CNBC's Jim Cramer said Wednesday that he is more concerned about a flood of new stock and bond issuance than re-escalating tensions between the U.S. and Iran. The 'Mad Money' host warned that the surge of new equity and debt offerings has sopped up sidelined capital and could threaten the bull market if it continues. While Wall Street has been focused on geopolitical risks, Cramer emphasized that oversupply of securities poses a greater danger to stocks.
Companies Issue Record Equity and Debt in Recent Month
Companies have issued staggering amounts of equity and debt in the last month, Cramer noted. Alphabet conducted a big stock sale, SpaceX completed an $85 billion initial public offering and a $25 billion bond sale, and Amazon issued large debt offerings. Cramer said the market has absorbed that supply so far, but warned that demand may be approaching its limits. "I fear it's getting to be too much," he said. "If the issuers and their investment banking minions don't rein things in, I think the bull is going to get hurt."
Rivian and SK Hynix Offerings Raise Market Concerns
Two recent deals raised concerns for Cramer. Electric vehicle maker Rivian conducted a discounted stock offering, which Cramer said suggests the market may no longer be willing to absorb new equity at lofty valuations. South Korea-based SK Hynix plans a $28 billion Nasdaq listing. Cramer questioned whether institutions will have to sell existing holdings to make room for the SK Hynix offering, potentially creating additional selling pressure elsewhere in the market.
Nvidia Rebounds on China Chip Export News
Cramer pointed to a rebound in semiconductor stocks during Wednesday's session, led by Nvidia. Nvidia's stock had shed almost $1 trillion in market value from its peak. The stock got a boost after The Information reported that China will allow a handful of AI companies buy a limited amount of H200 chips. "We are still at equilibrium," Cramer said. "The buyers still have some spare cash." However, he warned that balance could quickly disappear if companies keep tapping investors for capital at the current pace. "We haven't reached the danger zone yet, but if these offerings keep coming, we will not be safe from oversupply," he said. "We need to see a break in the IPO and secondary action. IPO abstention and M&A activity can still save the bull. But if we keep getting this level of supply for a few more weeks? The bull will suffocate under the weight of all that new paper."
FAQ
What did Jim Cramer say threatens the bull market on Wednesday?
Jim Cramer said Wednesday that a flood of new stock and bond issuance poses a greater threat to the bull market than geopolitical tensions between the U.S. and Iran. He warned that the surge of new equity and debt offerings has sopped up sidelined capital and could hurt the bull market if issuance continues at the current pace.
Why is Jim Cramer concerned about Rivian's stock offering?
Cramer said Rivian's discounted stock offering suggests the market may no longer be willing to absorb new equity at lofty valuations. He also expressed concern that SK Hynix's planned $28 billion Nasdaq listing could force institutions to sell existing holdings to make room for the new offering, creating additional selling pressure in the market.
