Even though many years have passed and so many groups have made some pretty incredible rebounds and gains in the stock market, a typical morning still starts with a bunch of negative emotions. That gloom continues until near the close, where the market seems to be saying, “Well, maybe things aren’t so bad, at least for now.” Then, the selling stops with an hour or two left until the final bell. It’s amazing how very important people worry every day about the Federal Reserve doing the wrong thing, the presidential candidates doing the wrong thing, the allies doing the wrong thing. But we don’t hear much about what companies are doing wrong. We do business with businesses. It’s not aggressive or 25 basis point or 50 basis point units. The environment is so good for businesses, and yet somehow we want to ruin it by talking endlessly about the Fed. I don’t care. I know I’m always on the lookout for ideas. But it’s so distracting that I wonder if those who are fixated on the Fed are really lost or stuck in their own path. It’s so easy to give an opinion because it’s useless and you don’t have to do anything other than praise and praise. Serious homework is a pain. It’s much easier to assume what the Fed will do than to decide that Amazon might go out of business, or that Micron’s quarter really was better than expected, or that Walmart could still go up. . These decisions require some homework. Especially if you have no intention of changing your mind about that decision tomorrow. Friday’s excellent session served as a reminder that the slower central banks move, the better, even though the September jobs report derailed the narrative that the Fed would need to make another deep rate cut at its November meeting. I let it happen. Fed-centered people don’t seem to understand how good this moment is. When the Fed decides it’s time to lower interest rates, it will need to do so in a prudent and systematic way. There’s nothing harsh about it. Nothing exciting. The longer and longer the better. In that sense, Friday’s strong employment numbers were a godsend. The US economy is based on services, and we hope that consumer attitudes remain strong as the Fed lowers borrowing costs to more reasonable levels. The addition of 254,000 jobs in September will help this. Why does the market go up despite all the negative circumstances? The first reason is supply. Notably, with the rate cut cycle in full swing and many investors returning from summer vacation, there hasn’t been much new supply coming online. We hear about OpenAI and its impressive $167 billion valuation, but we don’t see the stock available to public market investors. We know that Elon Musk is becoming more politically active, but he’s also seen his stake in Starlink, a subsidiary of SpaceX (the satellite internet service that many of us love). do not provide it to us. Meanwhile, share buybacks continue at an abnormal pace. Going into the third quarter earnings season, sales will be down, but demand simply far exceeds supply. We don’t often talk about supply, but when my “Squawk on the Street” co-host Carl Quintanilla talks about newly public companies ringing the opening bell, I don’t really talk about supply, except occasionally. I am aware that there is nothing like that. Great — spin-off. I find supply to be the most telling issue when it comes to market direction. And right now we don’t have enough information. All the money from the decline of money market funds and expiring U.S. Treasuries appears to be flowing into stocks, whether it’s small-cap stocks, mid-cap stocks (the new hot thing), or the S&P 500. Again, this is a function of excess funds not finding supply until stock prices rise. If there are stocks that are not participating, a second stimulus is needed: an analyst upgrade. Think about it, the conversation is positive about almost everything, except for Nike, Walgreens, CVS Health, cable companies (sigh), and maybe Etsy. It’s not a joke. If you look at a huge number of stocks, you’ll find very few stocks worth hating. That was not the case a few weeks ago when sentiment towards China improved, but this is our third positive. We don’t seem to realize how big of a deal it is. China has been the Achilles heel of this market for many companies, including apparel companies. Medical companies, including the club that owns GE Healthcare. Consumer goods company. Casino companies such as the former club name Wynn Resorts. They were all in the process of deteriorating, with one analyst after another trying to cut the numbers. We lost that negative group when the Chinese Communist Party, faced with a contraction in the MSCI index, decided to go all-in on various economic stimulus packages. This was something I didn’t expect, despite constant prompting from one of my best mentors, hedge fund manager David Tepper. Tepper even sent me GIFs and social media posts about the “BABA black sheep” referencing Alibaba’s stock ticker. I’ve been furious at myself for thinking that the Chinese government couldn’t do anything about the country’s struggling stock market. You forgot the golden rule: the market there has nothing to do with fundamentals. Sure, e-commerce and cloud giant Alibaba has real fundamentals, including a lot of cash, but everything else going up is pretty bogus. BABA 3M Mountain Alibaba’s stock price performance over the past three months. The money that appears to be flowing into China is a combination of international funds that are underweight China and are now afraid of missing out on the upside, and former tech money and DraftKings money (gambling, as I define it). It is something. China’s stock market has been steadily rising since the announcement of the economic stimulus package. But at some point, not necessarily immediately, the Chinese military will run out of firepower. The best part of the newfound positivity about China is that the remaining analyst downgrades and price target cuts for U.S. stocks with significant exposure to the country have been halted. China is so powerful that one of the last companies to turn positive will be Apple. Soon, the Chinese consumer will be in a better position, which will mean she will buy an iPhone, leading to an extension of the purchasing cycle. It hasn’t happened yet, but it seems like a contingency. The bullishness of this Chinese company is incredible, but we limit it to Alibaba, Chinese electric car maker PDD Holdings, JD.com, Baidu, and some Chinese companies to be named later. have a tendency to talk. The waves of positivity have not even reached our shores yet. Considering that China was the world’s biggest negative factor, it is extremely unusual for it to be surgically removed. I think it’s somewhat comical that we spend so much time questioning the Fed and so little time discussing these incredibly positive points. I say ridiculous because the stock is acting as if the stock has fallen significantly from its high. In fact, despite breaking out of its previous overbought state, it did not fall that much after the start of October. The S&P 500 ended Friday trading just 0.2% from its all-time closing price set on September 30th. Of course, there are weak points as well. I saw the home builder get the records on Friday. But on Monday, six analysts will come in and tell you to buy them. Housing-related stocks that were so special will eventually become special again. It is true that oil prices soared last week, but there were very few stocks that fell due to this effect, and laggard stocks such as Diamondback Energy, which has a growth-oriented oil business, and Exxon Mobil, which has a solid oil business. Many stocks rose, including At some point, it would have led to a zero-sum advance. Instead, they too are now up. So why isn’t this too much? Why isn’t this too Panglossian? That’s actually a simple question. Set your alarm for 3:30 a.m. ET and watch how negative U.S. stock futures go around that time. There is a ground pig-like bear that magically appears when the sun rises. The bear has all the trappings of a critical intellectual. Or a hedge fund billionaire screaming about how miserable everything is. These great critics hold the microphone and make good headlines, which makes everyone nervous. Negative stories prevent bull markets from surfacing in the media, but not among the buyers themselves. They have no choice but to look for something to buy. The worst thing you can do is choose an index and buy it. Still, buyers are the only ones who don’t seem to have a noticeable aversion to this market. Again, that’s all that really matters. (Jim Cramer’s charitable trusts are long AAPL and GEHC. See here for a complete list of stocks.) As a subscriber to Jim Cramer’s CNBC Investment Club, trade before Jim makes trades. Receive alerts. After Jim sends a trade alert, he waits 45 minutes before buying or selling stocks in his charitable trust’s portfolio. If Jim talks about a stock on CNBC TV, he will issue a trade alert and then wait 72 hours before executing the trade. The above investment club information is subject to our Terms of Use and Privacy Policy, along with our disclaimer. 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People walk outside the New York Stock Exchange (NYSE) on September 13, 2024 in New York City.
Spencer Pratt | Getty Images
Even though many years have passed and so many groups have made some pretty incredible rebounds and gains in the stock market, a typical morning still starts with a bunch of negative emotions. That gloom continues until near the close, where the market seems to be saying, “Well, maybe things aren’t so bad, at least for now.” Then, the selling stops with an hour or two left until the final bell.
