These 3 bank stocks can ‘make fortunes’ from greater rates

CNBC’s Jim Cramer on Thursday stated that financiers who think the Federal Reserve can manage a soft landing ought to have bank stocks on their wish list.

“If you think we’re headed for a full-blown recession, it’s right to avoid the bank stocks. But if you’re like me and you think the Fed can actually do some needle-threading and engineer a not-so-incredibly-hard crash landing, then these companies will make fortunes from higher rates,” he stated.

The “Mad Money” host highlighted 3 bank stocks particularly as buys.

Here is the list:

1. Wells Fargo
2. Morgan Stanley
3. Bank of America

“At these levels, I think Wells Fargo, Morgan Stanley and Bank of America already reflect the recession worries, but they don’t reflect the earnings upside from the Fed’s rate hikes. … That’s why they’re worth buying,” he stated.

His remarks followed the Fed raised its benchmark rate of interest by 75 basis points on Wednesday, marking the greatest dive given that1994

While stocks increased on the heels of Powell’s statement, the bank stocks’ gains were modest. The significant indices reversed Wednesday’s gains and after that some on Thursday.

Cramer stated the bank stocks need to have rallied more than they did on the day of the Fed’s statement, as a higher-interest environment is frequently great news for banks.

“Every time the Fed tightens, it means the banks can take your deposits and then instantly earn higher risk-free returns by putting them in short-term Treasurys,” he stated.

“Of course, a Fed-mandated slowdown will also hurt the banks — more defaults, less demand for loans — but I think any potential weakness will be much more than offset by these much higher net interest margins,” he included.

Disclosure: Cramer’s Charitable Trust owns shares of Wells Fargo and Morgan Stanley.

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