Jim Cramer fills his blog on RealMoney every day with his up-to-the-minute reactions to what's happening in the market and his legendary ahead-of-the-crowd ideas. This week he blogged on:
- the broken oil market,
- new tech, and
- the ouster of Lehman's CFO.
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Let's Face It -- the Oil Market Is Broken
Originally published on Tuesday, June 10, at 3:04 p.m.
Every market's so thin here and so easily pushed around by derivatives and aggressive buying and selling that it's hard to trust any prices. Does anyone believe that some large buyer of oil paid up $10 the other day? Does anyone think that a major airline or a energy user came in and said, "Buy 200,000 barrels of oil with a $10 limit"?
That market seems completely broken to me. The only way I know to look at it is to divide it by 10, thinking of it as a $12 stock going to $13, but it still doesn't work. No one in his right mind who is a real buyer buys things so badly.
In the meantime, what short-seller is so thinly capitalized that he needs to pay up for fear of, well, for fear of what? An even higher price tomorrow? Sure, it's possible that some thinly capitalized player had a big margin call on his short. But it is ridiculous that such a trader or traders could
possibly change the world by chasing oil up on a squeeze. How can this market be that illiquid? Is it worth having? Is it really usable? Would
Exxon (XOM Quote - Cramer on XOM - Stock Picks) be able to buy or sell 200,000 barrels at that price? I don't think so. I think this market is made up of people who put little down and then are constantly being margined out. Raising the margin would have a huge benefit to the world's economy. That this isn't being done is bordering on criminal.
Or gold. It's flopping and chopping in huge gobs of dollars, yet nothing's really happening -- another sign of a very inefficient if not dubious market.
Or how about the grains? They are totally out of control, where again the market seems to be as small as the head of a pin vs. the huge amount of wheat or corn that is produced. That market has some limits, so it can't be freaked out about. But the action seems pretty questionable if you ask me, with an endless romp unmet by any supply.
Jim Cramer
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