Wells Fargo projects record first quarter profits

Hey man, I hope it works out for you. Like I said, I have no pos over the weekend. All I ever wish for is volatility in the mkts. So a gap down to 7800 would be fine by me.

It just seems to me to say I am going short the mkt over the weekend because the market is wrong and everyone will figure that out over the weekend is...well............nuts.

 

This is exactly why I don't like to post on message boards. People love to argue and bicker and try to prove why they are so clever and special. Their petty little points amount to jack shit. They misunderstand everything said by anyone knowledgeable. Thank god the market is much more easy going. It just pays me. If I'm wrong I pay it.

I think I know why no pros post on this board. Just a waste of time. Even if you do it for entertainment purposes you end up getting into a pissing contest with a bunch of clueless idiots.

I used to allow myself to post on Fridays for fun but now I'll limit that to never. Anyways, good luck out there boys... it's a tricky game. I hope you can survive. But you probably won't.

 

As all of us seem to agree the numbers are fake and they are running a planned orchesterated move to make money in trading as business in credit and investment banking has come to a halt! We are all small fish and have to swim with the sharks! Enclosed XLF chart- volume (3 day-1 bar) decreasing as we have come from 6 tp 10. Chaikin money flow is still green,CCI is avove 100,Momentum is above 0 and climbing, but OBV ( on balance volume is flattening).
I guess the same fiction ( memo leaks, early annomcements) is going to be repeated by other banks in the next 2 weeks and we might see XLF to 12 to 13?

 

You won't be missed, good riddance.

 

Read the fine print :

From WFC "NEWS REALEASE" :


Cautionary Statement About Preliminary Results and Other Forward-Looking Information


In accordance with the Private Securities Litigation Reform Act of 1995, we caution you that, whether or not expressly stated, all measures of first quarter 2009 financial results and condition contained in this news release, including revenue, net income, earnings per share, pre-tax pre-provision profit, net chargeoffs, provision expense, net interest margin, efficiency ratio, mortgage originations and applications, loan commitments, various credit quality metrics, and tangible common equity ratio, are preliminary and reflect our expected first quarter 2009 financial results and condition as of the date of this news release.


Actual reported first quarter 2009 financial results and condition may vary significantly from those expectations because of a number of factors, including additional or revised information, subsequent events, including credit downgrades, that may affect the fair value of assets at March 31, 2009, and changes in accounting standards or policies or in how those standards are applied.

We also caution you that this news release contains additional forward-looking statements about the Company including expected second quarter 2009 mortgage originations and expected annual merger-related expense savings.

For a discussion of factors that may adversely affect our financial results and condition and cause actual results to differ from expectations, refer to our Annual Report on Form 10-K for the year ended December 31, 2008, filed with the Securities and Exchange Commission and available on the SEC’s website at www.sec.gov. Any factor described in this news release or in any report referred to in this news release could, by itself or together with one or more other factors, adversely affect the Company’s financial results and condition. The Company will provide additional discussion and analysis and other important information about its first quarter 2009 financial results and condition when it reports actual results on April 22, 2009.

 

From what I've gathered, WFC blew out the analyst's estimates simply by cutting their reserve holding by ~1.6 billion. Had they not done that, they would have only reported something around 1.4-1.5billion.

Most of the analyst's estimates out there were based on WFC adding 6 billion to their reserves, but they decided to only add 4.5 billion or so. If another shoe drops on the mortgage side, then you at least know who's swimming naked.

BTW, most of this information is from the FBR analyst, Paul Miller. He considered WFC the best short out there, but I believe he just got his head handed to him. On the other side, J. Macke of fast money thought WFC was a good buy simply because the markets haven't broken the upward trend, and WFC has a good chunk of upside to it. So I guess he rly got lucky, it could have easily gone against him too.

Good luck trading.

 

Wells Fargo: Why a $3 Billion Profit Doesn’t Solve Much

Given that it is nearly Easter, investors are on a search for a good rebirth story — and Wells Fargo seemed to provide one when it told investors today to expect a $3 billion profit for the quarter. That would be new record for the bank. The surprising news sent the Dow soaring up 3% to nearly 8000.

The earnings expectations are great news for a bank and nation beaten down by mortgage woes for two years, and they look like a vindication of Wells Fargo’s strategy in buying Wachovia, which apparently boosted the bank’s market share. But those higher profits won’t help Wells Fargo dig out of a much deeper pit of concerns about its regulatory capital, government stress tests, and weighty Wachovia mortgage loans, all of which still loom over its future.

Wells Fargo’s future may look brighter because of this boost, but it is wise to adopt a wait-and-see attitude: as several analysts pointed out today, the bank’s earnings numbers are not the same as its earnings quality.

Wells Fargo’s profit boost came, somewhat surprisingly, from a perceived recovery in the mortgage market. As our colleagues reported today, “The bank reported $100 billion in mortgage originations during the quarter, providing loans to more than 450,000 people either purchasing or refinancing a home. Wells Fargo mortgage applications rose 41% to $190 billion,

with $100 billion yet to close at the end of the quarter.”

That $100 billion in mortgage originations is important because many analysts had only expected Wells Fargo to fund around $86 billion in mortgages during the quarter. The question of how Wells Fargo blew through estimates by such a significant margin remains an open question to be solved


on the bank’s quarterly conference call with analysts, scheduled for Wed., April 22. (One thing is for sure: the extra profit certainly didn’t come from Wells Fargo’s forced cancellation of a 12-night Las Vegas junket.)

Wells Fargo’s problems are not solved, and analysts and investors will comb other measures of the bank’s health, including its rate of non-performing mortgage loans and its accounting treatment of mortgage loans it wants to sell. No one is declaring victory yet; Richard Ramsden of Goldman Sachs noted today, “several critical pieces of information were missing, including asset quality and securities exposure.”

FBR Capital Markets analyst Paul Miller indicated unease with Wells’ surprisingly positive earnings: “While themarket is reacting favorably to the [earnings per share] beat and the stronger tangible common equity ratio, we remain cautious based on what we don’t know. Most importantly, what happened to nonperforming loans and what would have been net charge-offs excluding purchase accounting adjustments? What are the trends in WFC’s Option ARM portfolio? Did the company write up the MSR and what was the new capitalized cost of servicing? Was there any benefit from an increase in level 3 assets given recent accounting guidance?”

Betsy Graseck of Morgan Stanley noted in a research report today that there is still a debate over Wells Fargo’s capital. “Investors are concerned about how WFC will fare in the stress test given its residential mortgage concentration. We do not bake in a capital raise but would not be surprised if WFC proactively raised capital to take this issue off the table.”

Ramsden of Goldman Sachs noted that Wells Fargo is still thoroughly under the government’s thumb unless it can pull off another rich stock offering. “On capital, Wells Fargo expects [tangible common equity] ratio to improve to above 3.1% in 1Q. This is clearly a positive although we would note that Tier 1 ratio excluding TARP is still likely to be around 6%, which would make it hard for Wells Fargo to disentangle from the government without a capital raise.” [Emphasis ours]

Wells Fargo joined a clutch of banks who declared their intention to pay back TARP capital quickly: Goldman Sachs, J.P. Morgan, PNC Financial Services, U.S. Bancorp and others have all sworn to throw off the yoke of government control as soon as possible.

Wells Fargo is not as well-positioned to pay back TARP capital as those banks, however. Wells’ key ratio of tangible common equity to tangible assets — a measure of a bank’s capital strength — is only 2.38, the lowest ratio of any of the big banks that have publicly committed to paying back TARP funds. By comparison, Goldman Sachs has a TCE/TA ratio of 4.86 and J.P. Morgan’s is 3.91, according to SNL Financial data.

Given recent regulatory changes and the pressure on banks to send out some good news, caution is the order of the day until it becomes clear how Wells Fargo reached those sky-high new numbers. Miller concluded: “We believe that credit quality materially deteriorated in the first quarter and that Wells Fargo is under-reserving for expected future losses.”

http://blogs.wsj.com/deals/2009/04/09/wells-fargo-why-a-3-billion-profit-doesnt-solve-much/

 

I wasn't arguing or fighting with ya. You seemed very convinced that the mkt is gonna get clobbered on monday's open. I was just curious to your thinking. The whole "the WFC news is bullshit and people will re-think it" seemed like you were just looking for an excuse to go short.....not much there.

I agree that this place populated by a lot of idiots. People cheerleading their positions.....etc. Not pros like yourself who have concrete reasoning behind a position. Your points definitely don't amount to jack shit. Really. They are ......ummm......solid. I think you should stop posting. Your info behind your trades is way too valuable and I would say that your greatness will lure every trader on here to piggyback your trades. At some point word will spread throught the entire trading community across the world how great you are. I can DEFINITELY see you making a short recommendation on here which will cause the SP's to close limit down once word travels across the planet. But then people will start trying to front run the great Flip Flopper by coming up with such ideas as "I bet Flip Flopper thinks that the raise in dividend by BAC is a complete hoax.....lets short the market !!!!", and sadly you strategy will run into big problems. So I think it's best a pro like you leave and keep these nuggest of wisdom to himself.

As far as surviving ? Thanks, but I have been in the game for 17 years, I think I will be fine.

 

Looks like they are borrowing against the future

 

WFC had positive earnings only because of the change in MTM that allowed them to not take an additional write down of 3 billion and because of payments from AIG. So now we'll see how much the price gets pushed up in the next few weeks so they can issue new shares to raise capital. This is one big shell game, and be prepared for dilution by all the banks. Make your money on these banks stocks where you can.