Here we are. At last. The long-awaited "price-in" where the stock market is waking up to the fact that we are in cold war status with China -- no more "my great friend President Xi" and it is time to take prices lower.
I have to tell you I am surprised how long it has taken. We have been sitting with a stockpile of cash, some of it from the dramatic overpay by Occidental Petroleum (OXY) for our hapless Anadarko Petroleum (APC) , and we have been astonished that we haven't woken up to this kind of red ink before. It is remarkable, given how terrible relations are between us and China, that it has taken so long.
Europe, of course, as usual, for this whole decade, is nothing but a drag, a negative, with most countries experiencing a decline of more than one and three quarters percentage points. The pajama traders set our markets at the same decline. In their America-centric world, everything is down because of what is going to happen here, not what is happening there -- which is nothing short of lunacy, as the Germans keep dawdling over the black hole that is Deutsche Bank. And who can even tell what our "special relationship" is buying us, with Theresa May still overplaying her eight minutes of fame.
It's the same old, same old bad with China, more harsh words from Beijing, more rumors of sanctions well beyond farmers, luggage, furniture and some apparel that seems to still be made in the PRC. Will they hit us in the Apple (AAPL) kisser? And why don't they just do it already?!
The new negative wrinkle? Things are so polarized in this country, I am going to give you two headlines, lest you go all nuts on me on Twitter: "Because Nancy Pelosi and Chuck Schumer will not stop prosecuting, or at least persecuting, the President, we lost a chance for a $2 trillion infrastructure bill." Or, "Because the President lost his temper with the Democratic leadership, there will be no $2 trillion infrastructure bill. "
Either way, I think people feel we lost the Trump put. If he had been able to suffer them and vice versa, we would be talking about buying Caterpillar (CAT) right now -- in spite of China.
So what are we doing? We want to see some real price breaks. Let me give you two neutral ideas, though, that show you how hard this market can be for those who are patient: We have patiently waited for the credit card companies to see their stocks fall. But this is really day one of the selloff for these guys. And we want very much to be even bigger in the cloud. But nearly every major cloud stock hit an all-time high yesterday.
You would be buying on day one of a selloff for those stocks -- and I can't find an instance where that has worked of late.
Therefore, if you have cash, I counsel patience. And if you don't? I think for many stocks caught in the trade war you can still let some go, so you can buy the China-free stocks that we talk about so much in these columns and in the club.