WASHINGTON. Via Twitter, President Trump has kept the nation informed about the ups and downs of these bilateral trade and tariff negotiations, for better or worse. The immediate results, thanks to Wall Street’s headline-driven algorithmic trading machines: violent whipsaw markets. This makes for an exceedingly treacherous investment climate for those of us trying to trade and invest at home. Without those high-speed lemming-robots at our beck and call. CNBC’s Jim Cramer doesn’t like the current barrage of Trump tweets on the chaotic trade negotiations with China. I do. Kind of, sort of.
Jim Cramer mistrusts Mr. Market. So do I.
As I indicated in Monday’s column, Mr. Market didn’t appear to look so hot yesterday in light of America’s ongoing trade battle with a clearly intransigent Chinese Communist government. As if to prove the point, the Dow crashed badly. It plummeted close to a negative 700 points by Monday’s close as the President tweeted away.
However, today, at least as of 1 p.m. ET, the Dow has recaptured nearly 50 percent of Monday’s loss. But we all need to remain skeptical in this current hair-trigger market environment, as Jim Cramer pointed out Tuesday morning.
“Jim Cramer voiced concern about the staying power of the stock market’s bounce Tuesday following President Donald Trump’s latest tweetstorm on China trade and Monday’s sharp decline.
‘”I don’t trust this market at all,’ Cramer warned on ‘Squawk on the Street’ as stock futures pointed to a higher Wall Street open, which in fact came to pass through the morning. ‘[Trump] has made it so we got to wait to be able to buy.’
Trump tweets: Disturbing the zeitgeist of Mr. Market
That latter reference was to the President’s tweet pushing the Federal Reserve to lower interest rates as another way to force the Communist Chinese to get real during the increasingly rocky US / China trade negotiations.
But here’s Cramer’s money graf.
“Trump is ‘really disturbing the zeitgeist of the stock market,’ Cramer said. ‘He should knock the tweets off if he wants the Dow to start going up, at least today.’
Cramer’s first comment is right on the money. President Trump really IS “disturbing” the stock market’s “zeitgeist.” Ditto that huge fusillade of Trump tweets.
But in many respects, that’s why America’s Deplorables elected Donald Trump in the first place. As we’ve duly noted many times, Washington’s Deep State succeeded in aggregating too much power to this city’s well-established faux-socialist elites, inadvertently conjuring up their “Destructor,” as Danny Aykroyd did, quite inadvertently, in the original, real “Ghostbusters.”
The entire world has chosen the form of its Destructor. The Deplorables rejoice.
Trump has already busted half the elitist China closets in D.C. (no pun intended). And his tweets are meant to keep the masses informed in a way no other president has. Yes, the President’s latest tweet barrage is disconcerting to say the least. And it certainly nicked a major artery in my portfolio on Monday. Not to mention last week, when I was abroad and couldn’t really follow Mr. Market very closely.
That said, what the hell have the last four US presidents done to keep most of the world, including China, from eating our lunch? And subsidizing their own socialist governments by slapping tariffs on vast amounts of American products while we failed to return the favor? No wonder all those once middle-class-supporting manufacturing jobs departed for other shores over the past 30 years or so.
The Chi-coms have no intention of playing nice.
Frankly, I’m not sure that anything less than a wholesale revolution in China will deter the current Chinese Communist government from its headlong drive to achieve worldwide domination by 2025. And such a revolution is dubious at best, as we learned years ago during the 1989 Tiannamen Square massacre. What the Chi-coms want, the Chi-coms get, as any remaining dissenters in that country long ago learned.
But who knows what will happen this time. The US does have the upper hand here, from an economic standpoint. On the other hand, the Chinese Communists are crafty enough to cause plenty of damage in the US small farming sector via their own targeted tariffs. They are clearly playing stall-ball with this president, hoping to damage his strongest constituents to elect some wussy Democrat in 2020 who will, like Trump’s predecessors, bow down and submit.
In this, they’ve been greatly encouraged by the fake-news networks and the majority of Congressional Democrats, along with seditious Deep Staters embedded in the State Department, the CIA and elsewhere. All of whom have badly damaged the outcomes America’s Deplorables elected Donald Trump to accomplish.
Don’t miss the next thrilling episode.
Tuesday Trade: New rally or dead cat bounce?
Meanwhile, let’s briefly get back to Cramer, who was really on fire (or, as he says, “en fuego”) with the truth during this morning’s CNBC broadcast.
“Cramer said Wall Street is nearly oversold and investors should get ready to load up on names that can withstand higher tariffs.
“However, in light of the uncertainty around Trump’s new tweets, Cramer on Tuesday advised investors to let things shake out, saying there may be a buying opportunity in stocks later in the session.”
Jim Cramer is routinely trashed by some of Wall Street’s most “prestigious” financial advisors. But, as a one-time hedge fund trader, he knows how stuff works in the stock market because he used to be a big player.
The market WAS oversold Monday, as my favorite early-warning indicator, the standard-issue McClellan Oscillator foretold. Note the green line we’ve drawn, connecting this year’s previous low with yesterday’s. (Image via Stockcharts.com)
The green line tells us that we were indeed due for at least a dead-cat bounce today. Or maybe tomorrow at the latest. However, this welcome bounce’s staying power is as yet unknown.
What to do about our portfolios? General ideas
I continue to snug up a few positions here and there and reduce the exposure of our portfolios to Mr. Market’s temper tantrums accordingly. But in times like these, even though it’s also “Sell in May” time, I’ve found that if you go all cash at this point, you won’t have anything in the game for the next massive rally, which almost always shows up without much warning, at least for us little guys battling the high-speed machines at our home-based PCs.
Bonds and preferred stocks – the latter of which we hold in abundance – held up rather well Monday. International stock holdings, not so much. Maybe it’s time to pick up a few utilities again, hold the rest, continue to fume about Allergan (trading symbol: AGN) and not get too excited. As of now, the Chi-coms likely want to drag the current trade war out long enough to damage Trump’s chances in 2020.
But Trump’s no fool himself, MSM idiots and left-wing trolls to the contrary. But for purposes of portfolio stability, we remain in the neutral corner at the moment. We’re also trying to avoid big international trade-dependent Dow-style stocks this morning, although we’re stuck in a small position in Apple (AAPL) at the moment.
We’re going to go about 25 percent cash here at this point, jettisoning weak positions on up days like today and holding fire during downdrafts. But we’ll let the rest of our positions ride. Cagy Jim Cramer has got this situation covered, at least for now. It’s nice to have some company for a change.
— Headline image: Trump as the Destructor. Image by the author.
Based on screen capture of YouTube video trailer for the original “Ghostbusters.”
(© 1984, Columbia Pictures. Fair use of image for satirical purposes.)