More Bad Loans

wells fargo earningsFinally the green rally was snapped today as markets spent a lot of the day in the green, but the Dow ended up closing down about 35 points. I am hoping that the red closing spawns some more profit taking for the bulls tomorrow after their good week of green they've had. Ebay announced, after close, that their profits were down over 20%, however, once again they beat market expectations which has given them some green in after hours.

Qualcomm disappointed the market with their dip in sales which has sent them trading downward in after hours. To me, both reports are discouraging, and continue to reinforce to me the instability of the economy and the poor ability for businesses to succeed at this time. Regardless of whether the market was expecting it or not, it shows the strong changes in consumer spending, which will ultimately effect GDP. In addition to that, President Obama has made it very clear of his intentions to raise taxes as he jumps start his medical plan. If it wasn't already tough enough for small businesses to succeed, now they will have higher taxes eating into their profits.

Wells Fargo traded down today as they announced their earnings. Although they reported an estimated 81% in profits this quarter (really?!), their non-performing assets number also soared 45%, just from the 1st quarter! Non-performing commercial loans jumped 69% (now you know why I continue to discuss my grim outlook on commercial real estate). With these types of bad loans, where are they earning 81% more profits? (hint: Government & Fed). Investors did not like these numbers as Wells Fargo's stock closed down 3.5%. Lending Club can be a good place to consolidate high interest bearing loans.


There are only more bad loans right behind this batch that are waiting to be foreclosed on. Despite the large amount of non-performing loans, banks continue to stall on foreclosing, especially on commercial properties. As they continue to stall, the market continues to deteriorate. When they finally do foreclose on these properties, which they will, it will send a huge shock through the commercial real estate market and set the new "comparable" price for sellers to match. This could be the opening doors to the next stage of this crisis. I still find SRS to be an undervalued jewel, that is of course if it really tracks the benchmark it claims to. Happy Trading.

PS- I have some more eye opening data I will be sharing on tonight's premium podcast (subscribe here).

4 comments:

  1. Anonymous Says:

    Chris I am attaching a technical perspective that I have been basing all of my trading and investing strategys on, although I have been hammered in the last 60 days for doing except my long term retirement accounts.. This seems to me the most likely outcome and it coincides with the fundamentals or should I say lack of.. give me your thoughts

    DJ

  2. Anonymous Says:

    Oops here is the Attachment
    Charts Show Danger of New Bear-Market Low
    If the market doesn't start to hustle now, the S&P and Dow are likely to fall from here onwards, and we could see a new bear-market low, Chris Locke, MD of Oystertrade.com Management said Wednesday.
    http://www.cnbc.com/id/32079552/

  3. Finance Fanatic Says:

    Good stuff, Thanks DJ.

  4. Dior iPhone 6 Cases Says:

    In spite of having reservation about the near term outlook for the demand in Apple Watch, Bernstein believes that the device could allow the company’s overall gross margins to expand over time. Bernstein points out the major costs during this quarter are startup costs and such would be temporary.