Now we have taken off the table the collapse of Lehman with the bond issue, although the bears don't want to believe that; Wachovia and Washington Mutual with cash infusions (soon National City, too); Citigroup with a breakup (we all see that happening) and better-than-expected revenues; and Wells because it is an obvious choice for Treasury's next anointed acquirer. Merrill Lynch doesn't need capital, there was only so much damage that could be done by First Franklin. Meanwhile, the leveraged loan market is being freed up, allowing banks to raise more capital even if they take realized losses. In previous tough times, many of these last deals would have already blown up. The worst, Freescale, is still alive and kicking (even though maybe it shouldn't be).
Other outfits, CIT (CIT - commentary - Cramer's Take) and E*Trade (ETFC - commentary - Cramer's Take), proved more resilient. Capital One may still be considered a good short, but the defaults aren't that high, especially for credit cards, and the bears can do their best to raid it with lies but they can't do much to destroy it. Bank of America (BAC - commentary - Cramer's Take)? It got pantsed when it paid too much for Countrywide (CFC - commentary - Cramer's Take), which probably would have been a casualty otherwise, but it will muddle through and at one point will be a buy. And it was obviously an awful quarter. But they ain't going out of business -- it's just a bad place right now, nothing more.
Retail's terrible, but if the worst that happens is a failure of Linens 'n Things, which was ridiculously levered, and a couple of bank lines pull from Talbots (TLB - commentary - Cramer's Take), who cares? We haven't had retail bankruptcies galore, and that's surprising too given that we used to have them even when the economies were good. Restaurants stink, but they hang in. Again, even in good times we have lost restaurants; if the worst is Ruby Tuesday's (RT - commentary - Cramer's Take), who the heck cares? It was never that hot a place to eat anyway.
Homebuilders? Sorry -- no bankruptcies there, either. That's a preposterous thing, given what has happened, but it is a reality. The banks didn't close them down. They could have; they didn't. They are all going to make it, and some will prosper beyond what we think possible because all of the mom and pops are out of business; that's how bad this moment is. It's a good group, we all know it. We are worried about silly things like HGX resistance. Give me a break.
Jim Cramer Blog I Wouldn't Write Off This Rally 4/18/2008 3:07 PM EDT Short-covering helped, but the fundamentals are there.
Jim Cramer Blog This Joint Is Jumping 4/18/2008 1:45 PM EDT It's a marketwide party, and everyone's invited.
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