Wells Fargo knocks it out of the park…

Sometimes a few weeks of good news is an anomaly or a blip, and sometimes it’s an indication that maybe better times are right around the corner. While it might be too early to declare a recovery in process, the news is certainly far brighter than it has been in months, and the “D” word is being replaced with the much nicer of the two “R” words - recovery. 

This doesn’t mean that things are already hunky-dory: the stock market is still down 40% from its high, the housing crash hasn’t necessarily leveled out yet, and job cuts are likely to continue throughout this year as the recovery in jobs tends not to start until months after the economy has already recovered from recession and sustained that recovery.  Still, the general outlook on things is far improved from where it was a couple of months, or even a couple of weeks, ago.

This week brings in more great news, and more and more economists agree that the bits and pieces of good news that are adding up could be indicating that the worst of the free fall is over, and recovery could begin as early a the end of 2009. The most obvious bit of great news was Wells Fargo’s stunning report indicating record profits. Part of this is because the acquisition of Wachovia makes Wells Fargo far larger than last year, but this report also has buoyed confidence that traditional banks are doing fine, and most major bank stocks have jumped 19-35% on this news.

Since banking is one of the sectors that has economists most concerned, any early or strong signs of recovery or strength is going to be a huge plus and will help to rally the economic recovery. This news also marks the fifth straight week the U.S. stock markets have shown gains, the first time since October 2007 that this has been true, back when the stock market was at its peak.

In general optimism seems to be returning. Home buyers are coming out looking for great deals on the market, credit markets are slowly unfreezing (although they still have a long way to go) and a lot of spot good news is beginning to add up. Another note along the reasons to be optimistic line of thought: most of the money from the government stimulus packages isn’t expected to really kick in until the end of the year.

It’s always nice when weekly reports have some good news to share, so without any further wait, here is more on this week in review.

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