Don't fear a little big-bank blood

When a company like Wells Fargo feels a little pain, don't panic. Things just might right themselves much more quickly than you'd think.

By Jim Cramer Jan 15, 2014 12:01PM

A Wells Fargo & Co. bank branch in New York © Scott Eells/Bloomberg via Getty ImagesWhat does it say that Wells Fargo (WFC) shares finished higher Tuesday? What does it say for the bank group when a company that barely makes the earnings estimates, and barely met on revenue, actually finishes higher?

 

I think it says this is a group that people really want to own this year. It says that the group hasn't advanced so far as to make people worrisome and that when the smoke clears there are more positives than negatives and that the group is investable.

 

The Action Alerts PLUS charitable trust owned Wells for a long time. We chose to move on to banks that are less leveraged to the mortgage market. But one thing was for certain during this period: As sure as the sun would come up, Wells would miss the quarter. As great as the franchise is, it has simply failed to blow out the quarter since the Great Recession began.

 

I know and understand that it made all of the sense in the world for Wells to take market share when it was able, even if it meant taking share by buying Wachovia and Golden West, two companies with much lower loan standards than those of Wells.The Street on MSN Money

 

I also understand that Wells has been a remarkable ameliorator of bad loans. The company is so good at it, in fact, that I wish the government would just turn over the whole housing problem -- or what is left of it -- to Wells.

 

But the simple fact is that Wells Fargo's stock, even after having gone down like clockwork, has rallied back in a few weeks, again in clockwork fashion.

 

In other words, the stock doesn't have to rally back from a hole after each quarterly report -- quarters that are very similar to the previous "disappointing" quarters. This tells you that the group has more legs than what we might have thought. I think the strength here is a tell: The money wants to go to what hasn't advanced.

 

Remember, Wells is very different from JPMorgan Chase (JPM). The latter got a very nice target boost from Bank of America Merrill Lynch because of a bottoming in net interest income, and a re-focusing on earnings power, away from legal issues.

 

Wells is chiefly a home lender, and its stock was supposed to be as decimated after the Federal Reserve started tapering stimulus.

 

There are many more bank earnings coming. Just remember: When you get a not-so-hot one like Wells, don't panic. Things just might right themselves much more quickly than you would think.

Jim Cramer on MSN Money

 

At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, was long JPM.

 

Jim Cramer's Action Alerts Plus: Check out this charitable trust portfolio and uncover the stocks Cramer thinks could be winners.

 

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106Comments
Jan 15, 2014 2:53PM
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Pope fires everyone in the Vatican Bank. You DO grasp that a Pontiff is only going to do that just before he reports a $100 BILLION discrepancy in the books, right? The move spells out the writing on the wall for ALL banks worldwide. Zero credibility doesn't do your stock price any good. 
Jan 15, 2014 12:20PM
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The only regret I have is after dispensing pretty much all financial stocks back in 2007-2008...

That I didn't consider WFC in the down mode or bottom...

Or another Regional we owned off and on...

They have had some pretty good recovery in the last 2-3 years..

Maybe we should have paid more attention to the "Oracle of Omaha."?

Jan 15, 2014 1:00PM
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That evil Christie !!
Can you imagine him asking/using  the IRS to spy on conservative groups ?
Allowing the AP to spy on people ?
Running guns to Mexican cartels ?
Allowing terrorists to kill our Ambassador in Libya, doing nothing about it ? Then lying about it ?

People pick on our Dear Leader Obuma- Why ?
What did he do close a bridge, create a traffic jam ?
Big deal

Jan 15, 2014 2:14PM
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I'm a little worried about V_L ............ A headline with "bank" and "blood" in it should have brought him out like stink on shlt.
Jan 15, 2014 5:00PM
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Banks are paying a Record Low interest on Savings while still charging Loan Shark Rates. At the same time, customers are facing Record Fees. So any blood the Banks are seeing is barely visible compared to the Bloodbath customers are seeing. It's literally impossible not to make money at banks. Even the FEDS are accepting their BAD Debt aka Derivatives as collateral. This is rigged in the Banks favor and against literally almost everyone else.  
Jan 15, 2014 2:50PM
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I think the banks won't "right" themselves quickly at all. Pay no attention to the gaping hole in the side of their existence, eh?

QM kicked in. Banks need premiums and margins to pull away from QE. If you look at the structure of their credit products, it's a haircut in a rising cost environment. Rates are rising without any jobs and a lack of stability in literally every sector. Anyone forget tapering? With nearly 50% of Americans not using banks or only using boutique (free) services, insurance sales falling and big ticket sales dropping (read your holiday sales breakdown), we have no avenues outside of massive backroom activities to float them. 
IF there is a Jobs Extravaganza say as early as March and we put a significant dent in the under and unemployed numbers, those folks aren't going to jump from sub-economic customers to mainstream, they're cautious til death now. BIG is terminally ill, even as it maintains the power to drive us to ruin with them. Sorry Cat & Love, buying banks wasn't smart. When Paulsen waved blank paper in the air proclaiming the dire need for TARP, his ploy was to get Goldman Sachs and Morgan Stanley IN on the bankster ruse. As for the institutions, they were dying in the 90's and pulled off some corrupt scams to add a decade. Since 2009, it's been pure corruption. You have nothing. 
For those who hate Dodd Frank, practice your breathing or you'll have a stroke. New rules made by scholarly and law-biz fools will choke the paper and shut it down. The Fed can't bail- deader than a door nail. 
Jan 15, 2014 5:39PM
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DLH2448;Gee,3,000 deaths on 9-11 and 4 deaths at Benghazi.Which is worse?Do you

think you`re objective?

Jan 15, 2014 6:28PM
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EVERY attack is preventable ....what a bunch of tools u righties are ; )
Jan 15, 2014 12:41PM
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"ameliorator" - Give yourself a "Gong" sound bit Bobo!!!
Jan 15, 2014 4:14PM
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I'm still waiting for BAC, C, GM, JPM and WFC shares to be distributed to US taxpayers.
Jan 15, 2014 6:29PM
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Brent 9 -11 doesn't count to them unless they can somehow blame it on Pres. Obama ...instead of Howdy Doody ..."mission accomplished" ...
Jan 15, 2014 10:16PM
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Strange that we can go back in time with "selective memory." That's why some garner no respect.


We talk or mention Benghazi and such things as Fast and furious..

BTW..The Ambassador apparently said, "they didn't need any help.." (out of context like yours)


Then we skip about 8 years and get to Whitewater..?

Hmmmm, Didn't realize??, "you fer us or agin us.", "Mission Accomplished", "deficits don't matter", 

Patriot Act implanted, "CONSTITUTION TRAMPLED", Two un-founded, un-funded Wars,

Where almost 10,000 have been killed chasing someone around in the WRONG COUNTRY. 

10s of thousands of others including innocent victims, total disruption in the Middle East.


"We hear you" at 911 Site where near 3000 or so were killed, and hundreds more have suffered.

"Good job Barney" at Katrina area, that has never recovered.


And a failure of our Financial Systems and other Government Oversights allowed us to approach failure in America, And the "worst Recession" maybe in it's History.
Billions and Trillions lost, Citizens uprooted, jobless and living in despair...

YEAH I"M NOT GOING TO FORGET THOSE 8 YEARS...NEVER.

Jan 15, 2014 3:27PM
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Ah, it's a good day..and one and a half hours to go....


Got birds and possums to feed.

Markets will feed themselves, always have.

Jan 16, 2014 1:45PM
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If antbody has trouble sleeping watch Jay Leno on January 23rd.John{undertaker}Boehner

is on the show.

Jan 15, 2014 12:52PM
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Snore-- Village Idiot 2.0 just showed up!
Wah , wah , I lost $5,000 10 years ago , taking Cramer's advise !!
That evil white mutha fluffa !

Solution = Stalk him day and night. Learn a few words of Latin , fail in life , swallow swords for a living
Impressive !

Jan 15, 2014 1:15PM
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The Banks are back to the same Games played with their balance sheet as before the Market Crash. The investors you are referring to are the Banks themselves aka massive Stock Buybacks via CrackDollars. Jimmy, this has nothing to do with Retail Investors and everything to do with Fiat Dollars thanks to the Global FEDS. It's not a secret what is going on, the only problem is eventually there will be a huge price to pay. By then, all the Smart Money will have cashed out.
Jan 15, 2014 2:30PM
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to Reiterate.  I do NOT love BofA, nor do I emotionally invest in Big Banks
like some posers on here. 

HOWEVER,  BAC is poised for more growth.  At this time, earnings
and revenues are levitating upwards,  legacy issues brought with
Countrywide are being mitigated.  And most solidly, those numbers
will translate to a Reinstated Dividend "greenlight" from the FED.

My guess is Q2 or 3.  Then it will run up over 20. 

Jan 15, 2014 3:18PM
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there is nothing more enjoyable  than manipulative traders getting burned ...
Jan 15, 2014 2:38PM
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Fatty Cakes, owns shares in all those Banks, man he must rich....Do tell, Fatty.


Yeah, 3 hours to go and we're "hanging in there" from a 100 up to 115 up, yeah we're hanging 10...

Jan 15, 2014 2:23PM
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"Risky derivatives make return for returns' sake"

"By Francesco Canepa Published May 30, 2013 Reuters"


That article, which by the way was on FoxBusiness-com, and others which address this key issues is rarely talked about these days for obvious reason. So Jimmy, don't fear the little Blood, fear the Far bigger issues that are still looming. Meanwhile, certain posters can tell some more tall Tales.

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