Cramer's Morning Take: JPMorgan Chase Buys First Republic 5/1/23

Jim Cramer (0:02)

I'm Jim Cramer, and you're about to hear a sample taken directly from today's CNBC Investing Club morning meeting.

Okay, so we know, Jeff, this week is the Federal Open Market. We just got the JPMorgan Resolution, which is, I think, very positive, although Jamie said loans are going to be a little restricted. I come back and say, you know, what I think matters here is that we know there's going to be a quarter point. It's just about whether they say, listen, we're not going to do anything in the June meeting, or they just say, you know what, we'll play it data dependent. Data dependent means that the market might sell off. There could be a buying opportunity.

Jeff Marks (0:34)

So maybe it's a little bit more of like a hawkish hulk because there's definitely people looking for a one and done situation here. But it depends on the data, of course.

Still a big determinant. Big week, by the way, you got about 30% of the S&P 500 reporting, the Fed meeting, as you mentioned before. But the real story of the day is what you just referenced was JPMorgan taking over a big chunk of...

Jim Cramer (0:58)

Right.

Jeff Marks (0:58)

First Republic.

Jim Cramer (0:59)

Now, I think what people have to understand is that JPMorgan learned its lesson. First, they bought Bear Stearns, and that was hideous. They didn't make any decisions. They felt that somehow the government would indemnify them. Then they bought Washington Mutual, and they realized, wait a second, here's the playbook. We're not taking any of the liabilities here. We're just getting the upside, and we're doing you a big favor. That was one of the reasons why I think they had to pay FDIC 10 billion, because it's such a great thing to be able to go beyond 10%. It's a great franchise, and all the loans are basically going to be guaranteed, and the loan to value is so good that I think people would say, oh, it's sweetheart, unless they had paid the 10

Jeff Marks (1:32)

Now, this was the fourth bank failure this year, the second largest in the US. This one was actually larger than Silicon Valley Bank. But at least Jamie on the call this morning says this part of the crisis is over. Doesn't sound like any other banks are at risk from this.

Asset liability, mismatch, the deposits fleeing, which is a good thing for the entire sector, which is why you get a good rally in Wells Fargo today.

Jim Cramer (1:57)

Yeah, I want to point to you a piece by a really good guy, Michael Semblist, who's a senior strategist at JPMorgan, who Jamie relies on, who did say that there were some banks who could be in trouble with Schwab.

But Schwab's bank was too small versus the rest of the company. But looking at the liabilities that Semblist talked about, I guess we're further along. He didn't make this, no quote, why don't you give me a break?

Jeff Marks (2:26)

Yeah, so my theory why Morgan Stanley would be down is because First Republic has a big wealth management. If this crisis, if it drawed out even longer then perhaps more of those wealth management assets flocked to Morgan Stanley. Instead, they're gonna go to JPMorgan as they build out their wealth strategy. So maybe that's the reason why Morgan Stanley is today. But they just picked up 110 billion of net new assets last quarter.

I expect even more went over to them over the last couple of weeks.

Jim Cramer (2:57)

Yeah, I just say buy. You just buy this. I mean, it's just right.

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