The market has mostly enjoyed a bullish run-up since Election Day last week, but CNBC’s “Mad Money” host Jim Cramer thinks stock market investors are being too complacent about a number of lingering risks that could rear up and cause a potential selloff.
‘We are worried about the fact that we could be moving toward a constitutional crisis.’
Notable among those worries is what Cramer describes as a potential “constitutional crisis,” due to President Donald Trump’s unwillingness to concede defeat and pave the way for a smooth transition for former Vice President Joe Biden, who is seen as winning the 2020 race for the White House.
“We are worried about the fact that we could be moving toward a constitutional crisis,” the CNBC host said Wednesday.
“This is not encouraging,” Cramer said, when the “president tweets regularly how the election was rigged.”
Late Wednesday, Trump, who has vowed to launch a series of challenges to the vote-counting process, tweeted his belief that he would still prevail in the presidential contest that was called in Biden’s favor over the weekend by most major news outlets and political experts. The 45th president wrote “with 72 million votes, we received more votes than any sitting President in U.S. history—and we will win!”
“From the stock market’s perspective, that’s a problem.”
“It does not seem like he will vacate the premises in January,” Cramer said Wednesday.
“By denying the legitimacy of the election and trying to fight it any way they can, they’re certainly destabilizing the situation,” he said. “From the stock market’s perspective, that’s a problem.”
It’s not clear, however, at which point Trump’s unwillingness to concede the election and pave the way for peaceful transition of power will impact the market.
Stocks have been mostly climbing since Election Day on the belief that elections in the U.S. will result in divided government, with Biden in the Oval Office and Democrats failing to muster a majority in the Senate — a political landscape that has been historically viewed as positive for stocks because it won’t result in changes that could be viewed as market disruptive.
The Wall Street Journal reported that Trump is pursuing a patchwork of legal attacks in a long-shot effort to try to prevent officials from certifying the election results.
So far, experts see no reason to believe that Biden’s current popular-vote lead and his lead in the Electoral College won’t expand when the final votes are tallied.
According to the Associated Press, Biden has 290 votes in the Electoral College, far surpassing the 270 required to win the presidency, compared with Trump’s 214. The AP has yet to determine the winner in Alaska, Georgia and North Carolina, with Biden leading in Georgia and Trump leading in Alaska and North Carolina.
Meanwhile, Cramer also noted the resurgence of COVID-19, including a rise in hospitalizations in much of the U.S. and elsewhere in the world, and the lack of a new relief package for troubled companies as other headwinds that investors aren’t paying full attention to at the moment.
On Wednesday, the Dow Jones Industrial Average
snapped a two-day win streak, but the S&P 500 index
and the Nasdaq Composite Index
finished the day firmly higher.