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Bank of America to Face Difficult Challenges


The financial beat the Street on earnings, but remains cautious.

Minyan Morning Memo

One to Watch: Investors asking "What's the frequency Kenneth Lewis?" got their answer this morning when Bank of America (BAC) reported Q2 profit which beat the Street, even as its CEO cautioned "difficult challenges lie ahead". The stock, initially up, is now bidding down after gaining in tandem with other financials this week. Issues abound, including a weak macro environment and culture clash with Mother Merrill, but it does appear to have weathered the worst. It's worth remembering that it does business with almost every other American household in one form or another. And if a new policy of charging customers more than the GDP of planet earth for a packet of cigarettes gains traction, better times are indeed ahead.

What Just Happened: Stocks gained again after a seesaw (or yo-yo) session as initial unemployment dipped and investors accurately anticipated above-expectation earnings out of IBM (IBM).

What's Happening: Asia ended ahead, albeit marginally. Europe is on course to complete a sweep of gains this week. Here at home futures are mixed after key Dow components reported results. And banks are on the up, at least according to today's Times. Its front page lauds not only JP Morgan (JPM) and Goldman (GS), but also emerging "signs of hope" in the West Bank.

What Will Happen: It's anything but a slow summer Friday, notwithstanding Squawk Box beginning its broadcast from sleepy Sag Harbor this morning. BB&T Corp (BBT), Citigroup (C), General Electric (GE), Mattel (MAT) and many others are out with earnings on a day which will also witnessed options expiration. In economics, housing starts are announced at 8:30 AM Eastern.

Happenstance: The latest Harry Potter movie will do boffo box office this weekend while its creator gives new meaning to the term "welfare queen". J.K. Rowling, onetime recipient of government assistance in Edinburgh as a single mom, out-earned Her Majesty long ago.
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