"Money in" is going to become the story as the Dow takes out Jim Cramer's year-end price target of 14,548, he said on TheStreet.com TV's Wall St. Confidential
Web video Monday. When he says "money in," Cramer said he means "there's a lot of money that says this time it's for real" and that the market is going to go up a lot. "It's not all speculation on what's going to be LBOed or private equitized," he said. "The cash rates are going to go down." Despite what market players hear from all the people who said the Federal Reserve wouldn't cut rates before and are now saying it won't cut again, "the Federal Reserve is going to make cash an unappealing asset," Cramer said. "There's just a tremendous amount of money coming in, and at the same time a tremendous amount of stock has been retired." Just last week, there was $40 billion taken out in takeovers, he said. Plus, there were a huge number of buybacks announced. People aren't putting together the vast picture, which is that "there is far less equity being printed than taken out while cash is becoming less attractive and our stocks are becoming more interesting to foreign buyers," Cramer said. "This is a huge sea change and people just don't believe it."
For example, Chevron ( CVX) and Lockheed Martin ( LMT) recently announced $30 billion worth of buybacks, he said. Yet this $30 billion worth of buybacks doesn't seem to mean anything to people. Cramer said he knows this because CVX was down the day it announced the buyback and Lockheed Martin was unchanged. "No one is willing to call it a trend," Cramer said. "The trend is unbelievable. This is the single-biggest thing that people ignore." People just think of it as another buyback, but "boy are they ever missing the point," he said. "We have buybacks that are really amazing now." Cramer pointed out a Barron's article last weekend in which the writer recommended selling Cisco ( CSCO) without looking at the P/E multiple. The journalist dismissed the fact that Cisco has taken out a billion shares in buybacks over the last few years. "These are not things that are just regular business as usual," he said. "These are huge retirements of equity and they are reflecting a major sea change up as we run out of big-cap stocks." He said he always hears that big-cap stocks are good now, but people should understand that one of the reasons they're good is because there's not enough of them anymore. "You have to look and try to understand things within a larger context," Cramer explained. "The buybacks are viewed as something about Chevron or Lockheed Martin. They should more be viewed as equity in general. We don't care that much about private equity if we can have big-caps buy back stock."