There are signs showing that investors can make more money on this market rebound even with a trade deal still pending between the two world’s largest economies, CNBC’s Jim Cramer said Monday.
In fact, there’s a chance that stocks can continue this rally even without an agreement between the United States and China, the “Mad Money” host said.
“If we can advance without a trade ceasefire, just imagine how high we could go if the White House and the Chinese Communist Party can reach some kind of accommodation?” he said. “Today, we got some solid evidence that there’s enough good happening away from China to justify sticking with this market in order to enjoy what Warren Buffett called the ‘tailwind of American greatness’ in his annual Berkshire-Hathaway letter that came out this weekend.”
Stocks are expected to spike whether or not a prospective trade deal drops tariffs currently in place. President Donald Trump said over the weekend that he will delay increasing tariffs on billions of dollars worth of Chinese imports originally scheduled to begin on March 1, citing progress in trade talks with Beijing.
Whether trade officials can deliver on a deal or not, Cramer ran through a number of reasons that stock traders can keep winning by way of mergers and acquisitions, future earnings and tech stocks.
On the M&A front, Cramer noted that a number of potential mergers could reveal that companies can sell for more than they are worth on the market. Barrick Gold, the host’s favorite gold miner, is making a hostile $17.8 billion bid for Newmont Mining. European drug giant Roche made a $4 billion deal— which Cramer pointed out is a 120 percent premium—for U.S.-based gene therapy specialist Spark Therapeutics. Additionally, Eli Lilly, GlaxoSmithKline, and Novartis have made multi-billion dollar moves in the biotech sector, he said.
Most notably, Cramer pointed out that shares of General Electric, which has had a list of troubles as of late, surged more than 6 percent Monday after health sciences conglomerate Danaher announced it would buy the company’s biopharma unit for $21.4 billion. Danaher gained more than 8 percent and reached a new 52-week high.
“Sure, there are still serious problems—the bedraggled power division, the expensive long-term care insurance policies that they’re on the hook for—but $21 billion goes a long way toward curing those woes,” said Cramer, who acknowledged that GE will hold on to its their health care division. “This deal tells me when you put China to the side, many companies may be worth a lot more than their stocks are currently selling for.”
When it comes to earnings, results this quarterly report season have not been the best but there have been some upside surprises that tend to have legs, the host said. Wayfair, which has yet to make profit, continued last week’s $32 rise off of a revenue beat by adding another $10 to its stock price Monday.
Cramer highlighted that child and baby apparel company Carter’s and heavy equipment maker Terex had some good action after reporting before he bell Monday: the stocks rose more than 8 percent and nearly 2 percent, respectively.
“By themselves I know they don’t mean much, but consider the implications: Carter’s can’t sell a lot of children’s sleepwear without department stores doing better. And Terex can’t sell a lot of heavy equipment without construction doing better.,” he said. “In that sense, you know what, those two represent some real good pin action.”
Cramer said the tech sector also got a boost Monday off of trade deal developments and praises from Buffett, who said that he would buy more Apple if the stock were to fall. He also pointed out that so-called FANG stocks are beginning to show life, but semiconductors and cloud companies have been leading the charge.
“The really good news? Both of the cloud kings and the semis were able to advance again solidifying their status as market leaders,” Cramer said. “They’ve really powered this rally.”
“The bottom line: We’ve got a heck of a lot of ways to win even without a trade deal, and if we get some kind of arrangement with the Chinese, I think we could have way more upside than most people expect or suspect,” he said.
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