This market's now giving you intraday irony. Yesterday JPMorgan (NYSE: JPM) (Cramer's Take) gave a terrific presentation about its current state of affairs. The only squib picked up about the story was a notation about credit card losses. That we only read that part on the tape, there was much that was fantastic, giving Jamie Dimon and this amazing back short shrift.
But even more amazing to me was the contrast between the thrust of the presentation -- there are still billions of dollars of bonds being crunched and billions of dollars of mortgages going unpaid or losing value -- and the declines in the bond market because of worries about inflation.
The JPMorgan real-life presentation, from one of the largest banks, was all about deflation but the 10-year was all about inflation.
You can't have it both ways.
It gets more ironic. JPMorgan will make a ton of money with this incredible, record yield curve -- the two and 10 having the most juicy spread in history -- yet all we heard yesterday was how hazardous the spread was and how it will derail the Fed's mortgage gambit to spur more home sales.
I think the home sale issue is quietly resolving itself as we drop to new starts equivalent to when we had about one-third the people we have now, and we accelerate the sales as people fear mortgage rates going higher. That's the stampede effect that always happens. Three out of four regions in this country experienced a rise in home prices in just the last month. You have the perfect combo of rising prices of homes and rising prices of mortgage rates to get people off the sidelines, particularly in California, where the gains in housing prices were quite notable, despite all of the headlines about the year-over-year declines.
Yet none of this made it into the market. Nothing. Just all inflation, all of the time, without any notice that the 10-year is still near historic lows.
The negative news triumphed again. The irony was lost. And so was money.
Jim Cramer is co-founder and chairman of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer was long JPMorgan.
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Reader Comments (Page 1 of 1)
5-28-2009 @ 11:47AM
Ynot said...
Cramer is out of touch with the working man. All he wants is for average americans to engage in reckless spending to drive up corporate profits and stock prices. He don't give a damn about your well being. Work hard and pay off your debts folks. Stick it to the Cramers of the world who want you living paycheck to paycheck.
5-28-2009 @ 11:58AM
rob said...
Cramer is a complete duesche Bag! Why would any A-hole waste their time watching that butt hole.
5-28-2009 @ 11:59AM
Iridium said...
The simple fact is that any rise in mortgage rates will take a great number of potential buyers out of the market.
The rate doesn't matter, only the final out of pocket matters. That number must be affordable. With low prices and low rates many people are finding a home purchase to be affordable. If the out of pocket goes up then the home purchase will not be affordable anymore.
The only thing that can make a hom emore affordable witrh a higher rate is lower prices. If we get an increase in interest rates home sales will drop, not increase. Yes a lot of people will want to try and buy a home before rates go up higher but they will be unable to secure finaincing or afford the payments.
Wall Street has lost all sight of real economics. It trades in some fantasy land where real economics does not come into the picture.
Prices went up in California because you started to have huge ammounts of speculative buyers coming in to buy distressed properties. Even if multiple bidders drove a sale price up 10%, that is still far below the market price of the average non distressed home. WHy people can't figure this out is beyond me.
5-29-2009 @ 6:02PM
Mike said...
If you go along with Cramer's stock picks you have a good chance of ending up living in a paper box. This alleged investment specialist did not see the crash coming anymore than I did. He was too busy running around looking stupid.