again.

Now I realize I am cutting a broad swath here. Are the telecoms Trump stocks? If they could be more deregulated, yes. T-Mobile US (PCS) would thrive in that world and its stock's a rocket. How about the real estate investment trusts? Twitter (TWTR) ? Yes, if it can figure out how to monetize its hottest commodity, The Donald. Homebuilders? Yes, as long as rates don't go too high.

But, here's the bottom line: Trump, like the market, tends to fluctuate. Consider this no more than a cheat sheet that's subject to changes. But right now with the market at all-time highs but only some stocks taking you there, it's better to make a good deal than face the wheel without a Trump stock to your name.

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