Cramer's Stop Trading! So Long, Stress Test (4/9/09)

Stocks discussed on Jim Cramer's Stop Trading TV Program, Thursday March 9.

Wells Fargo (WFC), JP Morgan (JPM), Whirlpool (WHR), Textron (TXT), Fortune Brands (FO), Black and Decker (BDK)

Cramer says so long to the bank stress test which won't be needed anymore now that Wells Fargo is changing the rules and proving that there is at least one good bank out there. Cramer identified JP Morgan Chase as another good bank which may be able to take over the better portions of weaker banks and sell bad segments to the Federal government. Wells Fargo reached a record $3 billion in earnings for the quarter with $100 billion in mortgages so far this year and a backlog of $100 billion. Cramer thinks Wells should be trading at an 11 or 12 multiple and should reach $26. Other proof that the tone of the markets is changing is in Textron's 50% rise and strong performances by Whirlpool, Fortune Brands and Black and Decker.

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Comments

[ECONOMICS 101:]

Wells reported a fantastic quarter no doubt but i am still skeptical because nobody knows what the accounting rules are anymore. I'll sit on the sidelines.

Apr 10 08:52 AM

[erniem:]

WFC's report is like every earnings report. It stimulated a brief interest in the market. Next monday or tuesday a dollop of bad news will be released indicating horrible things coming. The market will go down. This cycle will continue until I die.

Apr 10 09:01 AM

[Fliujniligui:]

I would like such dollop of bad news to occur, I want more financial stocks at better price. Allied Irish Banks is still cheap tho and it should stay this way for a while.

Apr 10 09:13 AM

[InvestBaboo:]

True, the market will take 3 steps forward and a step or step and half back giving you guys the chance to get on the bus. The long term trend is positive. How do I know this? The charts are telling the story. I have posted from about 6 weeks back that I started noticing something unusual in charts. I made a specific reference to Goldman Sachs and Morgan Stanley. Of course, I was dissed on but those were beginning signs of a stock market resurgence led by financials. Since then I made several posts pointing out to further rallies in equities and a decline in Gold. Recently when that moron Michael Mayo made a bad call I said as such and predicted the bank stock rally to continue. Look at what has happened.

I am no genius. If you shut your brain from overanalysis and look at what people are actually doing (reflected in the charts) and not what they are saying you will see where the market is going. This rally is strong. So strong that historical patterns suggest this is the beginning of a long term bull market rally.

I happen to think that this kick in the Jewels that America got will actually produce a better people and a stronger nation. I think that what will emerge over the next few years is a strong economy and a stronger nation and many leading stocks within leading industries that are in single digits today will test new trading highs. What that means is an investment made today in many of these strugglers will produce enormous returns in just a handful of years. Saying in one other way -- what I am saying many of the single digit stocks today will trade at levels higher than their previous best in just a handful of years giving us a wealth creation opportunity of extraordinary magnitude.

Apr 10 11:00 AM

[rogerk2:]

How much of the banks' profits this quarter were due to the windfall from AIG using government money to pay off the banks' for their co-party swap obligations? The big "profits" the banks are claiming may just be a one-off gift from AIG and the Treasury.

Apr 10 02:54 PM

[sr9web:]

one time gift is correct. Wait till July...


On Apr 10 02:54 PM rogerk2 wrote:

> How much of the banks' profits this quarter were due to the windfall
> from AIG using government money to pay off the banks' for their co-party
> swap obligations? The big "profits" the banks are claiming may just
> be a one-off gift from AIG and the Treasury.

Apr 10 05:34 PM

[montyman:]

test

Apr 10 08:34 PM

[PeteK:]

Cramer is right .
It should get better from now on.

Apr 10 11:15 PM

[Francisco M...:]

Cramer is wrong! Wells has not even accounted a write-down for its Wachovia acquisition of at least $10 Billion. So far, Wells has only accounted for about $72 Million (yes, with an M, this is not a typo). 2nd Quarter is going to look much different. As for the other banks, more than half have failed the stress tests and that is why the Fed has told them to "shut up" about the results.

Apr 11 01:07 AM

[walkup:]

It is one of those delicious moments when fear and greed are nicely balanced. So next week, do you feel lucky?

Apr 11 04:35 AM

[Pessimistic...:]

I think WFC will continue to climb gradual.. and them that bilatterally symetrical bell curve will subside downturning a bit.. I may be wrong on when the craze quells but I do not feel longer than two weeks.

Apr 11 09:55 PM

[bartpr:]

all the big banks have bad securities. these will not show up on any earnings statement. they show up in the capital impairment. until the real estate security issue is resolved banks will be bad long term investments.

Apr 12 08:21 AM

[PeteK:]

walkup,
yes, we feel very very lucky.
This crisis had given us the "Once in A Life Time"
opportunity to get some big companies otherwise we
could never afford.
Do you feel lucky too ? or confused ?

Apr 12 03:58 PM

[guitoon:]

pretty amazing..we don't know the real numbers of WFC yet..
I don't understand why people are paying attention to this guy
"we don't need stress test"... absolutely outrageous..let's just hide the trash under the carpet...

Apr 12 05:27 PM