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:

  • Why Iran's discounting on crude is going to cause pain worldwide.
  • Why the stocks jumping on a little oil rally demonstrate how backwards the market's behaviors have become.

Click here for information on RealMoney, where you can see all the blogs, including Jim Cramer's -- and reader comments -- in real time.

 


 

Iran Is Now the Global Walmart of Oil, and This Hurts the Markets

Posted on Jan. 20 at 4:44 a.m. ET

Plenty to write about this morning, but just want to get this out: We are trapped by oil and Iran is trying furiously right now to get its oil to market by "giving" it away. The first time that the U.S. could ship oil, it gave a wild discount of an undetermined sum -- just dramatically lower -- than the world market could compete with.

I have to believe that Iran did that yesterday. I am sure that the Iranians would have no trouble selling oil for half the current price just to get something going, not unlike Walmart (WMT - Get Report) offering some ridiculous everyday low price as it used to.

Consider today BOGO day. You buy one tanker, you get another one free.

BOGO oil is not what America can compete with. It is a reality though, and there are plenty of tankers available to ship anywhere, any time.

In other words, the Brent price is being rendered meaningless and has been meaningless ever since the Saudis ended the cartel back in December.

There were always going to be situations when national companies with low costs would try to wrest control over higher cost producers. But Iran coming back on line in the West? That's something special.

The oil's been sitting there, ready to ship and, unlike Canadian heavy crude, which has to be specially and expensively refined, this stuff's normal refinery ready. You can only believe that the Iranians are targeting Nigerian and Venezuelan contracts and maybe even some Saudi deals.

Which means that BOGO may not be the last salvo.

As long as we are caught in this vice grip of oil, we are going to go down.

The overreaction to Action Alerts PLUS charity portfolio holding Bank of America's (BAC - Get Report) excellent quarter is a recognition that we are now in a territory where anyone with money lent or invested in oil is going to be presumed to lose that money.

There will be bounces. We had that weird phony bounce yesterday.

But BOGO is the watchword, and there are $300 billion in loans that are suspect under the new Iranian price-cutting regime.

 


 

As Rallies Go, This One's Ridiculous

Posted on Jan. 21 at 1:07 p.m. ET

Nothing like a good old-fashioned retail, restaurant and travel rally based on higher oil prices!

Yes, it is that ridiculous. But think about it. The leader in the Dow? Home Depot (HD - Get Report) . Here's a stock that went down on anemic housing starts but is soaring on gasoline going higher. Soaring on the consumer having potentially less in her pocket.

Oh my, for the first day in ages, Best Buy (BBY - Get Report) is up. What's Best Buy stand for? How about the ultimate in discretionary spend? True non-beneficiary of oil going higher. No matter. So this is what makes Macy's (M - Get Report) and Kohl's (KSS - Get Report) roar. Walmart's (WMT - Get Report) rallying 3% even as it's raising wages bigger than people thought. Did you ever think more shirts and ties will be sold when oil goes higher? You have a better reason why PVH (PVH - Get Report) could be up almost 5%?

When was the last time Marriott (MAR - Get Report) went higher? How about when oil last went higher? Yep. And boy do we like Delta (DAL - Get Report) today even as its biggest variable cost is none other than jet fuel! Holy cow, even Spirit (SAVE - Get Report) has spirit -- up almost 6%!

Now the whole rally isn't chimerical. What you see is a combination of oil jumping 6% and Kinder Morgan (KMI - Get Report) not blowing up. Kinder Morgan was the sum of all our fears, a gigantic company that slashed its dividend big time, causing a world of hurt for people who owned it for the big distribution and paid huge taxes when the master limited partnership was turned into a C-corp. Ouch: Most people paid huge capital gains and then were almost instantly saddled with capital losses.

But this quarter was a good one. In fact, business was real good, much better than everyone thought, and the shorts who figured it must really be bad have to run for cover, especially because we now know Kinder's management overly slashed the dividend out of caution that proved unwarranted. Sure, there was talk about counterparty risk -- but it was from two coal companies that went into reorganization.

No matter, the averages have masked the real damage that has been wrought upon the rich who reached for yield with these stocks that often billed themselves as toll roads but didn't talk enough about what happens when not enough oil and gas is pumped through those "roads." I will say this: If you like natural gas, you are heartened to see real growth in use for natural gas. Then again, it is the fuel of the future.

Remember, this market's concerned about both the debt and the equity of oil and oil-related companies, and if oil can lift its head for a couple of days -- despite still burgeoning inventories -- then some of the most stretched companies can do equity deals and get more liquid, or at least sell forward some oil to take in some cash.

Oil is a commodity, so all the commodities and their related entities run, too. Alcoa (AA - Get Report) jumps 6% back to some ridiculously low dollar amount, $7. But at least it can go up. The sun also rises. Don't forget Dow (DOW) . Yes, I am surprised that PPG (PPG - Get Report) got hit, but I think they are very different animals, although of course they are chemical companies.

And, how about the banks! Look at Wells (WFC - Get Report) go, because it has oil loans. I guess it is just a matter of time before people realize Bank of America (BAC - Get Report) got hit on oil loans and now they can do better, too! (Dow Chemical, Wells Fargo and Bank of America are part of TheStreet's Action Alerts PLUS portfolio.)

Yep, it's about as nutty as you can get out there.

At the time of publication, Jim Cramer's charitable trust Action Alerts PLUS, was long BAC, DOW and WFC.