Cramer's Contrarian Trump Call

Unwitting king of big calls strikes again...

CONTRARIAN INVESTING is simple, writes Gary Tanashian in his Notes from the Rabbit Hole.

When the herd thinks one thing, you think the other. And there is no greater tender of the investing herd than Financial TV star Jim Cramer.

His inverse record of correct market calls is amazingly accurate. This is not just me poking fun at a cartoon character on the TeeVee. It is me (and many others) having observed this man's record in action, over many years. He's got a TV show, after all. He's got to give his viewers what they want: red meat.

Boo effing ya! "Unbridling the Bull" indeed.

CNBC's Jim Cramer on Wednesday told investors there will be a shift in Wall Street's focus, from the actions of the Federal Reserve to those of President Donald Trump.

"We're now looking at the changing of the guard from Powell to Trump," he said. "It won't be easy, as one's a pretty predictable guy and the other's a wild card."

Jim Cramer told "investors"...ah, Cramer told a particular herd that thinks it can tune in to a sensational TV show and gain something of value. "Investors"? Yes, I am sure that Dalio, Tudor Jones and Druck were riveted to their seats in rapt attention.

What the clown prince of contrarian investing is actually saying – in terms that his audience can understand – is that governmental fiscal policy will largely replace Federal Reserve monetary policy. It's just that the word "Trump" is so dynamic, emotional and to some, exciting, that Cramer and the network he performs on will of course put it in those terms.

"It feels like we may be back in the world that I remember, a world where the Fed only plays a role at extreme moments," he said. "A world where we don't have to guess and guess and guess their next move, or even listen to what the regional governors are saying, because it won't be that important in the margins."

The above is actually a good point he's making. However, it is not as simple as that. In fact, the bullish implications of Trump are the basis of why a contrarian investing opportunity (an opportunity to go the opposite way of the herd and its predominant perceptions) is likely (IMO) in development, because Trump is so pro-business.

The previous administration did all it could to pump the system to new heights of debt and mal-investment. Interest rates have lurched back upward on the back of that and the stated policies to come from the Trump administration. Oh and there's this...the Fed still matters. Oh yes it does. We'll see the degree to which it matters when Trump launches his first volley of verbal bombs at Jerome Powell.

Here I disclaim that I too wish we lived in a world without a monetary central planning authority. But I am dealing in the world we have, not a Utopian world.

Hearken back to late 2018 when long-term Treasury yields were busting upward to test the upper bound of our then resistance limits (monthly EMA 100 & 120, now supportive limits) on the Continuum (30yr Treasury yield) as Trump constantly hectored the Fed chief to drop the Fed Funds rate. Powell all but ignored him.

If history (eg, 2018) repeats, the Fed will bow to its true master, the bond market. Not its new (would-be) master, Trump.

Back in 2018 Trump messed up his timing, because he attacked Powell as yields were rising and the Fed was following bond market signals. After that came the decline (from the limiters) as was usual during the Continuum's decades of trending down.

Today, the situation is much worse, from a bond market perspective. My view is and has been that no matter Trump's pro-business, pro-economy intentions, the macro is stressed to a coming reversal point. Maybe after a big time clean-out, Trump 2 will take hold to positive economic effect.

In other words, there is no denying that deregulation, tax cuts and maybe even some aspects of tariffs would be positive for corporations. The stock market is made up of...corporations. But we are talking interim here. An interim where perceptions are unified in one direction after that direction has already been in play since the 2020 mini-crash. It is in play with a host of negative macro internal conditions and indications.

Now the play is on a popular TV cartoon show. Just sayin'.