Bank of America (BAC) may have reportedshrinking loans, lower revenue in five out of six divisions, and a dip in deposits on a quarter-over-quarter basis, but investors gave the stock an 8% bump in aftenoon trading.
Whether shorts are getting squeezed, or the bank’s guidance impressed investors, the woebegone is at least getting a breather for the day. The bank has successfully cut its expenses and plans to continue to cut. And its capital ratios are slowly improving.
That said, investors still don’t know what they don’t know. The elephant in the room is still the bank’s mortgage exposure, both in terms of loans its Countrywide unit sold during the downturn and its more recent foreclosure practices. On top of that, the entire financial sector is being weighed down by its unknown exposure to European debt. (Perhaps, if Bank of America had let CLSA analyst Mike Mayo speak on the conference call, we would have learned more.)
And that’s why, despite an 8% move, the stock is still down 51% for the year.
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