It’s been an angst-filled session as US and Chinese trade negotiations continue and dominate investor emotions.  Going into the session, it was a long shot any deal could be crafted, but there was hope maybe both sides would signal improvement since Monday.

Hu Xijin editor of Chinese newspaper Global Times has been a solid source of information and handicapping these talks summed it up with tweets earlier today.  Conventional wisdom last Friday was a trade deal was just about done.

Now, it’s highly in doubt, and maybe that’s the best place for it to be to get done.

Battle of the Teutoburg Forest

I know the media is pouncing on President Trump and tariffs, but it was the only weapon left, and the notion old-school statecraft would have worked is a joke. 

That kind of ridged thinking harkens back to why Roman soldiers struggled to fight back Germanic tribes beginning the ambush in the Teutoburg Forest where Rome lost three of its vaunted legions and six axillary cohorts.

• Up to 23,000 of Rome’s finest warriors
• Up to 15,000 Germanic tribesmen

This was the first Roman foe that simply wouldn’t stand there and fight against those legendary fighting formations.  In other words, they changed the rules, and in the process, changed history.

Guerilla Warfare

The United States had to mix it up and resort to something akin to modern day guerilla warfare.   The use of the WTO and waiting for reluctant economically wounded allies was never going to work, and the proposition only got weaker by the day.

Tariffs Working?

In the first three months of the year, China exports to the United States declined sequentially and by higher amounts in successive months; January $4.2 billion, February $5.9 billion and March $7.1 billion.

Consumer Inflation: Where’s the Beef?  

Tariffs have been in place for a year and consumer inflation continues to come down in items heavily imported like apparel.

Today's CPI

Headline 2.0

• Core 2.1
• Food -0.1
• Apparel -0.8
• New Cars -0.1
• Used Cars -1.3

Meanwhile, we need Jay Powell's definition on "transitory" because this is another report that counters his assessment deflationary forces are only temporary.

CPI

Uber is trading, opening down from its IPO price and struggling in its debut.  I’ve been very vocal about my concerns about Silicon Valley darlings going public after private players sucked up all the upside and using consumers and the public purely for liquidity.

A few weeks ago, I thought maybe Uber would be so exciting it would get a public pass, but conventional wisdom has shifted to my way of thinking.  Nobody wants to be a chump whether it’s in an unfair trading relationship or buying stock from billionaires that got a bite of the apple so much cheaper than the public.

Market Fundamentals

Stocks pared some of the losses after Treasury Secretary Steve Mnuchin said China trade talks are done for the day, but they were "constructive."

I’m very excited about this stock market in part because of US economic backdrop – strong growth and modest inflation.  Moreover, those fretting about valuations are going to get a chance to buy soon.  I know I’m ready.

Have a great weekend, and Happy Mother’s Day to all the moms. 

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