You do not need me to critique Tuesday night's debate. Heaven knows you got enough of that already. But what you do need me for is to relate the debate to the reality of the business world and you can find a lot to like, even if you found the battle unpalatable.
And, amazingly, while everyone seemed universally to condemn the debate, the market liked it, liked it a lot and it's worth exploring what you heard and what you didn't hear that explains a lot about how your portfolio formed.
First, I think what we have to go over is what we didn't hear, an attack on the health care system as we know it. Many of us can remember that one, if not both, candidates tried to score points with the electorate by attacking the greedy health care insurers who, in the name of shareholders' profits, have crushed the nest eggs of the meek.
Nope.
Not last night.
They weren't portrayed as villains this time. No one took a shot at them. When that happens, we are willing to pay a lot more for these companies' shares. I have been waiting for the stock of Centene (CNC) to reflect the company's incredible stewardship thanks to long-time CEO Michael Neidorf. It took the debate to ignite this stock, sending it up 5%. Anthem (ANTM) , Humana (HUM) and Cigna (CIG) all advanced, too. Even CVS (CVS) , which has been such a poor performer after it paid a ton for Aetna, was able to rally. I have parsed every word of that debate and the most important ones were uttered by the much criticized moderator, Chris Wallace, who said "you, in the course of these four years, have never come up with a comprehensive plan to replace Obamacare." That's music to all of the managed care companies. Remember, Joe Biden happens to be the greatest defense of the status quo, because his administration created Obamacare. There will be no disruption of this important group. I say that means we are now in clear sailing territory for this group. It's been awhile since I have green lighted it, but now is the time.
Second, I didn't hear anything that made me feel that the banks, long-time punching bags of the Democratic party, didn't even merit a whisper. No wonder that group just ignited with Discover (DFS) , the credit card company, and the one-time pinata, Goldman Sachs (GS) , leading the way. Easy targets all. Again, I find this amazing. A free pass for the bankers. When was the last time you have ever seen that?
Third, let's talk about optimism for a cure for Covid. The president said that he just spoke to Moderna (MRNA) , Johnson & Johnson (JNJ) and Pfizer (PFE) and the vaccine are ahead of schedule. I think that Operation Warp Speed is important, but the president's words got me digging into what's really happening behind the scenes that are creating optimism in this uphill fight against Covid-19. I don't think those companies can be bullied into doing something premature. But it did get me thinking about how close we really are to finding something to help bridge the gap until we get to a vaccine.
First we learned from Regeneron (REGN) last night that it has developed a monoclonal antibody that might be the first line of defense after you are infected. This morning Dr. George Yancopoulos, co-president and chief medical officer told me that he hopes, one day, that if you are tested positive you are immediately given the cocktail that Regeneron is making and it will stop and reverse the viral load that causes all of the problems and contagion. This could be gigantic, because right now if you get it, we have no surefire way to control it. Can you imagine what would happen if you tested positive and you could reverse it to negative with a medicine? That's what Regeneron is working on. The stock didn't react. I think it's a buy. I have since it was $5. It is now at $557.
Then, I think that the president's decision announced the other day, to send out the 150 million Abbott Labs BinaxNOW (ABT) tests is a huge game changer. The test, which gives you results in 15 minutes downloaded to an app on your cellphone, basically gives you a short-term pass for $5. You make an appointment as a CVS a Walgreens (WBS) or a Walmart (WMT) . You get tested. By the time you are home you have the results. The hope is you can use the QR code that you get with the results as a kind of boarding pass for anything you might want to go to, including air travel. That's why Abbott's stock rallied again Wednesday. It, too, is a buy,
Now, one thing we know about Covid-19, it is a wily killer. Witness what happened in the NFL. Members of the Tennessee Titan football team tested negative on Saturday and were positive on Monday. The NFL has any amount of resources to test and test and test. But they still got it and all you could do to stop the spread is contact trace.
There is no certainty with Covid. If people want zero risk. Sadly, they have to stay at home. Vaccines will help, but even those may not be perfect, either. We are going to be living with Covid-19 for a long time.
But I felt after last night's debate that at least there are some serious attempts to reduce risk out there. A bunch of safety measures will help to get the job done. Perhaps it would have saved the 28,000 jobs that Disney (DIS) had to cast aside because of the disease.
Finally, I was certain that both candidates would spend a big chunk of time bashing China. Except for the usual China virus stuff from the president, neither tried to outdo each other in taking shots at the Chinese. Sure, there were some boiler plate blasts, but nothing that could be considered threatening to the vast complex of tech that needs Chinese relations to at least not get any worse? I think that's why, even though Micron (MU) , the huge DRAM semiconductor company gave you a very downbeat forecast, it didn't infect the other companies. Witness the big move up in Nvdia's (NVDA) stock, and remember Nvidia will need China's OK on its brilliant attempt to acquire Arm Holding from Japan's Softbank.
I believe the more gentle way that China was handled also helped the stock of Apple (AAPL) , which was the first to rally after a so-so opening.
I know it is difficult to separate the endless ad hominem attacks and the tiresome name-calling and the bullying and the wise-cracking, but you have to understand that, as a student of the impact of debates on the market, this one comes off as benign to positive for the markets. Sure, Biden talked about raising taxes, but not with much zeal. Yes, the president talked about knocking down prescription drug prices, but not with the vehemence he reserved for pretty much everything else.
The results? You can see how for the moment, the candidates are giving the markets a free pass. Now, as usual hopes for a stimulus deal inflated the markets midday. But they so often forget that the key figure in the fiasco/theatre whatever you want to call it is Sen. Mitch McConnell and that means stimulus could be small or doomed because many Republican senators are listening to the president's rhetoric about a "V"-shaped recovery and are in no mood to spend any more money even if it dooms hundreds of thousands of smaller businesses.
C'est la vie?
I say, so far, when it comes to the market, though, neither candidate seems to be the enemy, even if Biden can get some tax increases through. It's a thicket. It's early. But bull one, bear nothing.
(AAPL, NVDA, DIS, ABT, JNJ, PFE, GS and CVS 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.)
