You knew from Monday's bizarre session, when everything couldn't go up, that you couldn't have the Biden stocks -- the stocks of companies that want business in China -- and the Trump stocks -- the opening of America trade -- both work at the same time.
You knew that one had to be wrong.
That was surprising and disappointing to all of those people who have lost their jobs or are about to lose their jobs, because the enterprises they are working for don't have enough money to pay for them. The airlines? They are like milk with a past due date for their employees. You have to wonder where the 14 million people involved in the hospitality industry are going to go with their pink slips.
Maybe all of the newly unemployed can learn how to swing a hammer and hit some nails into Lennar (LEN) bought two-by-fours to take advantage of the red hot housing market.
I know there were plenty of people who just wanted to surge the wave of new money coming from Washington. This is a market that thrives on liquidity and the president just pulled the plug on the ocean of cash that seemed to be headed to peoples' pockets.
What drives this decision, one that seemed to be unthinkable as long as Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi seemed to chat daily about numbers? They seemed to be getting closer, not further away, until President Donald Trump arrived back in the White House from Walter Reed Hospital.
Plus, speaking of surprise factor, not that long before the Twitter-announced pull, Fed Chief Jay Powell said that he favored doing more, not less, because the possibilities of downside were worth avoiding pretty much at all costs.
I think it's a calculated risk taken by President Trump that the economy is stronger than most in Washington and Wall Street think. He's a huge believer that we have a "V"-shaped recovery and he touts it every chance he can get, including Tuesday when he said that "the stock market is at record levels," which they were nearing before he pulled the plugged on the talks.
A president who tweets, "We are leading the world in Economic Recovery and THE BEST IS YET to come" is not one who will be trifling with negotiators trying to beat the election with a deal. Plus, the president made it clear that after the election, "we will pass a major stimulus bill that focuses on hardworking Americans and Small Business."
Can the small businesses hold out until after the election? Can the airlines make it with their cascading losses? How about the hotels that are in arrears? How about the renters who won't pay and the landlords about to go into default? How about the states that are bleeding from their eyeballs because of the pandemic?
Once again, at the risk of sounding heartless -- as someone who just closed his restaurant, because how long can you afford to be a restaurant without any customers? -- it won't matter to the stock market. That's because the stock market is reflecting a triumph of big business over small business and when the smoke clears that will be evident.
Why isn't the president much more worried than he is, and why is he more confident than Jay Powell about the economy?
I think it's because his aides are conscious that there are lots of areas of the economy that are red-hot and will stay red hot regardless of the stimulus. Let's just call them the non-stimulus-needing portions of the economy that rely on people who has jobs, not the ones who don't.
First among these are homes. As long as pandemic rages, there is going to be an exodus from cities to the suburbs and those people need homes. Of course, if you are out of work these low interest rates mean nothing to you. But if you have a job, you can use those low rates to buy a home and furnish it to your heart's content. This bull market could get crushed, if rates were going higher, but rates are sinking on the last of stimulus, so there's not much that's going to undermine this one. I like the housing stocks and I like the stocks of companies that are in the aisles of Home Depot (HD) and Lowe's (LOW) .
Speaking of Home Depot and Lowe's, they are real winners of a lack of stimulus, because many small businesses that were hoping for stimulus have now seen their hopes dashed and they can shut their doors. Target (TGT) , Walmart (WMT) and Costco (COST) are huge beneficiaries of a lack of stimulus. You can't get stronger than these guys, now that the remaining competition has to fold.
I absolutely love these stocks, because the lack of competition, and the share donating by loser department stores and small business people trying to make it to Christmas will continue with reckless abandon. This is also a huge win for the dollar stores, because that's where those who struggle to make ends meet do their shopping.
How about the autos? Did you see Group 1 Automotive (GPI) on Tuesday? I mean that thing was on fire, because sales were that strong, as strong as those of Carvana (CVNA) , AutoNation (AN) , Lithia Motors (LAD) and CarMax (KMX) . These are mostly used-car outfits -- precisely what you need if you aren't commuting to the office anymore, lest you have to go on public transit or carpool. The president may have little fear of Covid, but if you car pool or take public transit, you aren't going back to the office. You are buying a used car. You want to stretch the field? Buy the stock of Ford (F) , which is at the beginning of a nascent turnaround.
Needless to say, if you have enough money and you have a job you are back on your Peloton (PTON) , which is a boring, but worthwhile theme. You are still making use of the internet for shopping and you are getting a chance to buy some Amazon (AMZN) , right ahead of Amazon Prime on Oct. 13 and 14. You wouldn't see Federal Express (FDX) and United Parcel (UPS) up if that theme had gone bad.
And don't forget Yum! Brands (YUM) , Darden (DRI) and Chipotle (CMG) , the first two of which were down Monday as they are anti-stimulus stocks. That's because stimulus keeps the little restaurant alive until the vaccine arrives, and the latter is the last man standing.
Now, I don't want to be too glib here. Numbers will have to come down for a bunch of companies, but not much when it comes to technology, because technology supports the enterprise not individuals. You can watch until those sink a little lower and then pick some up. There will be people who say we will go into a recession, which I disagree with, but your buy list is shorter: Pepsico (PEP) , which just reported a great quarter, Conagra (CAG) , the same and Campbells (CPB) , too cheap to ignore. I like Bristol-Myers (BMY) and Johnson & Johnson (JNJ) and Regeneron (REGN) when it comes to the recession-proof drug companies.
But don't out think it. This is a stock market that's filled with, and caters to, people who have jobs and work at solvent or growing businesses. There is a V-shaped recovery in homes. There is a U -recovery in autos. There was never even a downturn in Walmart, Amazon, Costco, Target, Home Depot and Lowe's.
They all work. As do the food and drugs and the stay-at-home, work-at-home Cramer Covid-19 stocks, because as much as it looked good that the president ripped of his mask, most of us will be putting them on extra tight this fall.
The rest of the companies? What can I say? You don't buy stocks in the small- and medium-sized businesses and you were never going to invest in Bar San Miguel, anyway.