JPMorgan Chase & Co. (JPM), Wells Fargo & Co (WFC) – Mortgages and Housing: We’re Back in Business!

Page 1 of 2

JPMorgan Chase & Co.America’s big banks are having quite a second quarter. The second-quarter earnings reports show both investors and banking customers are looking for answers on how the rise in interest rates will shape the country’s economic expansion. The two American bellwether banks, JPMorgan Chase & Co. (NYSE:JPM) and Wells Fargo & Co (NYSE:WFC) have performed well in the second quarter. JPMorgan Chase & Co. (NYSE:JPM) had a 31% quarterly profit surge while Wells Fargo & Co (NYSE:WFC) saw profit rise 12%, bringing in 93 cents per share. Analysts, investors, and the covernment have rewarded big banks well while boosting the home-building sector.

Money talks

JP Morgan Chase saw earnings increase from $4.9 billion in the second quarter of 2012 to $6.5 billion in the second quarter of 2013. Wells Fargo & Co (NYSE:WFC) was not too far behind with an earnings boost from $4.6 billion the second quarter of 2012 to $5.5 billion in the second quarter of 2013.

JPMorgan Chase & Co. (NYSE:JPM)’s recent earnings illustrate the “London Whale” scandal has not hurt business — trading revenue is at $5.4 billion, up 18%. The bank has even declared a preferred stock dividend on outstanding shares. All is not rosy, and with several cases against them – energy market manipulation charges, Washington foreclosure trial and new capital rules – JPMorgan Chase & Co. (NYSE:JPM) must continue to keep its “financial” nose clean.

Wells Fargo & Co (NYSE:WFC) has a strong balance sheet. Strong overall performance and a recent $8 billion acquisition of Commerzbank’s Hypothekenbank Frankfurt is just another sign of Wells Fargo’s savvy sector performance. The stock has a highly attractive dividend yield of 2.8%. All is not perfect. Wells Fargo & Co (NYSE:WFC) is laying off 350 national mortgage business employees as demand for refinancing has slowed. These layoffs are about workload, not the overall business climate, so investors should not be alarmed. Well Fargo has been aggressive by getting into overseas commercial property loans while growing retail banking branches. Well Fargo clearly wants to grow its credit card business and catch up with Bank of America, Chase, and Citi.

Straight cash, homey

Banks are increasingly boosted by rich individuals and foreign buyers who are paying cash. Investors, not just institutional investors, have been buying up American foreclosures and distressed properties at a torrid pace — often pushing out traditional buyers. Cash is king, and those who can’t pay a 20% down payment are simply priced out of the current housing market. For banks, this new trend is fueling a good portion of these banking bellwether and home-building gains. In hot areas, such as San Francisco, many Chinese buyers are snapping up property. Randy Moss was right, when you’re rich, you don’t write checks — you pay cash.

If you build it

A recent National Association of Home Builders/Wells Fargo & Co (NYSE:WFC) index of builder sentiment shows that American home-building is climbing. The index of builder sentiment rose to 57 in July, a 6-point increase since June. The recent increase in mortgage rates has not stopped the significant rise in demand for new homes. Many builders can’t keep up with the growing demand. Lennar Corporation (NYSE:LEN) provides a rich buying experience by providing great customer care via its Total Lennar Care (TLC) initiative. Educating customers at its Lennar Corporation (NYSE:LEN) Welcome Home Centers is another example of how this firm aims to provide not just a quality home, but a quality home-buying experience. Lennar Corporation (NYSE:LEN) is also operating at industry-high margins — operating margins slightly above 13% make this firm the home builder to watch.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!