But last week was different. If you took the time out to read the report of Wells Fargo--and, believe me, there was time to do it--you would have been pretty much stunned at how much business it's doing and at how strong the mortgage business is.
Put the following facts in perspective from a company that has more than 30 percent of the mortgage market in this country.
- Mortgage-business revenue was up 90 percent from a year earlier and 11 percent from the previous quarter.
- Revenue from the refinancing business was up more than $19 billion, or 43 percent, from the first quarter, "indicating continued strength in the overall housing market, where we see increases in sales and pricing in markets throughout the country, even some of the hardest hit areas during the slowdown," according to CEO John Stumpf.
- A 31 percent increase was achieved in commercial loan growth, through portfolio acquisitions and organically increased credit-card penetration.
- Credit quality continued to improve, with the chargeoff ratio declining to 1.15 percent, the lowest since 2007.
- Non-performing assets declined $1.8 billion from the first quarter, down 11 percent from a year earlier.
- Record net income rose 17 percent, with earnings per share up 17 percent from a year earlier.
- "Mortgage volumes have been much stronger than anyone expected a year ago or even three months ago, or that matter, with originations more than double where they were a year ago and our mortgage pipeline, which should lead to future revenue and expense growth, has also doubled," according to CFO Timothy Sloan.
When the largest bank for mortgages reports these numbers, you simply have to rule out the kind of slowdown the employment numbers suggest to us. You have to conclude otherwise. The numbers from Wells are just too big.
I have been a believer in Wells ever since the bank got its arms around the portfolio it bought from Golden West via Wachovia.
That deal--which no one, other than Wells Fargo, would ever admit was cheap--now does look incredibly intelligent for this simple reason: The amount of national coverage Wells bought here would never otherwise have been allowed by the regulators. Wells basically got control over most of the country's mortgage market and servicing market--it services an astounding $1.9 trillion of residential mortgages, with an amazing ability to cross-sell, in return for two years of outsized losses.
Put simply, Wells Fargo is telling you that housing is back, and that it is booming, and that this moribund part of the economy is now a huge tailwind, not a headwind.
Can housing carry the economy? No. Can it offset sluggish employment? I am beginning to think it can, and that's the main reason the market was able to reverse direction and go up at the end of last week.
When you consider the good commercial lending by JP Morgan and the mortgage lending by Wells, you basically come back with a picture of U.S. being in fine shape, by far the best of all economies around the world, save for China. It emerges as an economy with increasing strength, not declining strength, as we head into the second half of the year.
Disclosures: At the time of publication, Cramer's charitable trust was long JPM.