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If the latest earnings reports have taught us anything, it's that traders are not always right when it comes to US-China trade negotiations, said Cramer on Monday, while Rumors of a possible trade summit kept the stocks at bay.
Specifically, traders who are betting against stocks such as Nike and Starbucks when the negotiations are unfolding in the south, generally baduming that they will be boycotted because they are distinctly American brands, could be totally wrong "the Chinese commerce, "he told investors.
"This season of results has revealed some brutal truths about" Chinese commerce "that do not please conventional wisdom," said Cramer. "We are acting as if the winners and losers of the trade war were obvious, but the reality is much more nuanced than that." Many companies that are expected to suffer in the People's Republic are publishing amazing numbers, while others are train to scramble pieces by increased competition or the slowdown of the Chinese economy ".
White House officials have confused Wall Street with their statements on trade talks in recent months, sometimes signaling progress and sometimes suggesting that the two sides are still far from reaching an agreement.
As a result, short-term stock breeders had to follow their instincts, explained Cramer. When tensions seem to rise, they will generally choose to sell short stocks of leading consumer brands, equipment companies and technology giants, he said. Short selling involves trying to profit from a bet that a company's stock will go down in the near future.
Nike, Starbucks, Estee Lauder and Yum China all tend to fall in the first bucket of short sales, but if you ask the host of "Mad Money", this strategy "just does not have bearing fruit".
Click here for his full badysis.
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