Best Stock Picks for New Relations Between the U.S. and China

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Joe Biden’s administration views China differently, and Jim Cramer tells the November meeting of the Action Alerts PLUS investing club what that means for investors.

Transcript: 

I have been a critic of China for ages, a fellow traveler to the president on this issue. I think China’s a bad actor. I believe only the velvet fist works for these guys. So I have stood with the president on this issue in large part because I saw my father’s business be destroyed by the Chinese as they attacked the American gift-wrap industry that he made his life in. My father only ended up working for the Chinese, who respected him greatly and admired his amazing work ethic well into his 80s and early 90s. And today’s the anniversary of his death. All I can say is that he loved working with the Chinese people, man.

And I make the point that, like I said, it’s not about politics and it’s not about who the president likes or dislikes. But the fact is China is the fulcrum, it’s the fulcrum of everything we need to know about the next leg of this market, shy of the vaccine. The real issue now is what will happen to our relationship with that colossus, and I believe that Biden will dramatically change our interrelations and it will revert to the period when he worked with Obama.

There will be diplomacy, there’ll be negotiations, and ultimately other than climate issues, I think that Biden will do nothing for the next four years. See, Biden wants to do things with our allies. He doesn’t want to … go alone. That’s really important to him. He wants to be sure that everybody is with him in a coalition, to which I say: good luck. Their industries are producing exports for China. If you go over to Lamborghini and go to the factory, one out of every four of those cars go into China. You don’t want that business to be ending. And remember that notorious Belt and Road Initiative? It’s providing plenty of foreign aid to every country in return for little or nothing.

They’re outspending us in foreign aid. Our allies want only China money. They want nothing more. So now this idea that we will somehow have a united front against China is almost laughable. China gets a big pass. And again, it’s not something I favor. But if you put your business hat on, not bad.

I think the Chinese will be great. I think that they will try behind the scenes to thank us. But that won’t be enough. So they’ll show their gratitude, and the way they show their gratitude is to go buy a ton of Boeing MAX planes. Which is another reason why we keep Boeing front and center. The stock is down $2.55. I think that that’s a tremendous, tremendous time to buy.

Now. It’s also … why we like and have substantial positions in Honeywell, in Nike, in Starbucks, in DuPont and, of course, Apple. These are all from now on what I call Biden stocks going forward. And while taxes fell under Trump, it is amazing and amusing that there are no Trump stocks that you have to sell – except for maybe the coal stocks and I hope you sure weren’t in those.

There’s too much oil and we’re getting still one more chance to liquidate the oil stocks into strength. Oil stocks are going up for one particular reason. Because, remember, we used to think it was because a lockdown, avoiding, things were opening up. That’s no longer happening for the buyers. Here’s what’s really occurring. Under Biden, people think there’ll be restrictions on the amount of drilling. Actually, the only thing he really controls is federal land and that’s New Mexico. There’s almost no oil there. But people feel that what will happen is he’ll clamp down on drilling, and because of that there’d be less oil [produced,] and if there’s less oil produced, the price of oil will go up. So people are actually buying oil on that ridiculous thesis. And you know, good luck to you.

What happens now? As a fund manager one must always be dispassionate about your setup. I can’t let my feelings in the election get the better of me – except for China, and believe me, that’s going to help you.

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