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:
- eternal optimism;
- the mesmerizing fall of BP; and
- what Asia's return brings to the table.
for information on
, where you can see all the blogs, including Jim Cramer's -- and reader comments -- in real time.
The Eternal Pessimists Still Have the Floor
Posted Monday, June 7, 11:44 a.m. EDT
First, nothing would please me more than to
about the potential positives of this market. He's got a great point: "the pessimists are getting hyperbolic." At 5:40 a.m. I heard "breaking news" on
TV: Nouriel Roubini spoke negatively about the euro. I said to myself that until that's not breaking news, we are still in a world where we are not inured to the downside.
We still have people in the media -- and therefore in the public, as the public is swayed by the media -- who regard this as news. I can write Roubini's speech in my head, and it goes like this: "The world is falling apart. The U.S. is falling apart. China is a bubble that is falling apart. The euro is falling apart. We are going back into a recession. The European banks are bigger and worse off and can take us back down huge. We are in a terrible situation of which there is no way out."
Of course, no one says, "That's the same rap he had at Dow 6500. He wants it back there." But the uncritical way with which this fellow is treated reminds me of the others, the Prechters, the Garzellis, the Granvilles, who went negative and stayed negative, and every time they spoke, they were reported on -- until they were made irrelevant by the market. We are not there. Not there at all.
Second, I totally disagree with Doug about earnings. I think they are way too high. I watch these pharma stocks go down every day and know their estimates are monster too high. I see companies like
preannouncing, and I know it isn't down much, but I would short it with impunity. Why not? What is it going to get? A takeover bid?
Exporters will be hurt by either a slowing China or a slowing Europe that is more competitive on an export basis because of the euro. I like
, but I think it is at a quintessential earnings-risk moment.
Third, until we see the cleanup of
( STD) and of
, we can't rally for real. The credibility on what anyone says about BP is so shot that we will believe it only when we see the video that shows no oil coming out.
Look, I know sentiment is very, very negative, so negative that I would normally want to take the other side of the trade. But the oscillator that follow, the one that comes to the door on Saturdays, the S&P oscillator, was
That's terrible. We need fewer bulls in the Investors Intelligence report on Wednesday, we need the oscillator to be minus 5, and we need to see everyone important throw in the towel. Just this weekend, I heard Byron Wien be positive because people are negative (among other reasons -- I don't mean to single out Byron, whom I love). When no one is positive, Doug, Byron, whatever, I will be listening.
I had Sen. Ted Kaufman (D., Del.) in my office this morning. He feels that until people, the real public, feel the market has some policing with a containment of the rapacious high-frequency traders (the best piece yet on this topic, with solutions, came from
), the public will keep leaving. It is true that the public has been distancing itself from the market, but there were some nascent inflows, and they have now reversed. The ETF, E-Mini sellers can really roll this market, and they are doing it.
Finally, we are in a new world, a world dominated by the marginal buyers of stocks being taxed heavily starting next year, and the regular investor truly is beleaguered and frightened.
The market needs that cohort to stabilize. It hasn't happened yet. It won't happen with the policies coming out of Washington, which have frozen so many, from investors to people who want to start businesses to people who would be hiring otherwise.
Just a bad picture, Dougie, but not so grim that everyone is bearish. We need more bears, more negativity and more positive news against it for me to turn here. And we need more checks in my
, or I cannot join you in the risk/reward that you see.
At the time of publication, Cramer was long BP.
Mesmerized by the Fall of BP
Posted Wednesday, June 9, 6:56 p.m. EDT
You can't have one of the largest companies in the world disappear overnight and believe it won't affect other companies or the market's psyche. As
late tonight, this was
last hour, with ETF shenanigans thrown in.
At one point today, between $32 and $29, I remarked to a friend that I had
a stock unravel in front of my eyes like this one did, with huge value disappearing. Just amazing. Just disappearing.
It was frightening.
Also, it is clear that if you make the company's liability unlimited, it might never want to drill again. Who can risk this? Who can risk having a company taken away from its shareholders, as if it were expropriated
even when you believe it deserves it
Lots of people are debating right now whether any company in the Gulf of Mexico can finish a project, or even stay in the Gulf. They believe this is Three Mile Island for offshore drilling. My colleague Matt Horween reminds me that the risk-reward has now gotten astronomical for those who drill or already have wells in the Gulf.
Watching BP fall and watching
collapse after actually being up at one point -- talk about misdirection -- was horrifying to everyone. It was like watching the collapse of every single nuclear-power utility in the 1980s in time-lapsed photography.
I know there had been many smart value buyers of BP all the way down. They came on TV. They talked their game. But in the end, they could own, well, nothing. Or what, maybe they make $5? BP is now, to quote the late Richard Nixon, a pitiful helpless giant.
And that has everyone and everything spooked. I ask you this: If you follow the market, were you able to take your eyes off BP?
I sure couldn't.
At the time of publication, Cramer had no positions in any of the stocks mentioned.
Here's What Asia Brings to the Table
Posted Thursday, June 10, 9:29 a.m. EDT
You can't overstate what good news out of Asia does to this stock market. I don't think it's understood. I don't think people get the all-encompassing nature of what it means to have great export growth and terrific imports. It's almost as if we are blinded by darkness of Europe rather than bathing in the light of China and its derivatives.
First, we have major companies making major inroads in China. We all know the consumer plays, tech's doing well, so is
and we know the
just reported some good Macau numbers, although in typical conservative style they are tempering enthusiasm for the future. We also know that China is a classic "bad actor," dumping materials worldwide. But the consumption of product is so important in so many ways.
There's the linkage of oil and copper and the Baltic Freight numbers to the stock market. This is worth spending some time on because it is so powerful. If you go back to the beginning of the huge selloff in 2008, you got a peak in commodities because of high prices and a potential slowdown in China. The hot-money hedge funds had been betting almost entirely on the "China trade," owning a ton of the oil, mining and fertilizer stocks all because of growth in china. When China peaked, these hedgies -- huge and leveraged owners of the
Nation Oilwell Varco
complex, the most emblematic of the group -- fell apart. They all relied on China growing forever and ever. We got hedge funds gone wild, an absolute run on these owners when these stocks went down and the hedge funds could not meet margin calls. Sure, there were huge problems in the economy, but the selloff in these China names crushed so many stocks and brought the part of the market that was not financial to its knees. The ripple effects were felt in aerospace, in industrials, in companies as widely varied as
There was nowhere to hide from these sellers.
So a collapse in copper and oil and coal and fertilizer prices and the Baltic Freight, all off of China, led to the worst-possible-timed selloff we can recall, right at the moment of the
( FNM) /
( FRE) /
/ et al. collapse.
In 2009, this whole trade started reversing as China's stimulus, all about the consumer having more capital, took hold. The reverse led to the rise in all of the commodity futures, which then translated to the sector ETFs and ultimately the
. The combination of the end of the hedge-funds-gone-wild margin pressure and the beginning of the stimulus is what really took us out of the morass we were in, aided by
chief Ben Bernanke's accommodative policies and a line in the sand against bank nationalization. Treasury Secretary Tim Geithner's stress tests, Bernanke's assurances and the China commodities turn gave us the troika that we needed to go from
6500 to Dow 11,000, with banks, oil and tech leading the way.
We all know what happened when the government decided to attack the financials -- we lost them. But China realized that its stimulus had gotten out of control, particularly when it came to construction and residential housing. The Chinese saw what happened to our subprime boom and for three months put on the brakes to make sure it did not repeat itself there.
Immediately copper fell to a three-month low, the Baltic Freight index collapsed and oil dropped from $86 to $69. The hedge funds never learned, so the reversal was swift -- especially when the euro collapsed and the Greece and Spain terror began.
In the last week, much has changed. Chinese exports and imports took off, with exports jumping the most in six years. That means demand from around the globe is stronger than we thought, particularly Europe, which imports gigantically from China. Perhaps in sync with that, Japan's economy has started to grow again and unemployment fell in South Korea and Australia.
All sorts of companies of American companies are benefitting individually. We were worried about a drop in Boeing exports to China. Take it off the table and the multiyear cycle is back on track. The truck bull market is based in part on China, which is the home to a huge percentage of sales to
. Most important, GM (the company that is coming public very soon), with gigantic sales in China -- soon to surpass America -- will become a hot deal off of this turn. That's huge cheer on its way.
All of these positives occur if China turns. The pressure falls from Europe and the employment picture in the U.S. dims as an issue, which is good news given the "bad" unemployment numbers from last week and the elevated unemployment claims today.
That much good can trump a lot of bad.
Because our market jumps to the tune of the
(the copper etf) and Baltic Freight and the oil futures, we can rally as the hedge funds go from shorter to buyer.
That's why the rally could have legs. Strange, attenuated, but true.
: I love dividends.
( DLM), a fave of
Dave Peltier's, just announced a dividend boost. Right on the heels of
, two companies that we thought might have to
the dividend just last year!
At the time of publication, Cramer was long Cummins and Cisco.
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.