Cramer on BloggingStocks: Mixed feelings on the BofA capital raise

Posted Dec 4th 2009 9:45AM by Jim Cramer
Filed under: Market Matters, 3M Corporation (MMM), Caterpillar (CAT), JPMorgan Chase (JPM), Bank of America (BAC), Goldman Sachs Group (GS), United Technologies (UTX), Wells Fargo (WFC), Cramer on BloggingStocks

From TheStreet.com Network

TheStreet.com's Jim Cramer says it's good they could raise $19 billion so fast, but there are lots of reasons to be tentative here.

You have to have mixed emotions about this Bank of America (BAC) (Cramer's Take) deal. It's terrific that in 24 hours, a company that has no CEO and no history of making money during this tough period can raise $19 billion. But it is not terrific that $19 billion in buying power disappeared like that in a market where $19 billion actually matters, and is a precursor to maybe triple that figure that has to be raised within a short period of time.

Remember when we first did the TARP raises, the initial guys did pretty well but as we went down the path it got tougher and the stocks got hammered more, and you wanted to be short all of the financials even though the early ones popped.

And it comes at a time when there are a lot of big industrial sectors that are overweighted and overowned, where someone might just say, "I am blowing out of all my Caterpillar (CAT) (Cramer's Take) and my United Tech (UTX) (Cramer's Take) and 3M (MMM) (Cramer's Take) to go buy some Wells Fargo (WFC) (Cramer's Take) on the deal." Why not? They are all cyclicals now."

I could be more sanguine if either JPMorgan (JPM) (Cramer's Take) or Goldman (GS) (Cramer's Take) acted well, but JPM struggles daily in up and down days and Goldman has entered its own personal bear market.

Ultimately, the stocks aren't expensive, and bulls should be thankful about a market where a company like BAC that previously wouldn't have been able to raise a billion dollars over a week's time can now raise $19 billion in a heartbeat.

But supply is the enemy of demand, and I had waxed the other day about the lack of supply away from the banks as a positive. I didn't think the banks, though, would be this negative.

Puts a damper on things, from my perspective.

Jim Cramer is co-founder and chairman 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 was long Bank of America, JPMorgan and Goldman Sachs.

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