Eighteen years ago, Wells Fargo announced that fears of a continuing decline in real estate, especially commercial, were unfounded. The bank boldly stated that the worst had passed and we should expect the market to turn up. Of course, no one believed Wells, and the shorts continued to pile in. But they were proved wrong. Investors who bought WFC, Warren Buffett among them, made big money.
Today, JPMorgan made similar statements when it reported second-quarter numbers on Thursday. Despite all the negative press about a coming onslaught in foreclosures and a crash in commercial real estate, CEO Jamie Dimon described an environment that seemed to contradict all that. He said that loan loss reserves and delinquencies showed signs of stabilization and losses related to the Washington Mutual acquisition wouldn’t be any worse than expected. That, Cramer said, is bullish news.
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