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:
- steel prices,
- the dichotomy in natural gas, and
- separating the wheat from the chaff.
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A Decline in Steel Prices Would Be Huge
Originally published on Tuesday, Sept. 2, at 9:28 a.m. EDT
Is steel next to come down? This morning's commodity collapse is by no means limited to oil. We have everything from palm oil to platinum on the way down, and I have to believe that steel -- or at least the raw ingredients of steel -- can't be far away from a decline.
I can't stress how important this all is for the heavy-equipment makers like
-- they started to react to it last week -- or even for the
of the world that need steel. Certainly for the carmakers and the aircraft makers -- I believe if
takes it to the strikers, you might have even more of a trade coming.
Steel pricing has bedeviled everything from commercial construction to the building of rigs for the oil companies. It has also been crimping the pipeline business. So many companies have had to raise prices because of steel that it is a leading cause of the remaining parts of inflation.
Look for this to be the next big story. We know that
stock price has forecast this decline. While the long term could see steel shortages now and then -- and we haven't had many Greenfield mills built in years -- you can tell when the pressure's beginning to subside.
This is hugely bullish for everything that bends metal in the world, especially companies like heavy-equipment makers.
At the time of publication, Cramer was long Deere.
Two Sides to the Natural Gas Coin
Originally published on Wednesday, Sept. 3, at 10:17 a.m. EDT
Two more hurricanes, a price that's economic and down 40% in 8 weeks, a fuel that homeowners can switch to -- is natural gas capable of collapsing even more than it has?
This one's rough. Commodities are chart-oriented. The chart for natural is a disaster, one the worst I have ever seen. This commodity has $5 all over it. It's obvious that there is no place to put the stuff, and we are pumping like mad. It's possible that there isn't enough switching capacity to make a difference.
But it is also obvious that we are going to have success in making natural gas an auto fuel of the future, especially at these prices, which make the fuel smack at $2-a-gallon equivalent without any subsidies.
This price shouldn't be a hard call. You get it down here, and you know that there will not be as much pumped; these companies can shut in delivery. Plus, we do not have a big decline in the futures price, nowhere near the current cash price.
At the same time, the group's become as toxic as any I have ever seen.
I think you take a chance ahead of two hurricane forecasts and the elimination of the Ospraie overhang. If you don't, you must believe that natural gas can trade at the most outrageous discount in history, as it is if you use the old 6-to-1 ratio -- it's otherwise projecting $42 oil from the current $108! Even if you use what the bears on this site have been saying, a new 10-to-1 ratio because of the inability to switch, you have oil at $70.
Can oil go to $70? Yes, if we can find more. Yes, if we weren't running out. Yes, if driving doesn't come back at $3 a gallon, where gasoline goes if oil cracks $100. Yes, if China collapses.
Otherwise, this weakness right here is a buy, not a sell.
The disconnect on the drilling side is even more weird. This morning,
is talking about a 99% increase in daily lease rates, making it inconceivable that anyone would cancel orders to
National Oilwell Varco
, particularly because this morning Brazil announced that there might be a fourfold increase in natural gas in the Jubarte field. Brazil simply can't take advantage of that without many more rigs, and the backlog is already astronomical for NOV.
But the stock goes down relentlessly as if it is a coal service company, a la
That's nonsense, but again, the chart is terrible, and back in March the stock was at $52. Can it repeat that price? Anything's possible, but the backlog's firmer, the pricing better.
But nobody cares.
Just one ugly market.
At the time of publication, Cramer was long National Oilwell Varco.
Wheat vs. Chaff
Originally published on Thursday, Sept. 4, at 9:19 a.m. EDT
Wow, what a men-from-the-boys moment this is. You've got
just falling apart on orders, a gigantic slowdown in America joined by Europe. Ugly.
But then you have
yesterday reaffirming its numbers. And you had
saying things are just fine at the conference the company spoke at just last week. Terex simply is not best of breed and is less in control of its destiny than UTX and CAT.
Then there is
. Here's a company that's already been cut in half, and what does it say? Orders are bad, guidance is bad, and the big telephone companies say they are cutting back, specifically
said the opposite a few weeks ago.
just gets crushed.
says things are good.
Now, we know that everyone who's saying that things are good could have collapsed in the last few weeks or are just blowing smoke. But it is no coincidence that Terex, Ciena and Dell have had execution problems in the past and that when the going gets tough, they do not get going.
These muffs are not like
, where there was an inventory glut.
But it is worth keeping in mind as everything gets thrown away here, that sometimes there is share-take and sometimes there is just terrible execution.
That's how I felt, by the way, last night after interviewing Michael Sutherlin, the CEO of
, which at this stage in the cycle should have been blowing away the numbers given its orders and the coal shortage in the world. If they couldn't execute this past quarter, they just aren't going to be able to exceed the next quarter given the coal price slippage and the absence of the Chinese, something that has continued post-Olympics.
In a recession, you get some companies that take share and demonstrate strength, and you get others that fall by the wayside. That's what's happening now, and while it takes down everything, some will come back earlier than others, and those are the ones that are standing out now as economies falter.
At the time of publication, Cramer was long Cisco and Hewlett-Packard.
Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for
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