• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Stocks

Three Market Props Are Gone

We are now going to see a real test of the market's strength.
By JIM CRAMER
Aug 06, 2014 | 06:06 AM EDT
Stocks quotes in this article: WAG, FOXA, S, TMUS, ETN, AGN, VRX, TWX, DIS, GCI

Can the market sustain the loss of three different props in a period of 36 hours: the high watermark of inversion, a government-mandated stoppage of consolidation in an industry, and the end of hostile takeovers? Can it avoid getting crushed?

Think about it. This stock market's been punctuated by a couple of trends that truly had the bears on the run: takeovers and financial engineering of all kinds.

But in the last 36 hours, we have seen Walgreens (WAG) just say no to a foreign tax regime that would have really helped its shareholders even as it is a real acquirer of a foreign company. We have seen Twenty-First Century Fox (FOXA) walk away from a deal that might have been won if it had raised its bid at least once. We have seen Sprint (S) abandon its bid for T-Mobile (TMUS) ostensibly because the Justice Department's antitrust division, after blessing so many consolidating deals, seems to have, once again, blocked one in telco.

These are all occurring within the backdrop of Sandy Cutler, the CEO of Eaton (ETN), saying that inversion madness has gotten out of hand -- which is saying something, because his Cleveland company has a Dublin address. And David Pyatt from Allergan (AGN) starting to put some real points on the board with Valeant (VRX), his hostile pursuer, by tearing down Valeant and questioning its ethics and the legality of its moves.

Now, if we didn't have Russia in there not abiding by any international law, just a state gone rogue, I think we would be hit pretty badly anyway. Last I looked though, there's nothing good happening there. So today's an interesting test day for markets' strength.

In the old days the losses in the arbitrage community from not one but two busted deals would be enough to cascade down. In this case, both these deals were filled not only with arb money, but with hot money.

And while Time-Warner (TWX) wasn't willing to negotiate, it wasn't playing the anti-trust card. It simply wanted to tell Murdoch that Jeff Bewkes could do a better job getting this stock to $100 and beyond -- where Murdoch couldn't pay without basically giving his company up to Time Warner. The total reversal without further effort was pretty stunning, and we know caught many off guard.

Sprint, on the other hand, had been going down for weeks as the speculation grew that T-Mobile just wasn't going to be had. T-Mobile is in the cross-hairs of others, so it isn't like that one's going to plummet. It just seems more pertinent to the bull that a Justice Department that has blessed massive consolidation in the rental car and airline businesses would stick by its mantra of caring about the public when it comes to telephone bills.

The shocking -- and I think it is shocking -- news that Walgreens isn't going to bow to the wishes of its shareholders, including some big activist funds, may already be in the market. The stock took a hit yesterday as word got out that it would not use the Alliance Boots deal to invest. But if a couple of those activists, namely Jana, do hit the eject button, then this one's not done going down.

Did the President's comments that he doesn't care if it is legal, it's wrong, play a role? What I think matters is that the one company with real creed to invert because it has made a real, bricks-and-mortar acquisition, not a mail drop one, is saying no to the tax benefits, meaning that something's changed and the rest who pursue this technique must pause.

All in all, some real negative developments, all going against a backdrop of an oversold market that has been avoiding positive earnings news like Disney's (DIS) numbers or great restructurings like Gannett's (GCI), for a full week now.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long ETN.

TAGS: Investing | U.S. Equity | Stocks |

More from Stocks

Bounce Takes Some of the Sting Out of a Painful Week

James "Rev Shark" DePorre
Mar 5, 2021 4:51 PM EST

It is premature to declare that the worst is over, but the intensity of the selling will go a long way toward helping a bottom to form.

The Selloff in Twilio Could Extend Deeper Into March

Bruce Kamich
Mar 5, 2021 2:30 PM EST

TWLO could bounce in the short-run but avoid the long side for now.

The Price Damage for Roku Is Not Over Yet

Bruce Kamich
Mar 5, 2021 1:25 PM EST

It looks like further declines are possible. Avoid the long side.

Roll the Dice on This Bounce

Timothy Collins
Mar 5, 2021 1:03 PM EST

This has given investors an opportunity to load up on small speculative names I love over the next 12 to 18 months.

Walgreens Boots Alliance Is Likely to Weaken Further

Bruce Kamich
Mar 5, 2021 12:44 PM EST

Let's check out the charts and indicators.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 11:38 AM EST GARY BERMAN

    The INDU and DIA

    FIBOCALL: The INDU index and the DIA The INDU ...
  • 10:44 AM EST JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    "The Challenge of Short-Selling"
  • 08:40 AM EST PAUL PRICE

    Recent Pick SpartanNash (SPTN) Raised Its Quarterly Payout by 3.9%

  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login