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:
- a bullish sign for steel;
- an end of the Wall Street madness; and
- how natural gas is floating to the top.
for information on
, where you can see all the blogs, including Jim Cramer's -- and reader comments -- in real time.
Bullish Sign for Steel
Posted Wednesday, June 2, 9:38 a.m. EDT
Do you sell all of your steel stocks when the smartest steel company in the Southern Hemisphere,
, goes and buys
( GNA), its U.S. affiliate, for $1.7 billion? It already owned 66.3% -- why bother, unless you know that the stub is cheap? The Tampa-based company is at the heart of the worst construction market in the country -- Florida -- and the Brazilians are making their move.
We have seen endless articles about how the steel markets in the West are contracting and pricing is not holding up (from the bulls) or pricing is crashing (the bears). The stories have driven
down 25 straight points from $69 to $44 and at one point cut
, one of my absolute favorites and an
name, has been hurt much less, but it has been dinged all the same.
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I think that Gerdau, which has a great call on the growth region in Latin America -- it dominates the continent -- has a cooler head than they analysts. It is taking advantage of the negativity and the pessimism to scoop this one up at a 20% discount to its high -- not all that far from the top, again, but still off sharply lately -- at a hefty premium, something that you could argue it didn't need to do because it owns two-thirds of the company.
It is a bullish sign in a sea of steel negativity and worth thinking about as the stock trades through $11 on the bid.
: Vegas may be hurt but the preliminary May numbers from Macau remain very strong. Great for
and a reminder that Steve's tirade against our government may have resonance.
At the time of publication, Cramer was long Nucor.
Time to Call a Halt to New Financial Products
Posted Thursday, June 3, 4:20 p.m. EDT
How about a moratorium, a moratorium on financial innovation until we figure out what the heck the Bush people approved during the reckless years of the
Securities and Exchange Commission
? We are hearing once again about a whole new group of products, ETFs that mimic exotic hedge-fund strategies -- last week's nightmare revelation -- and I am sure it will go right into the queue of the SEC and be approved lickety-split because of some ill-found principles ginned up under the anything-goes Bush SEC.
Here's my suggestion. Just like we need to halt any new drilling in the Gulf until we figure out how to prevent the greatest ecological disaster, perhaps ever, we need to halt financial innovation until we figure out what the heck went wrong in the "flash crash" and the role of the ETFs and the other derivatives related to the super quickness of the new world. We keep hearing analogies to race cars that can go 160 mph that still have to obey a 65 mile an hour speed limit when driving in civilian traffic. All well and good,
that the people behind the machines don't believe there should be speed limits, and the exchanges themselves are so eager and greedy for market share that they cannot self-regulate. They will lose.
I think the better analogy is to World War I, where the technology of weaponry vastly overrode the ability of humans to deal with the newfound firepower. The financial markets, however, are not like wars. We need to protect soldiers, the regular investors, and we can do it. We aren't engaged in a titanic struggle between nations. We are trying to figure out how to get more regular players into the markets, not trying to figure out how to kill as many soldiers as possible with our fabulous new machine guns.
The financial innovation is like battlefield innovation, though. The innovators claim that they are providing liquidity, but they have turned the playing field into a battlefield, so the players are, justifiably, leaving.
It is worse. The SEC is busy trying to protect major and sophisticated financial institutions, such as the German bank that
allegedly hurt, instead of trying to protect individuals from rapacious products like the Ultra ETFs. Think about it this way. We know that the Goldman product in dispute, which was meant to mimic the housing market, did exactly that. But the public believes that the Ultra products, particularly the short products, are meant to hedge or protect from down markets. All they really do is track volatility on a daily basis. They don't do what people believe they are designed to do. So we have this ridiculous situation where the SEC is protecting sophisticated investors from something that worked -- even though it went down -- and allowing mom-and-pop investors to be decimated by products that don't work the way that they believe they do.
Now, we add the new wrinkle of the flash crash, which shows that not only do these products not do what the public thinks they do -- driving the public further from the market - they actually affect the underlying stocks, because the markets are so thin, often in vicious ways, including the flash-crash action. The algorithmic programs of the high-frequency traders detect the big orders from some of the products that have been created under the Bush years and back away from the market. That's the mile-wide fraction of an inch-deep sucking of liquidity out of the market.
We need to halt these innovations until we re-evaluate their consequences on the markets and on the public. Just like the oil platform inspections were done in boom times for the oil group, the analysis of these products, particularly the Ultras, was completed during the greatest bull market in history, when there were many players and much volume. Even the faulty studies done by the SEC to justify approving these products said that they could influence the close if the markets weren't so deep, but we know from the flash crash that they aren't deep enough at all and certainly can't handle the volumes these innovations generate, particularly at the close.
Why not pause? Why not figure out the "worth" of these products for individuals, as the Senate debated the worth of the Goldman contraption that was Abacus?
The last time I heard such praise for financial innovation was the move by a handful of institutions to offer portfolio insurance that would protect these funds in a downside. What did it do? It both caused the downside and didn't work the way it was supposed to. That's what the innovations are doing again. Portfolio insurance went away.
These instruments should too. And I bet any study of their impact and uses now would show exactly that. No more innovation. Just analysis. A halt in the creation of new products until we figure out impact and harm. We say yes to it in the Gulf of Mexico. Let's say yes to it on Wall Street.
At the time of publication, Cramer was long GS.
Nat Gas Floats to the Top
Posted Friday, June 4, 10:23 a.m. EDT
I see only one island of green on my screen, and that's natural gas. I think the Gulf disaster has put a floor under the fuel, and that's reflected in this rally. Some of the rally has been caused by the president's mention of tapping natural gas reserves. But he is a fickle friend; he just spoke from a
plant that just made its first electric truck! I interviewed
, and they expect to make 100,000 nat-gas trucks, including a ton with
that would have made a dynamite photo opportunity. Obama's flying in the face of that one.
Still, I think the Gulf disaster is going to make it so that, at last, utilities and nat gas users will want to lock into long-term nat gas contracts because they see the writing on the wall. That, too, is driving the futures.
To me, the sea change is here. The president is no longer
the cause, even if his heart is in electric everything (and even though these trucks and cars will plug into a coal-based utility system that will spew more noxious gas than ever).
But I think nat gas stocks are going to turn first here -- they are already starting -- and I like
National Fuel Gas
. I like
Remember, it is important to note that Chesapeake is the most levered to the demand. That's the play for those who believe lock, stock and barrel that things really have changed. Devon got out of the Gulf and is heavily nat gas, so that's a huge play too.
: The market beginning to price in some big bank failures in Europe. BEGINNING being the operative word.
At the time of publication, Cramer was long Cummins and ConocoPhillips.
Jim Cramer, co-founder and chairman of TheStreet.com, writes daily market commentary for TheStreet.com's RealMoney and runs the charitable trust portfolio,
. He also participates in video segments on TheStreet.com TV and serves as host of CNBC's "Mad Money" television program.
Mr. Cramer graduated magna cum laude from Harvard College, where he was president of The Harvard Crimson. He worked as a journalist at the Tallahassee Democrat and the Los Angeles Herald Examiner, covering everything from sports to homicide before moving to New York to help start American Lawyer magazine. After a three-year stint, Mr. Cramer entered Harvard Law School and received his J.D. in 1984. Instead of practicing law, however, he joined Goldman Sachs, where he worked in sales and trading. In 1987, he left Goldman to start his own hedge fund. While he worked at his fund, Mr. Cramer helped start Smart Money for Dow Jones and then, in 1996, he co-founded TheStreet.com, of which he is chairman and where he has served as a columnist and contributor since. In 2000, Mr. Cramer retired from active money management to embrace media full time, including radio and television.
Mr. Cramer is the author of "
," "You Got Screwed," "Jim Cramer's Real Money," "Jim Cramer's Mad Money," "Jim Cramer's Stay Mad for Life" and, most recently, "Jim Cramer's Getting Back to Even." He has written for Time magazine and New York magazine and has been featured on CBS' 60 Minutes, NBC's Nightly News with Brian Williams, Meet the Press, Today, The Tonight Show, Late Night and MSNBC's Morning Joe.