If China is indeed trying to renegotiate agreed-upon terms in trade talks -- and therefore President Trump is insisting that an additional $200 billion of goods currently taxed at 10% go to 25% by Friday -- then we have to believe the talks are about to break down.
Sure, that could be some sort of last-minute bludgeon, because the Chinese have ceased to play ball. But it seems like Trump is all over this as a way to prove that we simply don't need the Chinese -- because we are doing so well here, and they are doing so poorly there. I think Trump wants to attempt to counter the stimulus that has tried, vainly, to restart the Chinese economy. He's demonstrated some serious leverage against China, and this is what could cause a big decline in the market that we should have cash to be ready for, as I have been advising club members of ActionAlertsPlus.com.
Until today, many have disagreed with my cautious nature at this juncture. But I think it's warranted, because of a possible breakdown in talks, and a potentially botched Uber deal.
I have no idea how Morgan Stanley (MS) could screw-up the deal, other than if a wave of retail investors came in and bid the darned thing up. I was lambasted for saying that the $87 opening for Lyft (LYFT) was a good price, but how many of the critics have ever brought a company public, as I have both as a broker and a principal?
I was reacting to the fact that the Lyft deal might open at $100, and that would have been terrible. If you had gray matter and you had done a deal, you would know that $87 was better than $100.
But no, my clown critics, who remind me of some of the dummies who didn't understand what I was saying in 2018 and blamed me for all the losses, simply don't get how hard it is to gauge over-the-transom buyers. It was difficult for JPMorgan Chase (JPM) to control, but they did their best.
So the question becomes: "How will Morgan Stanley handle all the Uber retail-buy interest?" Will they price the deal low enough that all those who want in won't be paying a horrendous market price, much higher than is warranted, or will make money for the retail investors? Or will they price it so high that there is no way the deal won't become tainted and the selling begin as soon as the deal comes online?
Look, maybe Trump is bluffing? Maybe this is just the art of the deal? Perhaps this is a reaction to the strength of the non-farm payroll and how he says we make money off the tariffs? Maybe it is a sign of such strength that he feels compelled to walk away from the table.
Whatever, but until we get clarity I am grateful that we took so much off the table to be ready for a cautious market developing with others now suggesting trimming when it sounds like it's too late for this guy. I have said it enough at good levels. I don't reiterate at bad levels.
With all the cash we have accumulated, we buy.