Wells Fargo Earnings Announcement To hot to Handle

Bloomberg reported Monday that Wells Fargo (WFC) may need an additional $5OB to pay back the U.S. Treasury and to cover loan losses. WFC surprised the market last week, by pre – announcing a $3B profit in the 1^st quarter, but provided limited details of that pre – announcement.We should not be euphoric about this announcement, as there are some unknown details and negative headwinds that the company still faces.
With the current job losses continue to increase at a 700K per week clip, we can expect the credit losses for WFC will rise with the higher unemployment. This will reduce the company’s bottom line, and will impact their earnings going forward.

As reported by Bloomberg, WFC charge – off rate significantly increased to $3.3B in its current quarter compared to $2.8B from the last month.

Credit Suisse analyst Moshe Orenbuch stated,

“Given rising unemployment, continued home price declines and general macroeconomic headwinds, WFC’s consumer and commercial portfolios remain at risk for meaningfully higher credit losses over 2009 and 2010.”

I think this bank stock as a lot of work to do, this rise is premature, I do not hold the shares at this time and dont intend to buy in the near future.