CNBC’s Jim Cramer said Wednesday that while Wall Street is focused on the flare-up of tensions between the U.S. and Iran, it’s more concerned about a flood of new stock and bond issuance that could threaten the bull market.
“I’m much more concerned about supply, at least when it comes to the stock market. Specifically, a lot of new stocks and bonds flooding into this market and sucking up a lot of sideline capital,” the “Mad Money” host said.
Kramer noted that companies have issued an astonishing amount of equity and debt in the last month. of the alphabet large stock sale, space x An $85 billion initial public offering and $25 billion in debt sales, as well as large debt issuances from the following companies: Amazon. So far, the market has absorbed that supply, but demand may be nearing its limit, Cramer warned.
“I’m worried we’ll go too far,” he says. “I think the bulls are going to take a hit unless the issuer and investment bank stooges get things under control.”
Two recent transactions have caused Kramer concern. Rivian Undervalued stock offering and Korean base SK Hynix Plans to list on Nasdaq with a value of $28 billion. He said the discounted sale of shares in electric car maker Rivian suggests the market may no longer be willing to absorb new shares at high valuations. Kramer also questioned whether financial institutions would need to sell existing holdings to make room for the SK Hynix offering, potentially creating additional selling pressure elsewhere in the market.
Still, Kramer said the market has not yet reached its breaking point. He noted that semiconductor stocks rallied during Wednesday’s trading. Nvidiaits market value has fallen by about $1 trillion from its peak. NVIDIA stock rose after The Information reported that China will allow a small number of AI companies to buy limited quantities of its H200 chips.
“We are still in the balance,” he said. “Buyers still have extra cash.”
But Cramer warned that the balance could quickly disappear if the company continues to raise money from investors at its current pace.
“We are not yet in the danger zone, but if these products continue to be available, we will not be able to escape from oversupply,” he said. “We need to put an end to IPOs and secondary actions. There is still a chance that IPO abstentions and M&A activity will save the bulls. But what if we continue with this level of supply for a few more weeks? The bulls will suffocate under the weight of that new paper.”
