All I heard and read all day Tuesday was that the reason why the S&P 500 hit a new all-time high -- that's right, took out the Feb. 19 close -- is because we are having a "V"-shaped recovery. Endlessly, I listened to people and read about how the economy's comeback was the fastest ever, and the recession the deepest and the shortest.
These comments made me laugh. They are spoken by people who have no idea about the divergence of the stock market from the real economy. Before I became Jimmy Chill, I would have called these people mountebanks, or knaves or fools, maybe throw in a sunshine, or even chief'ed them.
Now I just say they are ill-advised.
What makes my view empirical and theirs reduced to the disgusting thin reed that is anecdotal?
As always, it's the craft. The craft of looking at what stocks have brought us here, what stocks have gone up the most, and then worked backward to see if they have any connection at all with the economy.
If you perform this exercise, which these stunted folk can't do, you will see that we have a V-shaped stock market recovery, even as the actual economy can, at best, be described as on tenterhooks post the run off of the government stimulus that has done a terrific job, but is now gone, a work no longer in progress, a siege about nothing except bringing down the small businesses that you can't see in the stocks I am about to rip down. Remember, I have the edge. I know what they do. They don't even know the symbols.
Numero uno in the case against the V-shaped economic recovery, but for the V-shaped stock market, is none other than PayPal (PYPL) . We interviewed Dan Shulman on "Mad Money" last week and once again he made it clear that it's PayPal's time. No one wants to touch cash, which seems bathed in Covid. The pin number? How about six digits of Covid? Paypal's the way to go. It's fintech personified. When you see that it has rallied 57% since the Feb. 19 top, you need to say, wow, that's just horrible for all of the regular banks, the JPMorgan (JPM) , Bank of America (BAC) , Citigroup (C) and Wells Fargo (WFC) . It's pretty zero sum when you stack Paypal up against all of these brick and mortar outfits with huge credit risk in the recession we are in.
Next is Nvidia (NVDA) , the company I renamed my 13-year-old rescue dog for. Unlike Nvidia the dog, this company can hunt and then dominate all sorts of markets including machine learning and artificial intelligence, edge computing, gaming and data centers. Nvidia now is what Intel (INTC) used to be then. CEO Jensen Huang is a modern day Leonardo da Vinci, who for the historically challenged, is not a movie actor. Like Da Vinci, Jensen's an architect, an inventor, an engineer, a visionary, a rocket scientist, a culinary expert and the nicest CEO I have met in my 15 years of this show. No offense, Marc Benioff. Plus he has a cool leather jacket that I don't have the cred to wear. The company reports Wednesdsy, and I have no idea if the stock can handle its 55% gain since the market top. I do know this, the quarter will be done with one hand tied behind its back-the company has the best driverless technology, which has still not become viable. Nvidia's making whole segments of tech obsolete along the way. Zero-sum? In a lot of markets, yes.
Three is Apple (AAPL) , yes, Apple. It's up 41%. If you followed me on this, you braved multiple downgrades, a slew of stories that said it would be crushed by China, knocked out by the closing of retail stores, beaten by the worldwide recession and, of course, destroyed by Covid. The research firms would have you gone in and out and in and out and in and out again, missing the entire 41% move, a move that was not even grazed by the recession. If you owned it and didn't trade it? The prosecution rests.
I know this is getting obnoxious, but I don't care, the fourth best stock is another one of my favorites: Advanced Micro Devices (AMD) . Lisa Su's done battle with the current version of Intel for all sorts of chips from personal computers to data centers, and it's always been too close to call. But this was the quarter that Intel lost; it couldn't make the chips that Su could. And her game set match gave her stock a 38% return. Does Su's success have to do with the economy's success? Far from it. She triumphed over the larger Intel. David slew Goliath.
The more complex the chips, the more you need Cadence Design Systems (CDNS) , which rallied 38% from the bottom. Cadence is pretty opaque; don't tell you much. Never have and I owned a big slug of the company back in the early '90s. Never pushed it hard. My bad. But the success of Cadence has nothing to with the economy whatsoever. The fifth biggest contributor signalled nothing about economic rebound. Just Cadence unbound.
Because I own Bar San Miguel, my small plate Mexican restaurant struggling daily with social distancing in Brooklyn, I am well aware of Qorvo (QRVO) ; it's what people drink when they are down. OK, fooled you, or acted like an economist who doesn't know Qorvo from Cuervo. This semiconductor company, which rallied 26% from the February peak, is a function of the fact that it makes radio chips for Apple. Have good client, will travel and finish sixth.
Qualcomm (QCOM) ? I could easily say see Qorvo. In fact, I will. It's a fabulous intellectual property company for cellphones and while it's litigious it's been winning, explaining its 24% gain, seventh in the homerun derby.
The Chinese have taken the mantle away from so many of our industries, but not semiconductor equipment, where we shine. One of the best performers for ages has been Lam Research (LRCX) . But this time around, Lam was only up 12% and it was its rival KLA Tencor (KLAC) that produced the big 23% return finishing eighth. It's vital, Peter Navarro and friends in the White House, that this industry is protected from the People's Republic of China stealth. It's the best we have.
When we think about software as a service, a company that can save you a fortune in time and money, ServiceNow (NOW) should come to mind. Bill McDermott, formerly of SAP (SAP) , came in hot, used that Rolodex and won a lot of huge clients. It showed: the stock rallied 22% and it's not stopping.
Last is No. 10: Synopsis (SNPS) . SNPS does pretty much the same thing as Cadence Design does, and for that superior semiconductor design work it's rallied 22%.
Now here's the issue: Somehow you may be foolhardy enough to think I cherry picked. But I will classify the next 10 for you: three semiconductor and semi equipment stocks, one work-at-home company, two financial tech and service stocks, one cellphone equipment stock, and two ecommerce companies and Microsoft (MSFT) .
There is one common theme among all the top 20 stocks that had the biggest gain since what you could argue was the beginning of a recession: They digitized this economy. Digitizing is short hand for cut out the fat, the fat being, alas, the real economy. When you can't afford people, you bring in this brigade of companies.
How about the industrials? Nothing to write home about. The financials, dreadful. The health cares? Unless you have a vaccine, not much. Retail? There are a few winners like Home Depot (HD) and Walmart (WMT) and lots of losers like Kohl's (KSS) or Nordstrom (JWN) . It's truly fascinating how divorced the winners have become and how little they have to do with a V recovery. In fact, I will go a step further: Many of these companies are why it is an "L"-shaped economy, going nowhere without new stimulus.
They are stocks full of sound and fury that signify nothing about the hardship of tens of millions of people on food lines, or, waiting to be fired from service businesses, especially restaurants and small retailers, or just huddled at home waiting for the vaccine nicknamed, right now, Godot.
(MSFT, QCOM, AMD, AAPL, NVDA, and JPM are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells these stocks? Learn more now.)
