Household's Deal Gives Bears Their Comeuppance

Here's one of those "you can't be as bearish as you were" events. Household International (HI - commentary - Cramer's Take), the target of a bid from HSBC (HBC - commentary - Cramer's Take), was one of the walking wounded that had been pulling down this market. People hate the business it is in, the lending business. They hate Countrywide Capital (CFC - commentary - Cramer's Take) and Capital One (COF - commentary - Cramer's Take) and MBNA (KRB - commentary - Cramer's Take) and Sears (S - commentary - Cramer's Take) because they all hold a lot of loans that were made to people who can't pay them back.

Now we discover that someone likes that business: HSBC. And that someone has the capital and the currency to make the bears feel real stupid at this very moment.

This HI deal is a Tom Brown-type of comeuppance for the bears. Tom loves this segment of loans, and often has told me that these companies -- although not Household -- know what they are doing and are down too much.

Looks like Tom's right, at least this morning. What will happen to this segment now that the biggest takeover deal in finance just occurred?

Squeeze! I don't know a hedge fund that doesn't have a short in this group. But with arguably the worst in the cohort getting a premium bid, well, that's the bears' worst nightmare. Look out above! Pain!

How do you factor this deal into your thinking? I think it presents a floor, a one-and-change times book floor, on the financials. That should be factored in immediately.

More on what that means later today!

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James J. 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. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. At the time of publication, Cramer was long XXX. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for Action Alerts PLUS. While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column to [e-mail]. Click here to get Cramer's book, "Confessions of a Street Addict."