Cramer's Mad Money - Wells Fargo Changes the Game (4/909)

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Thursday March 9.

Wells Fargo (WFC), Bank of America (BAC), JP Morgan (JPM), Whirlpool (WHR)

Wells Fargo's earnings beat should convince even the most bearish investors that the game has changed. Wells Fargo's solid performance wasn't merely an oddity, but a direct result of the coming turnaround as more home buyers are taking advantage of low housing prices and slashed interest rates. Cramer would buy Bank of America and JP Morgan on Wells Fargo's victory, and points to strong performance in Darden and Whirlpool as a sign of consumer health.

Sell Block: Prudential (PRU), Principal Life (PFG), Hartford Group (HIG), Lincoln National (LNC), Patterson (PDCO), Henry Schein (HSIC)

Cramer had confined insurers to the Sell Block, but he declared that he was changing his thesis on new facts; now that TARP money will be given to insurance companies, Cramer has decided to release Prudential, Hartford Group and Lincoln National from the Sell Block, although He still would not buy them. Dental supplies producers, Patterson and Henry Schein are being added to the Sell Block as dentists are purchasing cheaper equipment from Mexico. The cutbacks are mainly in consumable products which comprise 30-35% of Patterson's and Henry Schein's earnings. The Street hasn't yet realized this, since many analysts are still keeping their buy ratings on th stocks.

CEO Interview Zan Guerry Chattem (CHTT) with Wal-Mart (WMT)

The CEO discussed the company's earnings miss of 8%, but feels that Wal-Mart sales were strong and sees a bright second half of 2009. When asked why lower commodity costs hadn't helped the company, Guerry responded that the benefits will be seen soon and the company is planning to release seven new products rather than spend extra money on advertising. Cramer said investors who believe the recession will continue may consider buying Chattem, but bulls should stay away from the stock.

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Comments

[M.R. Henderson:]

How much could the "self-valuing" of mark-to-market assets have to do with this?

Apr 10 06:45 AM

[Jelo:]

Come on Jim. Wells Fargo are the biggest liars in the industry. If you believe their earnings weren't merely a cheap trick designed solely to pump up the stock then I have a bridge to sell you.

Apr 10 09:06 AM

[paxjds:]

How much federal bailout money was in Wells Fargo's delusional profits this quarter? Send me a Billion this quarter, and I show you increased profits in my net worth!! That will bring the Dow up another 250 points, and everyone will be happy. HAPPY DAYS ARE HERE AGAIN!

Apr 10 09:14 AM

[Smalltownba...:]

I knew there was some reason I never listen to anything Cramer has to say...

Apr 10 10:56 AM

[Michael Del...:]

Smalltownbanker,

You do not have to listen to Cramer. Listen to the market. A lot of institutions and other big traders were looking for a reason to like the market and Wells Fargo gave them a story to hang their hat on. Whether Wells Fargo was telling the truth or was using creative accounting is beside the point. When the big dogs want a bull market, we are going to get a bull market. You may think this rally makes no sense, but you can't fight the trend.

(Were you short and caught by surprise by the rally? How much TARP did your bank get?)

Apr 10 11:13 AM

[ebworthen:]

Creative accounting, period.

I could make lot's of money if I got free money from the Gob'ment, didn't have to show the real value of my debts, and had the Federal Reserve and the Treasury co-signing on my bullsh*t.

They're ginning up the market because they are desperate.

We are in the exact patter of April 1930.

Even if the B.S. avoids a downward grind to DOW 1,000 and S&P 100, inflation and unemployment will collapse the biggest Ponzi scheme in history - the U.S. economy 1990 to Present.

Apr 10 02:23 PM

[mac.barron:]

We have just had a massive transfer of wealth from wage earning tax payers to banks that were taking irresponsible risks and another transfer is on the way.

Rather than negotiate these payments down WFC and a lot of other banks (many of them outside the U.S.) got A.I.G. payouts on CDOs at 100 pennies on the dollar.

The next step will be banks such as WFC using TARP funds to bid-up each others toxic assets at "auctions," all underwritten by the U.S. Government. As usual, costs will be subsidized to the tax payers and profits will be privatized to all of Timmy the Tax Cheat's cronies.

Apr 11 12:19 AM

[obm:]

Wells Fargo earning is good does not mean Bank of America earning is good too. It is possible Bank of America will miss analysts' earning estimate since it has to pay many lawsuits and it is reported that it will lost a lot of money from commercial real estate too.Also Wells has been taking loan market shares from Bank of America. Many economists and analysts believe it is possible that Bank of America will not pass the stress tests. So be careful that BAC will pull back to $5 - $6 range.

Apr 11 01:43 AM

[obm:]

Alert! it is possible Bank of America will miss earning estimates.
Many economists and analysts believe Bank of America will not pass the stress tests and it's stock BAC will pull back significantly to around $5.

Apr 11 01:47 AM

[obm:]

BAC is too high to buy at $9.44. According to CNBC Mad Money, you should sell it and take profit now. Smart people should take profits and sell it before it pull back to $5 to $6. If you buy at this level, you will lost about half of your many if any of the followings happens:
1. Bank of America fails the stress tests.
2. Bank of America misses earning estimate.
3. Bank of America just barely meet earning estimate but not as good as Wells Fargo whose profits are more than double of earning estimate.

Apr 11 02:59 AM

[obm:]

BAC is too high to buy at $9.44. According to CNBC Mad Money, you should sell it and take profit now. Smart people should take profits and sell it before it pull back to $5 to $6. If you buy at this level, you will lost about half of your money if any of the followings happens:
1. Bank of America fails the stress tests.
2. Bank of America misses earning estimate.
3. Bank of America just barely meet earning estimate but not as good as Wells Fargo whose profits are more than double of earning estimate.

Apr 11 03:01 AM

[obm:]

Be careful to buy BAC and C at their current level.
It will hurt you very hard if any of the following happens:
1. Fail the strss tests. People will know the results although government asks Banks not to disclose it.
2. Misses earning estimate. Anything can happen.
3. Just barely meet earning estimate since the expectation for the banks are very high now after Wells said it's earning will higher than double of the estimate. BAC went up 36% on Thursday. WFC only up 31%. So don't be fool. Bank of America is not Wells Fargo.

Apr 11 03:39 AM

[drbob66:]

Gee, I wonder if this guy is short BAC...


On Apr 11 03:39 AM obm wrote:

> Be careful to buy BAC and C at their current level.
> It will hurt you very hard if any of the following happens:
> 1. Fail the strss tests. People will know the results although government
> asks Banks not to disclose it.
> 2. Misses earning estimate. Anything can happen.
> 3. Just barely meet earning estimate since the expectation for the
> banks are very high now after Wells said it's earning will higher
> than double of the estimate. BAC went up 36% on Thursday. WFC only
> up 31%. So don't be fool. Bank of America is not Wells Fargo.
>

Apr 11 07:48 AM

[Jan Baker:]

Gee, I am sure I heard an NPR report on the Wells Fargo news that said their data was high quality, and the data was based on conservative loans!

But I've got it figured out now. It took my one son, an avid Obama supporter, to take this year's 300,000 bonus and invest it in the stockmarket last week. (Yes, I know, I think I have raised a kid who does not know which side his bread is buttered on.)

So here's what I think. Obama once was asked what he would do if one of his daughters got pregnant, and he said he'd be glad she had abortion as an option to make good her 'mistake.' At the time I reflected on that comment, because one thing statistics show us about women who abort an inconvenient fetus is this: they will be back for a second, and a third, with some exceptions, of course. Women who have the baby, on the other hand, tend not to repeat their error, again with some exceptions. And it is difficult not to conclude that the latter learned a lesson from the experience, but the former did not. Or the former so loved the lifestyle associated with the first 'mistake' that they could not give it up.

And of course that's the key to the stimulus package. It's exactly the same logic. Obama's Change package will 'fix' that 'inconvenient mistake,' exactly so the fun party can continue unrestrained. And my son is correct to invest his bonus in the stockmarket, which we may forsee as bubbling up again, and in need of another 'abortion' down the road.

Now, my son may be able to recognize the signs, and bail. The economy as a whole, however, will take another hit. There are long-term consequences to abortion, either corporeal or economic (hugely increased risk of breast cancer, for one, in a living person, and Seeking Alpha is full of articles about the consequences of the failure to learn the lesson in the economic world).

But this is clear, to me at least: Obama just wants the party to last a little longer, and Change? Forget it.

Maybe if those who wish for a real change in the US economic climate would fight it in the social world, too, and stand with pro-lifers, it would work a miracle in his economic thinking, too. Presently we are praying a million rosaries for that, before he speaks at Notre Dame. You might as well join me; you could pray that he just learns people have to learn lessons in life, not get bailed out, and let it be an open field which arena you mean.

Apr 11 09:12 AM

[I am not a ...:]

Enzyme devices such as this have been around as long as I can remember. Why couldn't DOW just grow their own and spend the money on in house research? You are quite correct in your estimation of their spending habits.


On Apr 11 03:25 PM Bob Pool wrote:

> Update - DOW CHEMICALS going green with a BUYOUT of Indiana's EESO,
> 4-13-09.
>
> DOW is doing GREENWASHING via a buyout of another company, this time
> the buyout is of a small company, Enzyme Environmental Solutions
> (seekingalpha.com/symbo...), which is based in Fort Wayne,
> Indiana. EESO recently turned down their first offer of 10 cents
> for each common share of EESO. DOW has already presented their final
> offer to EESO on April 10, 2009, which has been increased to 14 cents
> per common share of EESO. EESO again has 30 days in whether to agree
> to the new price per share in a total buyout of the EESO company,
> which has over $136 million dollars in sales worldwide for 2009.
> I have already sold all of my Greenwashing DOW stock...I am totally
> against the Monday April 13, 2009 buyout of EESO. Enzyme Environmental
> Solutions, Incorporated (seekingalpha.com/symbo...) produces
> an enzyme solution used in a variety of special purpose products.
> The Company manufactures the enzyme products solution based on its
> formulas. The primary markets for the Company's products include
> retail, agricultural and industrial. The enzyme solution can be used
> to eliminate odor and organic matter, including blood stains to clean
> carpets and counter tops, remove wall paper, and as a cleaner/degreaser.
> This would a relative a small purchase for DOW. But it is just another
> Rohm and Hass mess, just more uncontrolled corporate greed by sprendthrift
> DOW CHEMICALS

Apr 11 04:28 PM