Contradictions Abound

We are all bothered by the seeming counterintuitive nature of the credit moment. In the excellent piece by Goldman Sachs this morning wrapping up bank earnings, I am struck at how great the consumer is doing. The credit losses here have clearly peaked. How is that possible, though, given unemployment? Just totally counterintuitive.

Then we have the commercial real estate market, which is supposed to be falling apart. But here's Federal Realty (FRT - commentary - Trade Now) doing so well and Boston Properties (BXP - commentary - Trade Now) above its deal price. Or Brandywine (BDN - commentary - Trade Now) reporting a great number. How is that possible given what we see? That's mall property, big commercial high rises and smaller office buildings. That doesn't add up. Not at all.

Then there's the biggest conundrum of all, the unmitigated persistent view that housing still has much further to fall, despite data that that says we are experiencing a bottoming and an end to house price depreciation. Again, if the persistent doubters are right, how can the Housing Index (HGX) be doing so well; how can the stocks of Lennar (LEN - commentary - Trade Now) and KBH (KBH - commentary - Trade Now) and Pulte (PHM - commentary - Trade Now) and Toll (TOL - commentary - Trade Now) be signaling a V-shaped recovery?

And since these numbers, the banks in the cross hairs of real estate woes -- Bank of America (BAC - commentary - Trade Now) and Wells Fargo (WFC - commentary - Trade Now), huge repositories of unsold foreclosed homes -- are climbing higher. How is that? How can Citigroup (C - commentary - Trade Now), which has some mortgage exposure (commercial) be going up? And the conduits are loaded with asset-backed junk that nobody really knows about.

All of these contradictions just don't add up. They are confusing and they make no sense.

But the market takes action on it, and it is positive action.

Are the buyers dreaming?

My answer, as always: It doesn't matter. They are in charge.

At the time of publication, Cramer was long Bank of America, Goldman Sachs and Wells Fargo.

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