It was supposed to be a bad week and it is playing out that way.
You know how nervous I am about the Uber deal. This is not the traditional IPO of a fresh-faced company. This one has been kicking around for years and I think there are so many shareholders who may believe, somehow, that they can sell instantly that you have to wonder how it won't flop. Could it be worse than Lyft (LYFT) ? The answer is sure, if the underwriters lose control of it.
I have always feared a loss of control of a popular offering with retail ever since TheStreet.com came public 20 years ago. I saw what happened when retail buyers, using market orders, that are NOT from the underwriter, in that case, Goldman Sachs (GS) , overwhelm the sellers. Could it happen here with market orders from retail buyers using discount brokers who pay way too much for stock?
Now it could be like Beyond Meat (BYND) where someone - the vegans - just keep buying. But that one is a small float and it seems almost cornered by the buyers. That won't be the case with Uber, believe me.
Of course, it's not just Uber. Given the Friday 12:01 a.m. deadline for the tariffs you have to believe that many individuals as going to trim positions. The gains are massive this year, the upside a bit limited given that the economy could slow because of the tariffs.
Now I don't think that is possible but that is what the economists say will happen.
No matter, I wish that Uber could shelve its offering because of the trade deadline. That, however, is not going to happen.
So let me give you a wish list. The Chinese, in a moment of clarity, give in and allow, say, Mastercard (MA) and Visa (V) to have unbridled free reign with no joint venture. They arrest some of the biggest fentanyl operators. They place Boeing (BA) orders for non-737Max planes. They commit to using more Caterpillar (CAT) trucks and earth movers.
And they do all of this by Friday.
That's a tall order but that is what has to happen on trade. An order of soybeans will not do it. Trump is doing what he can control - slapping tariffs first and then seeing if China behaves and then lowering them. It's not a bad strategy and even after the tariffs, the WTO website says that our average of 3.4% duties makes us the 13th lowest out of 150 nations. After the Chinese tariffs are put in place there will still be 100 nations with higher tariffs, including China at 9.8%, Korea at 13.7% and India at 13.8%
Remember, though, the president thinks trade is a zero sum. He is under the impression that the Chinese pay all of the duties so it is a big loss for China not us. He does not care that plenty of retailers, including those in the Dow, like Home Depot (HD) and Walmart (WMT) , will most likely have to raise their prices. That's the cost of stopping the Communist Chinese menace. That's the cost of ending the funding of the menace by companies doing business in China. That's the endgame.
And given that view it's hard not to think that Uber's timing, after so many years being private, could not possibly be worse than it is.
(Goldman Sachs and Home Depot are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells GS or HD? Learn more now.)
