Bounty of Deals Hints at Opportunity to Come

What's so compelling about Disney (DIS - commentary - Trade Now) to buy Marvel (MVL - commentary - Trade Now), Brazil to buy Pilgrim's Pride, Dainippon to buy Sepracor (SEPR - commentary - Trade Now) (a core short for many hedge funds!) and Baker Hughes (BHI - commentary - Trade Now) to buy BJ Services (BJS - commentary - Trade Now)? In all my years in the business, I can't recall more than a handful of deals combined on these dog days. We have to contend with an unprecedented number of deals during a period where there should be no deals at all. And that's not to mention a bunch of smaller ones like the Abbott (ABT - commentary - Trade Now) deal announced last night.

What does it say? What does it say when the Japanese, Brazilians and mainstream Americans buy this week?

I think it says, wait until next week. Wait until you see what's in the pipeline.

In the aftermath of the crash of 1987, we saw a host of companies totally unrelated to the crash, including foreign companies, swoop in and use the cover of the chaos to buy a ton of companies. The Brazil and Japanese deals look a lot like those. The Disney deal, motivated by the need to diversify away from advertising and the need to grow the theme parks, is simply opportunistic. The BHI deal is the long-awaited consolidation.

In every one of these cases, the sense is that our companies are cheaper than they should be and that they have been kept down artificially by credit markets that are thawing rapidly. Consider that a so-called failed program, the TALF program, has now seen $100 billion in issuance. I recall when this program started with $5 billion in sales it was considered a huge bust!

Now we are getting back to normal, with one big difference: Other countries now recognize that the time is right to strike here. And they have more cash than we do. Can you imagine if we were to encourage the Chinese to buy something, like one of our banks?

Amid the endless gloom here -- and it is endless -- I have to remind myself that there are multiple cavalries, including potential big growth to GDP (now rumored to be as high as 6% by year-end!), stronger-than-expected retail sales, a definitive reversal in the worth of the holdings of banks (even as we read about the credit woes) and now deals.

Now, there are so many sidelined people that you have to believe if we get a decent employment report we will get a burst up, then a push down hard and then the next buying opportunity.

Or we'll just go down off a bad one and you'll get a buying opportunity.

I think it is pretty binary, even though I thought and still think -- maybe tomorrow? -- we will go down 5% from the high.

At the time of publication, Cramer was long Abbott Labs.

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