The U.S. presidential election beckons and even though nearly 75 million people have already voted, according to NBC News , nothing seems to have leaked out. You would figure the hedge fund algorithms would have picked up something by now, but I haven’t seen any confirmed bets made either way. That makes trading on the election to be a bit of a sucker’s bet and not something that will occupy too much of my time beyond what I said on Friday’s “Squawk on the Street”: Both sides have confirmed Wall Street pros at much higher levels than President Joe Biden. At various times, I have sought ideas and knowledge from high-level advisers in both camps and can’t say that anyone is loco or insanely conservative or liberal. I am not saying that these advisers will actually be listened to. I am saying that both sides of this election are far more willing to listen to — and make a case for — capitalism than the current president’s people have been. However, the stock market did incredibly well under Biden. This tells me that unless you have a majority in both houses of Congress and the White House, I don’t know exactly how different it will be over the next four years — even as none of us has any illusions that the candidates are alike on anything. I am not an ideologue and I don’t profess to be part of any side. I don’t know a soul outside of the polling booth who has any idea how I vote — despite being hounded by both sides for being against them, something I like — so take what I say with an independent grain of salt. But I would tell you if I thought the top advisers on either side were Looney Tunes. I can’t do that because I have known many of these people for 40 years and I can’t just wake up and say one party would dismantle the stock market and the other side would send the market flying. Here’s one way to think about it: In 2020, former president Donald Trump fashioned himself great for business while Biden championed labor, and then backed up that view by, astoundingly, walking the picket line at Ford Motor . Biden used to joke with me that he owned no stocks and didn’t care about the market at all other than say it was the province of the rich. It didn’t matter. In fact, you could argue that the real gains in real stocks that made you a fortune occurred under Biden, so the relevance of the presidency may be overstated on the markets. The other issues? That’s up to you. So let me dispense with the election by saying, that my sincere hope is that there is a resolution within 24 hours of Election Day and that the courts are on board if the election is fair. Indecision will hurt the stock market, not destroy it, but bruise it because the only thing markets really hate is uncertainty. If you forced me to opine, I would say that if Trump wins, you have to sell SharkNinja , a company I love. Its household products are designed here — and I like them very much because I have bought a lot of their stuff at Costco — but the tax would just be too high to make it as competitive as it is now. Homebuilder D.R. Horton makes the most sense as a Kamala Harris stock because of a promised $25,000 toward a first home. I don’t know if either candidate can pull off huge tariffs (Trump) or a credit (Harris). But those are the two I will be talking about in our special Tuesday night election coverage . In the meantime, we do have a backdrop of earnings, a canvas to fall back on, and a canvas to paint over. That canvas is something I understand and can opine on. So let’s go there. Here are 11 surprising things about this earnings season that you can store up and pull out when the election is confirmed. 1. Europe is proving to be more resilient and positive than anyone is talking about. It’s hard to discern because Germany is not strong. It’s an economy too tied to autos and the Chinese have flooded the European market with electric vehicles — said to be about 25% of the market last year and, even with some hefty tariffs, may keep rising. Most people take their cue about how Europe is doing from the auto industry and so they may be blinded to this turn. When Volkswagen is closing three plants and cutting wages 10%, you know that Germany is hurting. Away from Germany, however? There is some real strength in countries that many gave up on years ago to concentrate on China. Hindsight is 20-20 but I can’t believe how wrong that bet is turning out to be. The strongest areas are the countries investors notoriously called PIIGS — Portugal, Ireland, Italy and Greece (yes Greece, which is really booming), and Spain. Bankers are crowing that PIIGS can now fly. Who understands this? Who is winning over this market? I would go with the companies that are pointing this out to me, including: Banco Santander , which is incredibly well-run with a nice yield; Amazon , which bet the farm on Europe a long time ago and (literally) lost money for decades; and Apple , which beat sales estimates by $1 billion, the only real upside surprise of the quarter and one that kept it from falling 5% on Friday. Let’s consider Amazon, which has spent billions on Europe in a way that many felt was wasteful with an ignorance of customs. That turned out to be wrong. Europe inflected big. The company made $1 billion this quarter and I think that its head of steam is going to drive this juggernaut of a stock well beyond where people think it could go. It’s a machine that’s been turned on, a profit machine, and it will only strengthen. Don’t let Germany’s woes blind you to the surprising strength of this continent. It is lasting, especially because Santander, Amazon and Apple have such vast operations there. Trust me when I say this strength is surprising everyone because most people simply gave up on investing in Europe a long time ago. 2. The solar stocks have taken a beating as Trump is perceived as being anti-solar. It is true that is he is against solar equipment made in China, but not if it is sourced here. That’s what made me drawn to Nextracker and if you read the quarterly statement you will see that Red States predominantly favor solar. The quarter was the quarter I thought would we would get the previous one. Was I premature in condemning the company’s stock? No, because the previous quarter was all over the place. But I will say this: If Trump wins it can be bought, and if Harris wins it must be bought. Either way you haven’t missed anything. 3. Nuclear power stocks should not be bought unless you are willing to be part of a Greater Fool theory. I say that as someone who is close to GE Vernova and wouldn’t mind tempering the enthusiasm because it is not being backed up by orders as much as liquefied natural gas (LNG) turbines. This stock should cool off one day but I don’t see why it can’t be a long-term juggernaut now that offshore wind, which isn’t a real business, is going away. 4. We are going to get more bets placed on short rates. The monthly employment numbers on Friday showed a weak October and bond yields went the wrong way because of the supply of bonds being offered by the U.S. government. When bond prices go down, bond yields go up due to their inverse relationship. We saw something like this in the 1990s when bond yields couldn’t stay down and the Treasury market became the dominant theme of investing. The deficit will begin to hurt the stock market hard next year even if the economy continues to cool. There is not enough money to go around and the longer end of the bond market yield curve will be a magnet until the 10-year Treasury yield hits 5%. I am not going to sweat this because it will be built into the market in stages. Get ready for some real negative rhetoric about Treasurys. There are always stocks that transcend the push down by the bond yields, but they tend to be the stocks of companies that don’t need capital — for them or for their clients. That means the “Magnificent Seven,” including Tesla if Trump wins, not so much with Harris. 5. The drugmaker stocks are too low … Bristol-Myers Squibb’s outside-the-box thinking about the brain —hitherto given up on by all the majors — is very cheap. Merck ‘s quarter was wrecked by China, which actually opted to not allow 100 million women to get its Gardasil vaccines to prevent HPV. This interruption by the government of the PRC is staggering and I don’t know how long the government can hold up the vaccine as it does have a modicum of caring for safety. But I am dumbfounded by how brutal this regime has become. It is now built into Merck’s stock but the efforts it has made to offset the cliff of the wonder drug Keytruda will pay off. Abbvie had an amazing quarter and it has now been able to avoid the once-dreaded decline of sales of Humira, the anti-inflammatory drug for a whole host of ailments. Skirizy and Rinvoq have replaced it. Botox is bigger than ever because of GLP-1s. Eli Lilly won’t be as bad next quarter because the company will be able to give you a run-rate for Zepbound, the weight loss drug and you should start seeing the moat the company has created with all of its manufacturing capacity; I think former CFO Anat Askenazi’s departure really caused part of what I can only say is disappointing disarray. I write that because Alphabet had its most rigorous call in ages and I believe she was in charge of it. Hold fast and wait for more studies showing more uses. Abbott got rid of a major overhang when it won big in a case involving its special formula for anti-NEC, a devasting illness that affects premature babies. The special formula is made at the behest of neonatologists who know that once a mother’s milk runs dry, only this special formula and that of Reckitt Benckiser works. It’s inferior to mother’s milk in its ability to stop NEC. And the company makes almost nothing off it. The plaintiffs asked for $6 billion. That’s outsized but only because the last case in the same jurisdiction awarded the family $450 million, which is being appealed. The FDA, CDC, and NIH recently put out a statement absolving Abbott’s drug as a culprit, something that should virtually turn the tide going forward. The statement was not allowed into the courtroom which I disgraceful. That won’t happen again, I believe, because the near-term caseload takes place in federal court which is a much more rigorous less capricious venue. I think that the families of premature babies who got NEC after using Abbott’s drug know this. More importantly, because the cases are all different and need to be litigated instead of just using the same information, I think the plaintiff’s lawyers will try to get a deal from Abbott. The lawyer in charge of defending Abbott, Jim Hurst, is a legendary defense attorney and I think he will play hardball with every case brought, which means that the plaintiffs will come to the table and beg for money. That means it is the end of the overhang yet the company’s stock is still not back from when Reckitt lost the first case, one where the plaintiffs got more than they asked for. The stock must be bought. 6. … as are healthcare and biotech stocks . I like Intuitive Surgical for new uses — it has been kept down because GLP-1s have impacted sales of bariatric surgery. That overhang was not noticeable in the last quarter. GE Healthcare ‘s numbers were very good, but no one really cares because its sales from China are almost non-existent and had been huge. We got bushwacked on that. Danaher ‘s life science business was also impacted, another bushwhack that is now almost backed in. Cardinal Health is going from being a middleman to a legit services company under CEO Jason Hollar. You saw the results last week. It’s only at 13 times earnings and deserves to trade higher, maybe much higher. I want to consider it for the trust, but there are so many companies in this cohort and we have been too jammed to study the results of all of these. Medtronic ‘s got some very good devices, especially it’s AI-guided colonoscopy test. It’s been hobbled by subpar sales for its anti-hypertension treatment, which is now built in to the story. I thought Amgen ‘s anti-cancer formulation was barely noticed in the hub-bub of last week’s earnings reports. That’s a mistake. Vertex reports after the close Monday and its non-opioid drug will have good results to show in that quarter. 7. China is now a burial ground for all companies . The Chinese government has targeted all U.S. companies in one way or another and whatever it can’t block, the horrendous economy will. Nothing has worked. However, we will get some pronouncements from the Standing Committee of the National People’s Congress this week. Once again, the bullish apologists will say this is the big one. Alibaba can be bought. I don’t want to buy any American company because whatever comes out from this legislative body won’t actually help a U.S. company. The government doesn’t want it to. China hurt Apple’s sales and that weakness is not built in. It will be this quarter though. Any company’s stock that goes up on a stimulus story should be suspect. If you want to know what it looks like when China severely impacts a quarter just look at the stock of Estee Lauder , that is if it is not too painful. We need to wake up to how much China hates us. It won’t get better. And, yes, the chief worry about Nvidia is Taiwan, but I am not as concerned as others because I believe China is not ready to do anything under either potential president. Get it into your head that the Chinese government hates us and wants to hurt our companies and you will be fine. 8. The star of this season so far for the industrials is Parker-Hannifin. Parker Hannifin shouldn’t have been as good as Eaton or Dover , which were tainted by a bizarre belief that the data center is weakening. If anything it is getting stronger and the data centers are getting bigger. Caterpillar has moved too much but it is fine to buy on a pullback. Linde is a terrific play on the world’s central banks’ cutting rates, as it does need that spur. 9. European travel is incredibly strong. That means Booking , even after its recent run, makes sense. The cruise lines, too. I like Viking a heck of a lot and think that Norwegian can go higher. It’s still not back to where it was before the pandemic, even as Royal Caribbean is much higher than 2019. No, I do not think Viking is too high given its excellent European exposure. 10. The semis are all over the place, but the best is Advanced Micro Devices. All this Club stock needs is a big order from Amazon for GPUs. I think AMD gets it and can therefore be bought. There are only two GPU companies for heaven’s sake. Intel has bottomed and has upside here. It is at last out of the woods and no longer hurt by CEO Pat Gelsinger’s bravado. He’s been humbled and it can be bought with a lot less risk. 11. Amazon is the best stock so far. Every division, literally every one of them, is doing well and the stock doesn’t reflect that. Alphabet ‘s quarter was also superb and the stock is stalled. Away from the hyperscalers, I like Marvell , where CEO Matt Murphy bought $1 million worth of stock in the open market. That’s an insanely positive buy. Micron ‘s business is turning up as an increasing amount of it is data center. I would buy Prologis off of a nascent data center business. Same with Arista , which reports next week. A ton of stuff here. Wish I had even more, but the election could taint everything else. So go to work. (Jim Cramer’s Charitable Trust is long COST, AMZN, AAPL, NXT, LLY, GOOGL, ABT, GEHC, DHR, NVDA, ETN, DOV, LIN, and AMD. 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. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. 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A worker delivers Amazon packages in San Francisco on Oct. 24, 2024.
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The U.S. presidential election beckons and even though nearly 75 million people have already voted, according to NBC News, nothing seems to have leaked out. You would figure the hedge fund algorithms would have picked up something by now, but I haven’t seen any confirmed bets made either way.
