Yes, we are correctly consumed by social unrest and the gruesome pictures from around the nation. We are shocked that the peaceful protesters, bent on social change, are mixed in with looters, many of whom have made our cities too dangerous for many to enjoy.
Yet, it seems that each time the market should be clocked, we get a stay of execution from some section of the market or some corner of the world, of often where we least expect it. The reportage is correctly struggled on an almost Nixon-like series of law and order dicta by the president as the curfews seem to go unheeded and the smashed windows blot out the dialogue so many of the protesters speak.
But I have been watching other places besides the United States, and they are flashing green. I think they can surprise us -- even give our international companies a boost. I'm talking about the possibility of aggressive stimulus in Europe, including Germany, where they seem to be falling all over themselves to resurrect their gross domestic product as well as the now considerable turn in China replete with an 11% gain in auto sales, and a surge in iron ore and copper, the latter reaching an 11 week high. That's significant, because copper is a still a tremendous bellwether of economic activity.
The implications for a China recovery are enormous. First, we may be having a trade war at the highest levels, but it hasn't extended down to many American businesses. There was a bit of an uproar Tuesday about Apple (AAPL) cutting prices for new phones ahead one of those Communist- mandated shopping holidays. I say hold your horses; the last time Apple cut numbers it took a lot of market share and ended up surprising in sales. Apple's inscrutable, except for Tim Cook's impassioned plea for social justice, so we don't know how well Apple is really doing. I know it, like Paypal (PYPL) , is benefiting from contactless retail sales as people are reluctant to touch credit cards after they have been touched without whipping them down and no one wants to touch a key pad, which seem like national Covid playgrounds. But I a drawn to a return of the Chinese market after the Wuhan shutdown.
Nike (NKE) could be getting the boost it needs from more aggressive spending. I was horrified to see a Nike store looted in Manhattan, but China is the locus of Chinese growth, and I believe that China's Ministry of Education, a Nike partner, could logically step up its program to keep kids healthy. We all know that the better shape you are in the less likely you are too get extremely sick or die from Covid. Our country will yawn about how to lower obesity. An entire packaged food industry seems hellbent on keeping people addicted to junk. I don't expect China to be that cavalier and I expect Nike to play a part.
There's been some ridiculous misinformation being spread about Starbucks (SBUX) and how it lowered numbers Monday. The statements, which caused a brouhaha of concern knocked the stock down just when things were stabilizing in this country and on the increase in China. Do not be distracted by any slowdown in the U.S. that is already in the numbers and, instead focus on Starbucks China and its now hobbled and humbled competitor, Luckin (LK) , who's luck -- and capital -- have run out. I remember when Luckin was supposed to destroy Starbucks. Well, it destroyed itself with fraud.
China's strength can have many ramifications; it can put a bid on oil, it can drive train traffic, but most of all, if trade can go uninterrupted for a few months, it can provide a spur for many of our semiconductor companies. If you listen to Marvell Technology (MRVL) tonight you will know how much business China is starting to do with U.S. companies to build out 5G. Skyworks (SWKS) , Qorvo (QRVO) , Qualcomm (QCOM) , are all redoubtable stalwarts now that China's back online.
We can also, perhaps, count on some Boeing (BA) orders, some Caterpillar (CAT) business and even orders for General Motors (GM) . These are all laggards. They can play catch-up, like Dow Chemical (DOW) has, with a stock that rallied another two points and, at $40 is well above where CEO Jim Fitterling made his fabled called shot on "Mad Money" at about $25 a share. DuPont's (DD) a winner, too, even with its auto exposure, as auto sales can indeed pick up. Yes, when you see those spectacularly strong Purchasing Managers' Index numbers from China, you know that its ordering, whether the party likes it or not.
We fret so much about Tesla's (TSLA) American orders, but I think we should be thinking about Shanghai orders, as that's where the money is.
Oh, and Americans were not able to discern that Alibaba (BABA) had a tremendous quarter, because of fears that U.S. legislation meant to rein in really silly, money-losing Chinese companies might also impinge on owning shares in Alibaba. I like the Amazon (AMZN) of China, because its financials are identical to those that American authorities want. The strong quarter is still not reflected in the stock, especially after Baozun (BZUN) , another Chinese e-commerce play, reported spectacular revenue growth last night.
As much as China intrigues, it's been a dog's age since anything good at all has come from Europe. But now you have the European Central Bank and German Chancellor Angela Merkel outdoing each other to figure out how to get economies moving again. Merkel had been stoic throughout a no-growth era, but I believe that fears about what's happening here make her tremble as civil unrest is what the historically fixated Germans correctly fear.
Last night, after the United States' president's fire and brim stone law and order screed, our futures plummeted. A declaration of war, replete with the threatened deployment of the non-police functioning U.S. Army -- that's not their job -- makes you want to sell stocks for certain. They stayed soft until I got up at 3:15 a.m. to inspect the pre-carnage.
Nope. Wrong.
Nothing.
An hour and a half later we were up, up nicely. You know what counteracted the paroxysms of pain? A 4% rally in the German stock market with several of the bourses not far behind. Before China became a fixation, Europe, an economy of 800 million people, used to matter. But it's been moribund for years. Can you imagine if it actually took off? You should, because it has, at last, stemmed the decline of the U.S. dollar and reversed it.
So many companies that report have to adjust down for currency and that adjustment matters because of its relentless nature. Now that U.S. rates are equivalent to those of Europe, the money is staying there. Europe, alas, has a pulse, and its pulse is loud enough to impact our stock market in a way that actually overshadowed the potential war between the streets.
Look I am not trying to be a Pollyanna here. We have a massive employment problem. We have stock trends like the work-at-home, play-at-home theses, that seem long in the tooth. There's a meek rotation into financials, because there's been so much debt issuance and now, this week, some equity issuance.
But the action, and our savior from these levels, may have to come from overseas. Bulls, who cares, we'll take it.
(AMZN, SBUX, MRVL and AAPL 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.)
