The agreement of Occidental Petroleum with Buffett is misguided

CNBC's Jim Cramer said Friday that Occidental Petroleum had borrowed $ 10 billion "misguided" from Warren Buffett to wage a fierce war with Chevron for Anadarko.

To raise sufficient funds, Occidental has now obtained a loan from Berkshire Hathaway with an interest rate of 8%, worth up to $ 20 billion, he said. It could be an "albatross around the neck of the company," he added.

"It's incredibly expensive money," said the animator of "Mad Money." "Occidental is a major company with a strong balance sheet, and the Anadarko deal makes a lot of sense and they could offer a normal bond offering at a much lower rate."

Buffett, on the other hand, made a good move with "incredibly favorable conditions," said Cramer. The rate of 8% is much more than it would have cost Occidental to get a bank loan, he said.

"If you are a shareholder, you should hate this deal," he said. "Western shares report a very high dividend currently yielding 5.4%, but this yield looks a lot less interesting if you realize that Buffett earns 8% and that it exceeds your capitalist capital." exasperated."

The CEO of Occidental, Vicki Hollub, however, likes the support of Buffett, which is why she was willing to pay by the roof, said Cramer. And there was a need for speed to compete with Chevron, which has a bigger purse, he continued.

"Think of it like this: if the price of oil takes the lead, Occidental will be looking for a huge amount of money.They will have a much harder time paying that back," Cramer said. "You do not play with the fate of your business, but I think that's what Hollub could do here."

Cramer compares the Western loan to Tesla's borrowing strategy here

The market in crisis will be put to the test when Uber will be released next week, Cramer said.

Investors need to be worried about moss – too high stock prices – especially in the IPO market, as there is too much enthusiasm to buy stocks, he said, highlighting the rally of the second day of Beyond Meat, Friday, after a rise of 163%.

With 263,000 new non-farm jobs last month and low inflation, Cramer said conditions were ideal for the Federal Reserve to keep interest rates where they are – an encouraging note for the host .

"We have a freight train fleeing to a market and I would like to see this thing damn cool over a session or two," he said. "It should not be so easy to make money because, believe me, times like this never last that long, and they almost have."

Get Cramer's game plan here

The key to playing equities in the business cycle is determining when institutional investors will be encouraged to buy and sell their assets, Cramer said.

"If you wait until a particular cycle is in place, you will be too late – by the time it is clear that you have already missed the move," he said. "On the other hand, if you try to move too early and the cycle does not turn, you risk being annihilated.This is why you have to be very careful before trying to anticipate a turn, but if you get it yes, the rewards are so generous that it's almost always worth a try. "

Cramer said that there was a split between the turning point of an economic cycle and its perception. The art of timing the cycle is subjective, and too much optimism can hurt the portfolio if the cycle does not materialize as expected, he added.

He suggested investors think of "Is not a mountain in enough", the timeless duet sung by Marvin Gaye and Tammi Terrell, when the actions come together well before anything that seems like good news.

"You do not bet on the resumption of activity, but on the patience of other fund managers," he said. "If there is no wide enough valley for some of these bigger dogs, then, well, that's the schedule." When you can not play the game, you have to face the players."

Cramer has reviewed what he thinks have been the most bizarre and lucrative battles across industries in recent weeks.

Cramer was puzzled to discover that there could be a bias in artificial intelligence. Tiger Tyagarajan, CEO of professional digital and data services company, Genpact, told the host that artificial intelligence is based on data that is embedded in it.

If a data collection has a bias, the slope can be implanted in machine learning, he said.

"Suppose someone had a learning bias, you take all that data, you feed it, the machine keeps doing what you did, so the bias continues," he said. Tyagarajan.

In order to eliminate the bias, rules must be inserted to counter it, he said.

"If you allow a normal AI to work on old data, you will get the new equivalent to the old one," Tyagarajan.

See the full interview here

Cramer was caught off guard by recent callers who proposed stocks of Rapid7, Inogen and EPAM Systems.

The facilitator delved deeper into the companies and shared his thoughts on them.

Check out Cramer's homework here

During Cramer's lightning tour, Mad Money's broadcaster launched buy and sell calls on the stock selection of the day.

Interpublic Group of Companies Inc: "Very cheap advertising stock.I am not going to say pull the trigger, but it's inexpensive.

Cedar Fair LP: "This youngster likes performance.Me too.I think it's good.It's better, frankly, than Six Flags."

NextEra Energy Inc: "Nextera has a good one, it's a growth utility, there are very few in this country and you have one, I say buy, buy, buy."