I need to learn to put a limit order in for
Wells Fargo (WFC) - I was watching it yesterday to buy and it held up almost the entire day - then in the last 15,20,30 minutes it was pole axed 10% but was not around to see it. Today, of course it is right back up 9%.
An upgrade today - remember folks, perception is reality. Wells is not immune from the credit crisis and has bad loans but is "perceived" to be a good player so money will flow to this name, no matter what the reality is. As long as big money is fleeing into the name, the realities on the ground mean little - it's all about money flow.
- Robert W. Baird & Co. analyst David George on Tuesday upgraded shares of Wells Fargo & Co. to "Neutral" from "Underperform," citing the San Francisco-based bank's strong balance sheet. Though Wells Fargo is not completely sheltered from credit risks, George said, the bank will likely benefit from a "flight to quality," given its strong credit ratings, healthy capital position and willingness to lend in a difficult environment.
- "We believe the challenges in the credit markets and weak capital positions of competitors will continue to result in significant new business opportunities for Wells Fargo, and think the company will come out of the current credit cycle with an improved customer and employee base," George wrote in a note to clients.
If things continue to degrade in the credit markets, which I believe they will over time as housing prices "do not rebound" and the mother of all bailouts is found to be inadequate the U.S. will potentially turn to the nuclear option. Literally having the Federal Reserve (via FDIC) force feed capital into a chosen group of banks to expand their balance sheets exponentially - this will mean the "state" is choosing "winners and losers" (the old USSR has nothing on us!) but as we know, in desperate times, capitalism and free markets mean very little. I believe
Wells Fargo will be one of those chosen for this
ultimate solution. Lost in the fuss about this mother of all bailouts bill is a
new provision for the Federal Reserve.
- Even before the House stunned the world on Monday by rejecting the Bush administration’s bailout bill, the Fed was already resorting to the oldest action in its book: printing money.
