Jim Cramer fills his blog on
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:
- dollar drivel,
- the commercial real estate "crisis," and
- a ludicrous pattern.
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, where you can see all the blogs, including Jim Cramer's -- and reader comments -- in real time.
Posted at 3:40 p.m. EST, Nov. 9, 2009
If I hear, one more time, someone asking how stocks can move up with a weak dollar, I am going to scream. Stocks are moving up
a weak dollar, for heaven's sake. Every industrial that is in a competitive situation -- companies like
( JOYG) and
-- are just huge winners here.
, with a gigantic international business, does so well in this environment. Aerospace plays with big international businesses, like
and all the parts that go into it, can take so much share.
go head to head against so many companies that have wares getting more and more expensive.
And don't forget all of the translation gains that can be had for everyone from
-- classic weak-dollar play.
Yet this canard continues. I don't even know where the heck it comes from. How could people be so, so misinformed? It drives me crazy, and it keeps people out of stocks relentlessly.
Now, don't forget that oil goes up because of a weak dollar, which then pulls up the stocks of up so many U.S. oil companies. (By the way it is hilarious that stocks barely go down when oil goes from $80 to $78, but then when oil goes back from $78 to $80, they soar.)
Maybe the weak dollar is just something to talk about by people who believe it
affect stocks even though it doesn't? Does the empirical mean nothing to these people?
We have great manufacturing. We have been free traders for years. It has gotten us nowhere. Now we are finally getting a break because the dollar's declining. We are winning business back.
What's wrong with that?
And why would anyone
think that's bad for the stock market?
It's just a positive. Do not overthink it. Ask yourself where the stock market has gone during this period of weak-dollar activity.
In the end, isn't that what's conclusive?
: Credit standards tighten, and that's bad? Another good thing. We don't want to go back to where we were, do we? ... Oh, just for more insult: I do not care about the dollar carry trade. If you are foolish enough to be a foreign currency trader here, then you are missing the greatest bull market in history -- worldwide equities. I think that dollar talk is inside baseball except when it comes to boosting earnings per share.
At the time of publication, Cramer had no positions in the stocks mentioned.
Crisis? What Crisis?
Posted at 1:23 p.m. EST, Nov. 11, 2009
If there is a commercial real-estate firm in trouble, at this very moment I can see a host of companies able to raise money right here to buy that real estate at very good prices.
, the classic example, has a gigantic war chest to buy large commercial malls, just waiting for developers to get into trouble. It was able to fill this war chest by offering equity at $57.50, which is nine dollars lower than where the stock is now. If you go over the quarter, occupancy is virtually unchanged year over year and the actual leases have gone up in price. So, you have a company that can raise its dividend and buy properties on the cheap.
But here's the issue. There aren't any. Nobody's defaulting fast enough for Don Wood, the CEO, to buy malls. The "crisis" in commercial real estate in something that should be very stressed; stores related to crimped retail spending isn't a crisis. It's actually humming!
So, you shoot back, how about commercial real estate? Can I point you to some very inexpensive debt deals done by
to raise money, coupled with a fantastic secondary at $50, which raised a huge amount of money, $731 million?
Why does this matter? Again, you are up hugely if you participated in that deal.
These deals are not the exception. They are actually the rule. Given how much money's been made on these secondaries, it is natural to presume that if they were to do more secondaries, there would be many eager participants.
I think you could argue, based on the leverage on which these companies can run, that they have the firepower to absorb a huge amount of property that could be in bankruptcy.
The problem, the "crisis," has more to do with the difficulty of unwinding the securitized mortgages that were sliced and diced. But you know where they reside? In the big insurers. Have you noticed their stock-price movements? If you were to force them to recognize a big decline in the value of their portfolios, they, too, could come to the stock market for more equity, because the buyers made a great deal of money on almost all of the tranches of debt and stock that were issued.
So now you have ready buyers of the loan defaults, outfits like Boston Properties and Federal Realty (I could also argue that the apartment complex REITs have had similar success, but they are levered to the stabilization in housing prices, so they are in much less trouble at this phase of the economy), and you have the securitized portfolios in safer hands that do not need to dump them, outfits like
Hence, the question is, WHERE IS THE CRISIS GOING TO COME FROM? I am not oblivious to the problems that can come from individual projects that were bought during the 2006-2007 period, like the ill-fated Stuyvesant deal in New York. There are plenty of Macklowe's out there, particularly those who bought Zell properties at the high. But they, again, can be dealt with by outfits like Boston Properties buying them?
The simple truth is that the "crisis" is really about transferring properties from one outfit to another at a lower price. It is NOT about $7 trillion in sliced and diced residential mortgages, often with second liens on them and, more importantly, deeply inflated by fraud and further complicated the valuations. These are big, one-time pieces of recognizable real estate, many of them trophy properties for which over-extended people paid too much.
Put simply, the sheer volume of the number of homes and the complexity of the securities has created the crisis in residential real estate. The commercial properties are not in great volume and the complexity of the securities is not so difficult, although I do not want to minimize them. The Treasury Department is trying to rewrite tax laws to make any redo of mortgages more advantageous and you do not have the tedious foreclosure process that has stretched this moment out in time.
Of course, there is one cohort that will be and is currently being damaged: the community banks. We see some community banks that are levered to commercial properties closed every weekend. But they are being closed in a methodical manner that has not put the "system" in crisis. In fact, the buyers of the banks have done quite well, as witnessed by
great article about that on our flagship site), or
, or, most recently,
The commercial real-estate crisis? Just a good talking point that doesn't hold up under scrutiny. In fact, my conclusion of this exercise is simple: Buy the
iShares Dow Jones U.S. Real Estate ETF
. It might be the best bargain among all of the ETFs I follow.
At the time of publication, Cramer held no positions in the stocks mentioned.
Recognize the Ludicrous Pattern
Posted at 12:04 p.m. EST, Nov. 12, 2009
Here's the pattern: We get shelled by oil. It drops to $76-$77, all energy goes down, and it takes everything else with it. Today some of tech is spared because of
Then, in the following couple of days, oil stabilizes (but not after it hurts the oils again), rallies, and everything goes with it.
That's what's been occurring. I don't know why it is any different. In this moment in time, it is often best to buy the most hammered natural gas stocks because they come back fast. The best value is
, but it simply isn't down enough.
would make sense below $60, which is still a ways from here.
Of the integrated plays, I like
, but it is not down enough. Drillers:
, but this traded below $18 last time oil got hit, and I would wait for that.
Otherwise, this is business as usual for most stocks off oil. It's ludicrous because if the market made sense, you could buy retail and restaurants off the lower oil price, but that's been a failed strategy so far, so I am not going there.
The reaction to
is typical of the instant moronic reaction I see. When the company reported at 7:02 a.m. EST, the stock was promptly hit as misinformed people focused on a small miss in revenue vs. a great upside in earnings and estimates. I couldn't believe it, but that's par for the course for the quick-draw people.
At the time of publication, Cramer was long BP and WFT.
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