These 3 bank stocks will ‘make a fortune’ from higher rates if the Fed pulls a soft landing, says Cramer

CNBC’s Jim Cramer said Thursday that investors who believe the Federal Reserve may make a soft landing should have bank stocks on their buying list.

“If you think we’re headed for an outright recession, then it’s right to avoid bank stocks. But if you’re like me and you think the Fed is actually doing some needle-threading and overengineering it’s going to be incredible.” -Hard crash landing, then these companies will make fortunes with higher rates,” he said.

,mad MoneyThe host specifically highlighted three bank shares 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 are already reflecting recession concerns, but they do not reflect earnings upside from Fed rate hikes. So they are worth buying. ,” They said.

His remarks came after the Fed raised its benchmark interest rate by 75 basis points on Wednesday, the biggest jump since 1994.

While shares rose after Powell’s announcement, bank stocks’ gains were modest. Major indices reversed Wednesday’s gains and then some again on Thursday.

Cramer said bank stocks should have been higher on the day of the Fed’s announcement, as a high-interest environment is often good news for banks.

“Every time the Fed tightens up, it means banks can take your deposits and then put them in short-term treasuries to earn high risk-free returns immediately,” he said.

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

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

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