Market dislocations occur when financial markets, operating under stressful conditions, experience large widespread asset mispricing.

Welcome to this week’s edition of “World Out Of Whack” where every Wednesday we take time out of our day to laugh, poke fun at and present to you absurdity in global financial markets in all its glorious insanity.

While we enjoy a good laugh, the truth is that the first step to protecting ourselves from losses is to protect ourselves from ignorance. Think of the “World Out Of Whack” as your double thick armour plated side impact protection system in a financial world littered with drunk drivers.

Selfishly we also know that the biggest (and often the fastest) returns come from asymmetric market moves. But, in order to identify these moves we must first identify where they live.

Occasionally we find opportunities where we can buy (or sell) assets for mere cents on the dollar – because, after all, we are capitalists.

In this week’s edition of the WOW: ExxonMobil

In January of this year, ExxonMobil (XOM) spent a whopping $6.6 billion on new oil leases – a sizeable amount even for Exxon whose net income in 2016 was $7.8 billion.

This was their biggest deal since the buyout of XTO Energy in 2009 when, after largely ignoring shale oil for a decade, they played catch up shelling out $41 billion for XTO – all of it in Exxon stock. More on that in a moment…

A popular narrative around this deal is the following:

This is dollar bearish. After all, oil and the dollar are relatively inversely correlated so why would you go spend a bunch of money on oil assets if you thought the dollar was going materially higher?

You probably wouldn’t, so what makes Exxon special and why should we pay attention to them? Why have so many analysts been pontificating over Exxon’s moves? After all, companies, even behemoths like Exxon, get it wrong all the time.