Somewhere at some point in the canon of journalism, someone came up with the idea of asking "what keeps you up at night." For me, it is usually back pain or migraine pain, both of which I am attempting to deal with and both of which are a lot more searing than the headlines.
But that, of course, is not what the inquiring journalists want to know. They want you to spin disaster scenarios which would then put the words in your mouth of "this is what's really worrying Jim Cramer," to use the dreaded third person on myself.
You know what, though? I am going to play that game for just one moment so people can see what might "keep me up" if I did worry and could not sleep because of the market -- EVEN THOUGH THAT IS NOT THE CASE. Here's what, if it occurred, even a klonopin could not make me sleep at night: a one-two punch on Friday that the market can't handle.
Punch one: The trade talks fail and the tariffs fall into place Friday, with 10% duties going to 25% on $200 billion in imported goods -- including furniture, electronics, handbags, bicycles and toys.
Punch two: The Uber IPO breaks the system, meaning it opens too high on retail demand and then plummets a few minutes after it goes higher, the dreaded pirouette that has led to so many terrible declines in the market over the years.
Now everything is so argumentative these days that I want immediately to explain that I am not saying the tariffs are succeeding or failing here. That's not the point of a "what keeps you up at night," discussion. I do not want to say "and this is why the U.S. will win."
I don't want to argue that the 25% will be impossible to absorb or contend, as the Trade Partnership, an international trade consulting firm does, that the tariffs will cost 934,000 jobs and cost the average family $767, according to Tuesday's USA Today.
I also don't want to say the opposite -- that there will be no impact on the economy whatsoever and no jobs will be lost, and the Chinese as well as the retailers and wholesale customers of Chinese suppliers will find a way to absorb the costs and the $767 is fanciful.
I would think that with this smoking-hot economy it is almost inconceivable that 934,000 jobs will be lost, or 935,000 or 933,000 or whatever the number is. The data indicate that job growth, which may or may not be related to the tariffs, is robust -- although it is hard to find cases where what was made there is now made here.
But back to the matter at hand. Are we really able to absorb these two body blows?
The answer is a resounding yes, if we know they could happen; and no, if we still think there is a chance that the trade talks will work, the Chinese will fold and the Uber deal will be well placed and lead to some nice but not obscene gains, the ideal scenario.
There has to be a very quick consensus formed RIGHT NOW that there will be no deal and at 12:01 eastern time, just like an execution, the tariffs will be put in place. No stay. Just 2000 volts of tariff pain coming right at you.
The consensus has to also include a reasonable belief that the Uber deal is priced horribly, that there is way too much Uber placed with people who are thrilled to have a quick gain when it opens, wherever it opens.
Remember that a deal like this, which has been kicking around forever, has lots of investors who are going to hedge their holdings somehow -- in ways we typically do not understand and are often deliberately arcane -- that will ultimately knock down this stock.
At the same time, you have to be forewarned that perhaps a huge number of people who have had a successful experience with Uber, including millennials who are not schooled in the process of IPOs, might use market orders to buy stock causing it to shoot up unnaturally because no underwriter will be able to find enough stock for sale instantly, especially after the underwriter urged those who got stock not to sell it because they are supposed to be long-term holders.
Let's hope Morgan Stanley has enough extra stock via the so-called green shoe option -- which should give the underwriter the power to sell up to 15% of additional stock. It is vital that Morgan Stanley get this right if we are going to avoid the second of two punches, because the first is pretty much a sure thing.
Now if you want to see a spirited debate about tariffs, look no further than my twitter feed. The gist of it is that about three-quarters of the people feel that the Chinese are all-powerful and have a 200-year timeframe and are going to defeat us no matter what because we are short-timers and they play the long game. Therefore any tariffs we put on are just bad for us and mean nothing to them because they can absorb it.
About one-eighth just think that Trump has every right to do whatever he wants because he's Trump and he wants to "make America great again."
Then there's an eighth that says we have 3.2% GDP growth and a 3.6% unemployment rate and a market near all-time highs, so if we care about the trade deficit with China and we think that they are a bad actor worldwide that is taking on the U.S. interests everywhere, then now is the time to try to shut them down.
This contingent doesn't see a 200-year plan to beat us. It sees a frighteningly debt-ridden nation filled with empty cities and no way to stimulate growth, given that Europe is moribund and we are trying to shut them down.
This view also says that the U.S. has been giving companies that rely on Chinese goods a full year to get out of China, a full-year! And those that haven't are now going to pay the price.
Yes, the president cares about the Dow Jones Average and even the S&P. But let me let you in on a dirty little secret: This group is so savvy about the stock market and the Dow that it has actually looked at what companies will really be hurt by the tariffs and decided they are not going to hurt the Dow as much as people think.
They have identified Apple (AAPL) , Boeing (BA) and Caterpillar (CAT) as most vulnerable to a decline. They also believe that Boeing has a healthy backlog away from China-737 Max -- as well as a huge defense hoard. Caterpillar? They think the company miscalculated to have so much business in China. And Apple? They can't figure out what the heck Apple's doing with such reliance on the Chinese. Remember this is their perception, not mine. Sure there are others. Dow Chemical (DOW) and 3M (MMM) , for example. But the administration doesn't seem attuned to their stocks and I can't blame them.
So, I actually will worry about this Thursday night -- which is why, after that bounce yesterday, I am still countenancing selling. Why? Because I want to sleep well Thursday night, backpain and migraines notwithstanding.
