This is going to be a distracted market today. One distraction -- the trade talks -- will be a thorn in its side. The other distraction -- the Uber (UBER) IPO -- will be a welcome distraction from the other distraction.
Uber priced its IPO at $45, which is at the lower end of the expected $44-50 range. Market conditions and the experience of the Lyft (LYFT) IPO played a part in the otherwise conservative pricing. We'll know just how conservative -- or not -- the pricing was based on the opening trade and the closing price.
The hoopla surrounding Uber, though, will be mitigated to an extent by the hula-hoop action of the trade deal headlines that keep going around and around without seemingly getting anywhere.
A deal has yet to be reached, so the tariff rate on $200 billion of imported Chinese goods has increased from 10% to 25%. What's more is that President Trump tweeted today that there is no need to rush a deal and that preparations are under way to impose a 25% tariff rate on an additional $325 billion of imported Chinese goods.
The president's view is suggesting to the market that there may not be a quick fix in the trade dealings, and that higher tariff rates, and yet-to-be-defined countermeasures by China, may be around to stay, particularly since the president tweeted over the weekend that China was moving too slowly in getting a trade deal done.
Now, there is no rush to do a deal?
It's a perspective that suggests the president sees the U.S. as having the upper hand in this negotiation process. China probably thinks otherwise or at least won't let anyone know that it thinks otherwise, which is why this matter is running a higher risk of being a persistent thorn in the market's side.
That thorn is drawing some blood in the early going, as the futures are pointing to red dripping across stock monitors when the opening bell rings.
Currently, the S&P futures are down 17 points and are trading 0.6% below fair value. The Nasdaq 100 futures are down 50 points and are trading 0.6% below fair value. The Dow Jones Industrial Average futures are down 126 points and are trading 0.5% below fair value.
That's more like an owie than a deep laceration. Still, for a market that is down 2.5% for the week entering today's session, it goes to show that trade matters remain an anti-coagulant.
Separately, the data from the Consumer Price Index for April goes to show that consumer inflation pressures continue to be held in check.
Total CPI increased 0.3% (Briefing.com consensus 0.4%) while core CPI, which excludes food and energy, rose just 0.1% (Briefing.com consensus 0.2%) for the third consecutive month. That left the yr/yr increases at 2.0% and 2.1%, respectively.
The key takeaway from the report is that it will keep the Fed in a neutral state of policy-setting mind and the market in an uncertain state over what the Fed's next move will be -- and when.