It didn’t take long to remember what a second Donald Trump presidential term would mean for the stock market, did it? Unpredictability. Random attacks. No one safe. Mercurial positions. The only difference? Former Vice President Mike Pence meant nothing. He was supposed to mean nothing. Now the Republican candidate’s new running mate, Sen. JD Vance of Ohio, means plenty: a populist agenda that antagonizes the “barons,” conveniently leaving out “robber” during his GOP convention speech so we can complete the phrase. Vance’s antagonist approach may be something said to placate the extreme right, not unlike Mary Elizabeth Lease, an activist aligned with the Populist Party in the late 19th century when that was a party that vowed to “raise less corn and more hell.” Right into the cauldron comes the mammoth uncertainty of the Democratic Party presidential race after President Joe Biden announced Sunday that he was dropping out of the 2024 election . Biden’s decision came in response to mounting pressure from figures within his party , who worried that if the president did not drop out, Trump would be marching toward a landslide victory in November. Total uncertainty. We don’t like uncertainty. But in most cases a winning strategy for uncertainty is a movement to the center — by both parties. That might mean a break from what we had to believe would be endless “America first” abdication and a spiting of U.S. allies even if it comes to protecting them without some sort of tithe in return. Think of the vicious decline last week in Club holding Advanced Micro Devices , — a little more aggravated than I first thought when we put on a small position Monday —after the semiconductor industry was injected back into the geopolitical spotlight. Perhaps investors fretted that its hefty sales to China could go away if the U.S. implements tougher export controls. They may also have worried about its reliance on Taiwan after Trump’s comments about the self-governed island , which is a chipmaking hub. The Biden position had been to try to protect Taiwan — awfully hard with no geographic room to maneuver— and to build semiconductor factories in the U.S. to make us less reliant on the island. We can’t make Nvidia and AMD’s advanced artificial intelligence chips in the U.S. because they are too specialized. But the chips need by non-cloud computing giants — i.e. everyone else — can be made here. But let’s go a little deeper. Not much is known about Vice President Kamala Harris . From all I can tell, she has followed the Biden administration’s policies on pretty much everything. I have twice met her husband, second gentleman Doug Emhoff. He came up to me at a White House correspondents’ dinner afterparty last year and told me he watched “Mad Money” with his kids. I had no idea who he was but was thrilled that he was a fan. He talked about how interested he was in the stock market and that he wanted his kids to learn so they watched my show together. I asked him what he did and whether he was “in the business,” which was not all that wise of a question. He said he was the second gentleman. I distinguished myself further by saying I was a gentleman, too. He then clarified his role but I was already deemed — at least by myself, but also perhaps by him — as a dolt of Nvidia-like proportions. When I saw him again this year, I gave him a big hug, which the Secret Service tried to stop, and he seemed to have forgotten about my faux pas and asked about the show. I was gracious in my reprieve from idiocy. From this experience, I highly doubt that Emhoff, at least, has the disdain for the stock market that Biden has, or else why bother to tell me he is a fan and then back it up with show remembrances as opposed to the usual blank people offer when I ask about any particular shows? All that said, it would obviously be quite wrong to consider Harris a shoe-in for the Democratic nomination given how unknown she is and how little she has endeared herself to the American people. Her pedigree is undefined, and Biden’s legacy doesn’t seem to be determined by whether she gets the nod. In any case, Biden in a social media post Sunday threw his support behind Harris . I do know this: The likelihood of a real race between two parties makes the possibility of a landslide much less likely and, therefore, the likelihood of a Republican sweep of the White House and both chambers of Congress much less of a certainty. Wall Street loves gridlock so that’s just a huge win for the market, although that’s not yet self-evident. Either way, it is hard to expect the Democratic candidate to be as ideological as Biden, which means the possibility of a vendetta against business, including Big Tech, looks less likely. I would be hard-pressed to think that Lina Kahn would stay on as head of the Federal Trade Commission or that Assistant Attorney General Jonathan Kanter would continue to lead the Justice Department’s antitrust division. Behind-the-scenes I hear of horrendous bad blood between the government and Big Tech. That may end if a non-Biden Democrat is elected in November. Who the heck knows what will happen if Trump is elected? Vance touts a desire to bring jobs back to the U.S., and that means protectionism and trade wars because tariffs go up on both sides. That’s so bad for business that it might dawn on the ideologues on the political right that it doesn’t create jobs here, either. We will all be faced with playing an ill-informed guessing game. In the run up to Biden’s withdrawal Sunday, the biggest themes on Wall Street were the “Trump trade” — hence why we devoted most of our July Monthly Meeting to the topic — and the recent rotation away from 2024 winners in technology toward small-cap and value stocks. The latter contributed to the S & P 500 and Nasdaq posting their biggest weekly losses since April . Seemingly always fond of bringing up Cassandras, The Wall Street Journal recently published a story summarizing the latest views of hedge fund manager Mark Spitznagel, who I now understand to be the most brilliant investor on earth. Spitznagel believes a big sell-off looms that could cause stocks to lose more than half their value, the Journal reported. Spitznagel’s fund, Universa Investments, is set up to profit during steep but infrequent market corrections. I wonder if we will be made to ponder whether this all part of the Spitznagel gambit, like some sort of bull checkmate we were caught unaware of. Sure, a prediction of a 50% decline is frightening, but I found myself measuring bubbles: In the dot-com crash of 2000, we had a lot of phony companies rollover. If we had a crash in 2024, it would have to be tied to an earnings multiple compression of epic proportions given the earnings power of so many of our biggest technology companies, which also hold significant weightings in the S & P 500. Perhaps they’re spending too much money on data centers and the latest Nvidia AI chips. But I find myself thinking which company can afford to be left behind? Which company can be Yahoo or America Online? Wouldn’t you rather be Google parent Alphabet , Amazon or Microsoft , the tech survivors of the dot-com era? Don’t you think that Google, Microsoft and Amazon are afraid of being Yahoo or America Online? You bet these Club holdings are. That’s why it makes sense to spend what you can. I put fellow portfolio name Meta Platforms in a different camp because I think the stock is very cheap and offers the most targeted advertising ever. A very big deal. Either way, it won’t hurt Club holdings Palo Alto Networks or Starbucks , and thank heavens for that. It’s worth noting the market seemed slow to capture how positive Friday’s Crowdstrike outage is for Palo Alto because I was shocked at how big a client roster the company has. And now I wonder whether Starbucks’ 6.85% pop Friday on activist investor news — on top of the stock’s 3.8% gain earlier in the week — can stand up in the face of overbought conditions that continue to wreak havoc on large stocks without a whit of impact on the small ones. What does it all mean for the allegedly doomed hyperscalers, the essence of the Spitznagel gambit? I still think they come under more selling pressure, but it’s possible they become detached from each other. The aforementioned rotation has been mindless, but now it can become more China-centric — bad for Nvidia and Apple, but meaningless for Amazon, Alphabet, Meta and Microsoft. The rotation did get to ridiculous proportions last week with the apotheosis of PepsiCo and Bristol-Myers Squibb , which defied the market’s declines and rose 1.8% and 5.4%, respectively. On July 11, Pepsi reported a truly not great quarter, something I also expect from Bristol Myers when it reports Friday morning. Meanwhile, the run in the homebuilders seemed like sort of reprieve from the guillotine as it was brought to light by D.R. Horton with an OK number that somehow became much ballyhooed. Who knew? I think the rotation has been extreme because of some technical factors that exaggerated the moves, making it seem like an epic shift in investor preferences. The only thing epic about it was how much money was made off it because everyone seemingly has it in for the hyperscalers. It seems much more exciting to lament the losers than celebrate the small number of winners who benefitted from the rotation. No matter what, I think the one thing you aren’t supposed to say about the Biden departure and its impact on the stock market is probably the most forthcoming: Who knows? In the past, when I would get asked about tangential things to the market, I would quip back: What does this have to do with the price-to-earnings ratio of Bristol Myers? Now, I have no idea what it should be — let alone what it could be under either party’s run to the White House. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. 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US President Joe Biden walks to the White House in Washington, DC, on July 7, 2024, after attending campaign events in Pennsylvania.
Chris Kleponis | Afp | Getty Images
It didn’t take long to remember what a second Donald Trump presidential term would mean for the stock market, did it? Unpredictability. Random attacks. No one safe. Mercurial positions. The only difference? Former Vice President Mike Pence meant nothing. He was supposed to mean nothing.
