Something different happened Friday – so different that it took my breath away. The first Friday of earnings season has recently been such a jumble of tension that we had forgotten what it’s like to have multiple big quarters reported in the morning. But that was exactly what we got. It was surreal. BlackRock reported early, and it was solid per usual. We had CEO Larry Fink on CNBC’s “Squawk on the Street.” It took me about 8 minutes to get up to speed, given that BlackRock is an asset management story. And, the assets? They aren’t dripping in. They are flooding in. The business model has to do with how much money it’s managing. A prolonged increase in stock prices over two years – Happy Birthday to the bull market – makes it even sweeter. We put BlackRock into the Club’s Bullpen of stocks to watch Friday after I have been salivating about the stock recently. Getting ready for the “two problematic stories,” Wells Fargo and JPMorgan , which came later in the morning, took some real digging. You have your models and a piece or two of Wall Street research, you have your key indicators – in this case, net interest income (NII). With those forecasts in front of me, I was ready. Sure enough, JPMorgan’s numbers were terrific, but Wells Fargo was nothing short of great, especially with what was a bottoming in NII as well as some huge investment banking numbers and some excellent commentary about the U.S. economy. Everything looked better than I could have hoped for from the Club name, which has had a regulatory mountain to climb. When I do my work, I am always looking up at the television with my left eye, concerned about how right or wrong I might be. JPMorgan’s stock was flat-lining, but Wells Fargo’s stock was down about $1.70 per share. I was thinking what the heck? Are you kidding me? I was remembering in my mind scenes from my old hedge fund manager days — throwing things at my screens, throwing things at the television set, because how could people be so wrong? Then I made my calls to see if I was missing anything. I am privileged to call people who have good insight that I might have missed. All of us agreed that JP Morgan’s numbers were clean beats. But all were astounded that Wells Fargo had been able to start changing its business model to the point where it was more of an investment bank than we thought. We were astounded at the headcount reduction and blown away at how much stock CEO Charlie Scharf bought back. Then an astounding thing happened – in premarket trading between 7:30 a.m. ET until 8:30 a.m. ET – Wells Fargo shares turned and started inching up. JPMorgan, meanwhile, took off like an Elon Musk SpaceX rocket. By the time the conference calls were running their courses, the sellers were overrun in JPMorgan and Wells Fargo was up 5% — as it should have been from the beginning. At one point, JPMorgan was up about $12 per share, about the time that CEO Jamie Dimon talked about how angry he was about people still fixated on NII. Of course, he’s right. But the analysts seem to be so caught up in that one number that they were missing the trees – and the forest. Not this time. This time the traders who made their minds up without knowledge, who made themselves “right” with their power, were annihilated. They didn’t understand something. The Federal Reserve is in an easing cycle. Understand that when I listen to anyone else outside my cubby hole at the New York Stock Exchange with my right-hand man for the Club, Jeff Marks, I am always struck at how infantile the commentary is. Think of the permutations of what may come next after the Fed kicked off things with a jumbo 50 basis point interest rate cut in September. According to the CME’s FedWatch tool last Sunday, another 50 basis points worth of rate reduction is expected before year-end. But all that matters is that there be no change in the Fed’s stance, and there have been no numbers that have betrayed the Fed. Sure, the data has been a little hotter, and bond yields have gone up – no kidding – but we are on a rate-cut course. That means the Fed is your friend. How is that friendship manifested? With what you saw in Wells Fargo and JP Morgan on Friday. We have a ton of banks about to report this week. Think like this: When the psychology of the market changes, people don’t want to bang out of Wells Fargo, they want to get in. The company will soon be buying back stock. We might have that confounded asset cap gone soon. It was imposed by the Fed in 2018 for misdeeds that predated the current leadership. The company didn’t say what it would do if the cap were lifted. I can’t blame them. Why court the regulators? But there is no doubt that Wells Fargo at 11 times forward earnings now seems a little silly given that the background is so positive. Why can’t it be at 14 times earnings? Why not? The Fed’s got its back. Scharf has finally put all of his people in. There is a flight path. Best of all, this stock is lower than it was in 2018. The S & P 500 was around 2,656 back then. It’s now at 5,815. I kid you not. This bank used to be the premier financial, not JPMorgan. It was the Warren Buffett bank not Bank of America. It had the highest price-to-earnings multiple of the entire group. Welcome back, Wells Fargo? I think so. Our other financial Morgan Stanley reports earnings Wednesday morning. Stay tuned. All that gets me thinking. What happens if the wall of worry, abnormally high because of the Mideast tensions as well as the presidential election, is a dodge? The expectations for every group are surprisingly muted given how high stock prices are. We have so many stocks that aren’t near their highs. We have a tech environment that is more dynamic than any I can recall with the gains from accelerated computing and generative artificial intelligence happening weekly. Yes, some stocks seem odd to me, such as the drugmakers. They are almost all bad except for Club holding Eli Lilly . The health-care stocks save insurer UnitedHealth and medical device maker Boston Scientific , look ragged. I see the transports well off their highs. The homebuilders haven’t recovered what they lost when we got a hotter employment number. Retail almost seems like a wasteland except for Walmart and perhaps Club name Costco . Semiconductors are still just okay. Enterprise software started going higher this past week on rumors of a takeover for JFrog . That matters. The short sellers have had their way with the stocks ever since it was clear that they were in the crossfire between what could be done with ChatGPT from Microsoft -backed OpenAI versus what could be done with regular old enterprise software. Nothing is coming into earnings season hot. We aren’t overbought. But the stupid chatter we have to listen to all of the time about what the Fed is going to do is the worst, dumbest, most methodically stupid commentary I have had to deal with – we have had to deal with – in ages. It is mind-numbing. However, it creates a perfect dichotomy between the truth and a narrative that used to work when we were trying to figure out when the Fed was going to stop raising or not. Remember, my rules: We need to worry about many pieces of data when we have a tightening cycle because we want to anticipate its conclusion. Once it is concluded, however, it’s a different story. The bozos who insist on trying to make stories on every tick, the ones who never apologize for being wrong because they are “never wrong,” create what we need. They are the overreach that allows for a better setup than we have had in ages. And, if we have anything like we had Friday, even with all-time highs for the Dow and the S & P 500, it will give us the launching pad we will need to go higher. Don’t forget the Club’s October Monthly Meeting on Wednesday at noon ET when members can expect two initiations — two new stocks added to the portfolio. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. 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Something different happened Friday – so different that it took my breath away. The first Friday of earnings season has recently been such a jumble of tension that we had forgotten what it’s like to have multiple big quarters reported in the morning. But that was exactly what we got.
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