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Take a week away to the Low Countries, on an art barge no less, and you are conscious of an actual boom in Europe. Each stop in town and at museums that we made in our floating hotel, we saw cranes everywhere. Barely an empty storefront. No graffiti all over abandoned buildings. Streets packed. It’s almost as if you can see why these European markets are roaring, and we are way behind. Of course, your eyes are always anecdotal, and Belgium and the Netherlands, up 3.0% and 2.50% respectively, aren’t poster children for the continent. But Germany, Spain, and Britain are. They are crushing it with stock performance that is outstanding, in many cases backed up by earnings, and the enthusiasm for their economies is everywhere. I sense a catch-up trade in those that haven’t rallied if only because it’s difficult to imagine the rest won’t be pulled up in unison. Is it spending on defense now that President Donald Trump is backing off from helping Ukraine? Is it a recognition that they are better on their own? Perhaps because they have less debt and more discipline than we have? It certainly isn’t hope for tariff breaks. As crazy as it sounds, I don’t think they need us as much as we think. Moreover, they aren’t engaged in some sort of war between the states that inspires nothing but a quizzical notion of our own harm and how, while we both have problems, they are trying to solve theirs, and we are trying to exacerbate ours. I prattle about my European observations because they may be part of the reason why no one I know can believe the U.S. market can advance. We are too far behind them to count us out from further deterioration. I get the chief reason why our markets aren’t roaring. There is real fear that one day bond buyers will go on strike because we have such a huge deficit. We have $36 trillion in debt with no cuts of any consequence being made. Because everyone fears Trump — I mean everyone — we are afraid to tell the truth. The cuts we have had for now were made to emasculate the left, the Bidens, the Harrises, the Clintons, the Obamas, whatever. These people have become house villains, because they have packed whole wings of government with leftists. That’s now counter to the beliefs of a huge part of the nation. Why not just say it? After all, Trump didn’t win on cutting the deficit. That would have been an added bonus. Maybe he’s finally getting started going after the drug companies, which do make a lot of money of the government, but it’s the needless middlemen and the clubby health insurers that would make better targets. The president has already ruled out cuts in Social Security, or age extensions, or whatever is left to do to curtail Social Security costs, and he can’t do a cramdown of government debt without destroying the bond market. And, the tariffs? Hey, maybe they bring in a trillion. I know, preposterous. But the whole thing, the shooting match, the attempts to get any spending or money raising under control do look impossible. I am not on a soapbox. I just gave you a right down the middle assessment unless you really believe that cutting spending in research and liberal arts and social programs that you may not like gets you to where we have to go, which is a dramatic reduction in spending. If I were a Trump supporter or a Biden-Harris supporter, I think I would be forced to agree with that analysis. But what about right now, at this very moment, why is the stock market not falling apart, given all the uncertainty? First, we are falling apart at least in comparison with our European cousins. When you have that level of distance in performance, especially where we were a few weeks ago, America is hideously underperforming. The European economies, thought to be tied so closely to China and stuck with a fascist Russia warmongering on its borders, were supposed to be abject failures as places to invest. Their immigration “policies” created polarization, but the liberals seem in control regardless of what we hear about here. They just seem a lot safer and predictable. So, we may think we should be falling apart but I would say we are standing in place while they are advancing. They can continue to climb given the momentum, and the need to spend even if it is to help the immigrants integrate, whether they like it or not. Second, people keep waiting for Trump to be Trump, you know, Trump 1.0, the businessperson. The one who wants everyone to make money and start caring about it. That the tariffs are a short-term obsession of his. That he will even win on the tariffs and once done he will start helping businesses make more money and create an environment that is pro-growth with a healthy stock market that allows big initial public offerings (IPOs) occur and mergers and acquisitions (M & A) go through with ease. I have not given up on this happening. But I don’t see much M & A at all, and no IPOs to speak of. It may be too much to ask for more tax breaks that would boost companies’ bottom lines, but it wouldn’t be too much for the president to explain why he made his moves with the Federal Trade Commission (FTC) and the Justice Department (DOJ). The guy’s a capitalist, no? We get deals done, and we don’t get many IPOs, we will shrink the number of shares in this market rather rapidly. What would be so bad if someone would admit that Club name Wells Fargo , for example, is a changed bank and deserves to be unfettered from consent orders and the 2018 Federal Reserve-imposed $1.95 trillion asset cap? Now, in keeping with the idea that something good could occur here, I continually detect hope for the housing market to rebound even if it appears to be totally misplaced. We need a real housing boom to get so much of our housing “food chain” to ignite, and I think there are enough people who do not take Fed Chairman Jerome Powell seriously, and do believe he will cut and reward them if they own housing and housing-related. We’re doing it with Home Depot so consider us guilty of too much enthusiasm. But the company did pull through the Great Recession swimmingly, and I think that it could do the same with this little blip of negativity. Finally, I do believe that there are many people who truly do think that the artificial intelligence story will be a reality, and it will produce bountiful results for everything from business formation to earnings per share (EPS) gains from soon-to-be-rampant productivity. I would like to believe it, but other than some claims from ServiceNow and Club name Salesforce I am just not seeing it. Plus, nobody wants to say, “With AI we haven’t had to hire a new person this year and we continue to lay off people with abandon.” Why won’t big banks or insurers say it? I get why law and accounting firms don’t; they are private. But have you heard a single firm say, “Wow are we able to cut waste and save money on the most expensive cost we have, humans.” And, then detail where they have saved money. No one does that. That’s OK. This is a piece about why we aren’t down big on the verge of what seems like a mandated worldwide shutdown in commerce. Perhaps it’s because, at this very moment, it is looking like, a yawner? There’s a developing thesis, kind of like this: Our trading partners never bought anything from us anyway and we can just do without a lot of their stuff if we have to. Inconspicuous consumption? Or half of the consumption we have had? Are we looking at a wave of bankruptcies? Retailers on the ropes with only the big three: Amazon , Costco , and Walmart — plus off-price retailer TJX thriving? The holds positions in TJX,the company behind T.J. Maxx, Marshalls, and HomeGoods, as well as Amazon and Costco. Would it shock you? So my conclusion, very simply, is that we aren’t going down because no one seems to care right now about the budget deficit except the people who are super rich. The ones who come on CNBC all the time, including last week, and always say things are horrible. I am so sick of those people. I am blessed because I never listened to them. So, bond yields don’t go higher – and as long as they stay around here, people are afraid that one or more of the positive/hopeful theses I just outlined will happen and happen without them being in the market. After all, we did have a vicious sell-off and got very oversold about a month ago. Now, we have been overbought for weeks, according to our trusted S & P Short Range Oscillator market momentum indicator, with a considerable number of people thinking the worst must be over. I can see how some could feel that way. We had two positions that had been real dogs for us: Disney and Texas Roadhouse , which, of course, I had been taken to think was “Texas Roachhouse,”: where you go in but never get out. DIS YTD mountain Disneyg YTD We never lost faith in Disney because we thought the gap between Netflix and Disney was just too large. Plus, they have some very sharp people internally and CEO Bob Iger has managed to start the process of making family films in keeping with the new tenor of the times. You make be totally on board with all of the “politically correct” Disney moves without realizing there’s a new PC in town, and it doesn’t include a message other than fun. Don’t forget that Hugh Johnston is a damn good CFO; quite a change for the better. Yet, the stock was so far from its top that you had to regard it as inexpensive. Turns out it was. It was our best performer last week, up 14.5%, after a solid quarter and lots to also like . TXRH YTD mountain Texas Roadhouse YTD Texas Roadhouse is a fabulous operator with great expansion plans and lots of room to improve on the top and bottom line. When those improvements occur, the stock will resume its climb, I think to new highs, because it offers the most affordable of steak dinners. The fact that it had fallen so low presumed that everything they were saying about the bad weather was a lie and the impact of small price changes annihilated same-store sales. Neither was true. We found that out last week: an OK quarter gave way to momentum ahead . Texas Roadhouse shares rose more than 5% for the week. I point these two stocks out because they are typical of what this market is littered with: very good companies with very low stock prices. You can say why isn’t this market coming down or you can say, “Wow, did this market come down.” To be sure, I have a lot of stocks that I see that should be much higher. Honestly, what is BlackRock doing down there? Why is Dover so low? Why shouldn’t Capital One be above $200. Isn’t Danaher ridiculous already? They are all Club stocks. I think the “wow, did this market come down” notion would be a more accurate assessment of the market’s attitude then “when is it going to crater?” I know we have a ton of stocks that are vulnerable if bond yields were to shoot up. No denying that. We know that the billionaire class will come on every show but ours and make you feel like an idiot for buying anything except government Treasurys, and they are never asked, “You have been wrong for ages, why do you persist with this?” What a breath of fresh air that would be. That fact is, though, there are a ton of stocks I would like to buy right here, right now, but they won’t come down. Maybe, in the end, stocks won’t come down because there’s a huge amount of money that senses, unlike the billionaires, that stocks represent great values. Could they all be wrong, all of those who want stocks? Maybe. But somehow, though, I don’t think so. (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. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. 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Tourists visiting the city take boat trips on the canals in Amsterdam, Netherlands on May 25, 2024.
Anadolu | Anadolu | Getty Images
Take a week away to the Low Countries, on an art barge no less, and you are conscious of an actual boom in Europe. Each stop in town and at museums that we made in our floating hotel, we saw cranes everywhere. Barely an empty storefront. No graffiti all over abandoned buildings. Streets packed.
