Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: ChanceIs who wrote (195695)	4/9/2009 4:29:21 PM
From: ChanceIs	Read Replies (4) \| Respond to of 306849

Is All Really Well for Wells? * APRIL 9, 2009, 3:18 P.M. ET By LIAM DENNING Wells Fargo has served up a sucker punch to short-sellers. Those who left their desks Wednesday evening looking forward to a long weekend must have spent an uncomfortable Thursday. Wells' surprisingly positive pre-announcement of first quarter earnings caused its stock to jump as much as 34% in intraday trading. The sheer size of the gap between Wells' headline figure of 55 cents per share and a consensus estimate of 23 cents helped reignite a broad market rally. Wells' highlighting of strong mortgage demand also did wonders for the shares of other big home lenders like Bank of America. Wells' announcement, however, came on a day of thin trading in New York. Crucial details -- including revenue mix and non-performing asset trends -- are still almost two weeks away It isn't clear how far the consensus estimate includes the impact of charges relating to December's Wachovia takeover. Fox-Pitt Kelton analyst Andrew Marquardt was estimating earnings before merger expenses of 45 cents per share. On that basis, Wells still outperformed -- just not as dramatically. Upfront realization of losses on Wachovia's books at the time of the acquisition, due to purchase accounting, also provides a benefit to Wells through a lower net charge-off rate in the first quarter. Higher profits lend strength to those analysts who believe the banks can earn their way out of their balance sheet problems. Even so, "catastrophe averted" is no guarantee of a sustainable rally. Challenges lurk all over in an environment of falling house prices and rising unemployment. Moreover, proactive capital raisings on the back of share price rallies, to face down lingering balance sheet fears, remain a wild-card.