It has been two months since President Trump said he and China had come to agreement on a “phase one” trade deal and that it would take just weeks to draw up the paperwork.
After months of contentious back-and-forth, Trump said last week that he liked “the idea of waiting until after the  election for the China deal, but they want to make a deal now and we will see whether or not the deal is going to be right,” a prospect that sent the market reeling.
He changed his tune this morning tweeting, “Getting VERY close to a BIG DEAL with china. They want it and so do we!”
Then on Thursday afternoon, news broke that Trump had finally signed off on the deal negotiators have been working on with their Chinese counterparts since October, just days before the next round of tariffs were set to go into effect on nearly $160 billion worth of Chinese goods.
The deal delivered to Trump by his trade advisers included a promise by the Chinese to buy more U.S. agricultural products, and the possible reductions of existing tariffs on Chinese goods to the tune of 50%.
While the terms of the deal have been agreed upon, the legal text has yet to be finalized. Still, the news pushed stocks to record highs.
But as the major indexes surge higher, Jim Cramer came up with a basket of stocks that he says could see a bump from the trade agreement.
“I still think the best way to bet on a trade deal is by presuming something’s going to go wrong, even after today’s encouraging developments,” Cramer said, adding that he’d rather own “stocks that have nothing to do with the trade war, but I know people have been demanding this list.”
At the top of his list are financials like JPMorgan (NYSE: JPM), Citigroup (NYSE: C), Goldman Sachs (NYSE: GS), Bank of America (NYSE: BAC), American Express (NSYE: AXP), Mastercard (NYSE: MA), and Visa (NSYE: V).
“All of these stocks are excellent; even if the deal somehow falls through [their] valuations are not that bad,” the host said of his financial sector picks.
With the exception of Mastercard, Cramer said with these stocks, “you can handle any deal that breaks down and still do OK.”
The technology names in his basket are Apple (NASDAQ: AAPL), one of the biggest names that has been caught up in the trade war, Nvidia (NASDAQ: NVDA), which Cramer says is a great 5G play, and chipmakers Skyworks Solutions (NASDAQ: SWKS), Qorvo (NASDAQ: QRVO), Qualcomm (NASDAQ: QCOM), and Marvell Technology (NASDAQ: MRVL).
Cramer is also positive on toy stocks Hasbro (NASDAQ: HAS), and Mattel (NASDAQ: MAT). “We were very conscious that this weekend’s tariffs were going to hurt them inordinately,” Cramer said of the toymakers. “They’re really in the crossfire. Well guess what: If we do delay or scrap [the December 15 tariffs], these are going to be two stocks that you can still own and buy.”
“The best thing about these retail stocks,” Cramer said. “There’s not a lot of upside built into them already, [which] makes them attractive.”
Cramer did caution, however, that there’s still a chance that Chinese reject the agreement.
“Just remember, please, these are mostly short-term trades, not investments,” Cramer said.