CNBC’s Jim Cramer on Tuesday presented a list of stocks that he believes will benefit from a collapse in economic talks.
Stock averages rose late Tuesday after President Donald Trump surprisingly cut off negotiations on another spending measure until after next month’s elections in a tweet just over an hour before closing.
After the sell-off, Cramer said there are parts of the market that are not affected by the possible lack of additional support.
“The presidential advisers understand that many areas of the economy are scorching hot right now and will stay hot regardless of what the government does.”Bad money“Host said.” And don’t forget, the parts of the economy that need help are small businesses, and they don’t trade in public, so their weakness seldom penetrates to the stock market. “
With the U.S. economy still hit by the pandemic-triggered recession, another emergency spending bill is seen as a means to keep the economy from plunging into an even deeper crisis.
Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi have been in talks for days in hopes of getting close to a compromise on a plan that will send another round of direct controls to the Americans and support the small and medium-sized ones challenged Would support companies through the ongoing coronavirus pandemic.
Cramer suggested that investors shouldn’t “reconsider” the situation as the economy is split between the small and medium-sized businesses that are struggling and the large publicly traded companies that benefit from the environment.
“The part that works is mostly public companies. We have a V-shaped rebound … in housing, a U-shaped rebound in cars, and some of the biggest retailers have never seen a downturn – you think Walmart, Amazon, Costco, target, Home Depot and Lowes“Said Cramer.
“All of this work, regardless of what happens in Washington,” he said.
Trump’s tweet, celebrating recent gains in the stock market just earlier in the day, caused major averages to drop more than 2% from their intraday highs.
The Dow Jones sold nearly 376 points for a loss of 1.34% to close at 27,772.76. The S&P 500 and Nasdaq Composite fell even further, falling 1.40% to 3,360.95 and 1.57% to 11,154.60 at the end of the session.
“Some people will argue that the lack of incentive means we are heading for a recession. I don’t think that’s true as long as we get some kind of bailout by the end of the year,” Cramer said. “But if you think we are facing a real recession [your buy list] is straight ahead. “
Cramer pointed to defensive stocks like PepsiCo, Conagra brands and Campbell soupA stock, he said, was “too cheap to ignore”. Bristol-Myers Squibb, Johnson & Johnson and Regeneron are three recession-proof drug stocks, he said.
The US economy needs another stimulus package and a large number of companies will be forced to cut their forecasts without a single word, Cramer warned.
The tech sector will be a bright spot, however, and it’s worth buying their stocks in the weak, he added.
“Without [a stimulus package]The numbers are bound to go down for a number of companies, but not technology, as most technologies support the company, not the consumer, “Cramer said.” As I said, the company is doing quite well. You can see these sink a bit [lower] and then absorb something in weakness. “
Disclosure: Cramer’s charitable foundation owns shares in Amazon, PepsiCo, Johnson & Johnson, Bristol-Myers Squibb, and Costco.