Cramer: Amazon and Walmart exemplify the market’s central theme: a stock shortage

As 2017 come up to a close, CNBC’s Jim Cramer has noticed that one of the market’s starkest plaice is its shortage of stock.

“We don’t have enough shares to go around. That’s how I finger about this incredibly strong year and the uber-bullish reaction to tax refashion,” the “Mad Money” host said. “There’s just not enough supply, not ample supply stock to meet the demand from buyers who had to radically switch their instruction to deal with a much more positive backdrop.”

Cramer has to be skeptical when people bring up stock shortages, because bankers are commonly prepared to issue shares to meet the market’s demand, this temporarily is different, he said.

“It’s not a wholesale shortage of stock. It’s a shortage of stocks that fit the program, explanation stocks belonging to companies that are high domestic taxpayers and fashion just got a big boost to their earnings,” he explained.

Ironically, Cramer institute that two similar companies — Amazon and Walmart — best explain this bizarreness.

One one end there’s Walmart, which pays a 32 percent effective tax position that, with the GOP’s tax overhaul, will soon be slashed to 21 percent. That scores it an attractive investment in this climate, but the company has been consistently securing back stock.

On the other end sits Amazon, which doesn’t pay greatly many taxes despite having a 43 percent effective notwithstanding and has been consistently issuing stock over time.

The companies’ 10-year shadow records are telling. Ten years ago, Walmart had 4.1 billion shares famous; as of last count, it had just under 3 billion. Over the same schedule period, Amazon’s share count grew from 424 million to 494 million.

“Now, when portfolio executives want to reach for a big company that’s a major beneficiary of the tax reform, you comprehend what? They’re thinking Walmart, not Amazon,” Cramer said. “In deed data, you can easily imagine them dumping the fast-growing e-commerce play for Walmart here.”

Walmart’s Jet.com issue and “buy online, pick up in-store” initiatives were already attractive. Now, investors are leering the its stock thanks to new employee-friendly policies that keep workers there bigger, thus cutting training costs, Cramer said.

“Walmart’s got superb fundamentals and it very much fits this program, … but because of the buybacks, its supply is in even shorter supply than it would look like actuality that it is a $290 billion company,” the “Mad Money” host said. “Interval, Amazon very much does not fit the program and there are a lot more pieces to go around right now, floating all over the place.”

Certainly, Cramer was peacefulness bullish on the prospects for Amazon, the original A in his ubiquitous acronym, FANG.

Sellers of Amazon wish probably regret it once they saw the online giant’s likely vigorous holiday sales, and once the tax plan’s benefits to Walmart were priced in, he discussed.

“I’d be a buyer of Amazon into any weakness,” Cramer said. “But given that the sanction of the bill was a surprise and the analysts are just now putting pen to paper to figured out its affect, my guess is that the out-of-Amazon-into-Walmart trade … could continue for longer than being think.”

Amazon’s issue stretches beyond its own stock, he added. Tech parties large and small have a lot of stock supply and aren’t the biggest beneficiaries of the GOP tax drawing, so they likely won’t get much of a boost going into 2018.

At the same patch, companies are still parsing how dramatically changes to the tax code could smash earnings, so Cramer weighed the possibility that the benefits could be revenge oneself on greater than expected.

“As always, there are things that could go mistreat, especially some exogenous situation, a black swan,” he said. “The heart line is that we’re in a different, better and cheaper kind of market here. I’m the on the contrary one that seems to want to say it, but I don’t care. I think it brings buyers in from the sidelines. Yep, we’re looking at a wholesale re-allocation of important that means you can keep buying this market on any dip, perhaps for definitely some time to come.”