TheStreet.com's Jim Cramer says the poor outlook for this economy has stemmed the flood of takeovers from abroad we'd normally see in this kind of market.
Where are the Europeans? Where are the Asians? Where are the Middle Easterners? Are they all cowed into not buying our companies despite the decline in the dollar?
Consider that there have been only two deals above $10 billion this year: AstraZeneca (NYSE: AZN) (Cramer's Take), which bought Medimmune for $15 billion, and Saudi Basic Industries, which purchased GE Plastics for $12 billion. No one has taken advantage of the astounding decline in the U.S. dollar to buy up enterprises.
Take two that seem absurdly low: Whirlpool (NYSE: WHR) (Cramer's Take) and Black & Decker (NYSE: BDK) (Cramer's Take). Both companies have bought in an immense amount of stock. Both companies now trade at $5 billion in value. Give them a 25% haircut and you can see how much these name-brand companies are marked down.
But nobody cares.
The amazing thing about this decline in our currency is that it has not started a wave of acquisitions. It is one of the most astounding features because other than real estate you have seen no company take advantage of it. Surely an Electrolux would be pouncing on one of these, or any German industrial company.
I just pick those two because they are so ridiculously small in size now in euros. There are dozens of companies that fit that depiction.
Why hasn't it happened? I could have picked Wachovia (NYSE: WB) (Cramer's Take), which would make so much sense for an HSBC (NYSE: HBC) (Cramer's Take) to buy. (I had thought the Canadians would be down here buying but so far only Commerce (NYSE: CBH) (Cramer's Take) has attracted a bid.)
I have no idea.
Meanwhile, Celgene (NASDAQ: CELG) (Cramer's Take) buys a European company! (Celgene, by the way would have been up Tuesday -- look at Adam Feuerstein's great stuff on this -- if it weren't for the crummy tape.)
We could look to anywhere overseas to save us but the lack of interest is, alas, deafening.
Maybe it says more about what they think about us than anything else. Nobody seems to want to sell into our market. I have to say it won't always be that way but the lack of takers may be speaking to the horrendous domestic economy, one that has rates through the floor because of a dramatic lack of consumer demand.
Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer had no positions in stocks mentioned.
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Reader Comments (Page 1 of 1)
11-21-2007 @ 9:20AM
Don Clou said...
Would anybody buy New Orleans real estate as the outer bands of Katrina were lashing the shore line? The world knows that the U.S. currency is sinking fast. Nobody wants dollar based investments while the Fed is pursuing a devalue the currency policy. When they change course and act to get us back to a strong currency, everyone will want some of it. Till then their will be no takers.
11-21-2007 @ 9:48AM
william lindblad said...
You have no idea? I do.
One word - FAITH
For years the dollar has been the worlds reserve currency but the mortgage mess has created a major problem and it is the word DOUBT.
When the housing boom started it was fed with domestic money, later as it picked up steam and required more coal we packaged debt, marked it "AAA" and sold it abroad. We lied. A lot of it was really low-end and high risk and now the truth is known. Two German banks went belly up, one Irish, Northern Rock is in deep trouble, Barclay's took a big hit and Royal Bank of Scotland is in the waiting room. There will be more. If you think anyone is going to be in a hurry to jumpm into a snake pit - you are mistaken.
THEY DON'T TRUST US.
You also continue to hold a belief that rate cuts are a panacea, while in fact such moves only further devalue the dollar and create pressure on their economies by creating too large of currency disparity. When their exports become too expensive, manufacturing slows and lay offs ensue. We are in for an inevitable slow-down and taking the rest of world with us will only make it longer and more painful. Read the news. There are already strikes in France.
11-21-2007 @ 12:05PM
ajgorm said...
The worlds economies, population and skill levels are growing exponentially at a faster pace than any time in history. We are not prepared for this change. We need new ways to deal with this growing economic problem. Simply the slow pace that we all wait for economic news is not acceptable and anemic. Before we can fix one problem another one comes along. A fast fix would be cut rates 1 % then bring them back up at a faster rate than we have in the past. We need a change in thinking. in order for a world market to work .
11-21-2007 @ 3:37PM
John Lysek said...
Our country is becomming a pariah because of it's expansionist policies, and the fact that bush has increased the national debt almost 50% in 7 years. The world is beginning to understand that we are just mooks, paying for real goods with worthless dollars. Who wants to buy a company in a country that is the world's thief?
11-21-2007 @ 3:38PM
Fito Villa said...
Why would foreigners want to buy at this time? They are waiting for the fire sale that is coming. And then the Middle Easteners will come in with petrodollars and own us. Wake up America!
11-22-2007 @ 2:40AM
john said...
The economy grew at a 3.9% pace last quarter, if you excluded real estate and finance 95% of the US economy was growing at a +5% clip. What are you smokin Cramer?
11-23-2007 @ 2:39AM
Zhang Fei said...
I think foreigners are starting to believe their own triumphalist and our Armageddon-like rhetoric. These things move in cycles. They'll get over their own puffed-up sense of themselves after a few years, and reality will chasten the wheelbarrows of dollars to buy a loaf of bread Armageddonists at home.
11-23-2007 @ 1:29PM
eugene said...
the rumor mill is in full swing, watch out there are many bubbles out there, and too many clowns juggling the books for bonuses they dont deserve
11-24-2007 @ 12:59PM
joel said...
They are not buying or investing in the US because of lack of trust plain and simple ,would you buy into anything that is based on borrowed equity which are falling faster that a meteor .
This aside , this administration has not helped alienating our economy with the rest of the world .Even mexican company are swallowing ours ..
11-24-2007 @ 12:59PM
joel said...
You wanted Freedom Fries , well now ou have them minus the fat and the gas to cook them .
Spoiled irresponsable brat get spanked too .....
11-24-2007 @ 1:01PM
joel said...
That is the funniest post of the day....
11-25-2007 @ 9:12AM
Bob said...
Cramer is a lying short selling sob
11-25-2007 @ 12:54PM
david said...
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11-26-2007 @ 10:15AM
Sam said...
Sorry Cramer......but the lack of interest in American investments stems from out lower interest rates and devalued US dollar. People looking for quick fixes instead of real solutions always start calling for interest rate cuts...that's human nature.
Wiser people understand the underlying problems must be addressed...
Back in 1970 our nation was number one in both our eduation level and in hourly wages...
since then we have been on a constant downward spiral in both education level and hourly wages. We are now down to number 20 something in both. We have replaced industrail output, savings accounts and international sales...with debt and more debt on the part of consummers and government. We have replaced and supplemented our nations staggnant real wages with credit card debt and home equity loans to make ends met.The USA has been on this downward spiral since 1970 and we are on a path to become a Third World nation ourselves as our HS drop out rate now approaches 50% nationwide.
What we are seeing now is the result of decades of "Borrow and Spend". We are a nation of debtors and in fact "The World owns us" and now at this point the World has lost it's appetite to own any more of us as it is starting to realize what a bad investment they made already and do not want to pour anymore of their good money into our constantly sliding services based economy.