Bank of America Day in the Markets

[Excerpted from Bill Cara's Daily Report]

Thursday was Bank of America Day in US capital markets. Congressional testimony by BAC CEO Ken Lewis did not seriously damage the roles played by the US Fed and US Treasury Department. Business as usual. Well-timed as usual were the rating upgrades of BAC by their peers in Humungous Bank & Broker (HB&B), and the promotion by the Friend of The Street, Jim Cramer.

Bank of America estimates raised at Morgan Stanley through 2011. Investment banking and retail brokerage revenue likely to top expectations in the coming quarters. Overweight rating and $32 price target.

Bank of America upgraded at Keefe, Bruyette & Woods to Outperform. $16.50 price target from $12. Valuation call, as the company has improved its balance sheet with recent capital raising. "Despite a higher share count than originally expected, Bank of America continues to have strong levels of estimated normalized EPS," KBW said.

[TheStreet.com] With all of today's headlines circulating around Bank Of America, a stock which Cramer owns for his charitable trust, Jim told the viewers of his "Mad Money" TV show Thursday that only one matters. And that's the one about today's upgrade of the stock by Morgan Stanley.

Cramer said everything surrounding CEO Ken Lewis and the acquisition of Merrill Lynch is water under the bridge, with no bearing on the stock's future performance.

Despite the priming of the HB&B pump, there was some dump following 1:30pm ET. At the bell, however, the DJIA (8,770.92 +31.90 +0.37%), S&P 500 (944.89 +5.74 +0.61%) and NASDAQ Composite (1,862.37 +9.29 +0.50%) all closed higher, and the S&P and NASDAQ managed to close at their highs for the year.

The Toronto Composite (10,714.11 +116.13 +1.10%) and Toronto Venture Board (1,148.32 +5.93 +0.52%) managed solid gains as well.

Earlier Friday, equity prices were mixed in Austral-Asian markets. Japan’s Nikkei 225 (10,135.8 +1.55%), Hong Kong (18,889.7 +0.52%), and Aussie All Ordinaries (4,061.5 +0.37%) were higher, while Shanghai (2,743.8 -1.91%), and India’s BSE 30 (15,237.9 -1.13%) were down.

In the past few hours, the European equity bourses have turned south as the $USD strengthened. The French CAC (), German DAX (5,077.2 -0.59%) and UK FTSE 100 (4,446.0 -0.36%) are down so far on the day.

In US trading Thursday, the leading sectors were Energy, Utilities and Basic Materials (XLE +2.0%, XLU +1.9%, XLB +1.4%). Consumer Discretionary (XLY -0.5%) was the losing sector, pulled down by Retailers $RLX -1.8%), while REITs ($DJR -2.2%), and Semi-conductors ($SOX -1.2%) were also weak.

The industries that performed best were Natural Gas ($XNG +3.4%), Oil Services ($OSX +2.7%), Computer Hardware ($HWI +2.6%), Biotech ($BTK +2.6%), and Banks ($BKX +2.6%).

The Cara 100 company stocks that lifted most yesterday were Gerdau Steel, Schlumberger, GlaxoSmithKline and PetroBrasil (GGB +5.2%, SLB +4.9%, GSK +4.1%, PBR +4.0%). Losers were optionsXpress, Bed, Bath & Beyond, Starbucks and Aetna (OXPS -6.1%, BBBY -4.5%, SBUX -4.3%, AET -4.0%).

The $USD sold off sharply Thursday (79.46 -0.77 -0.96%) against all major currencies including the Euro (141.08 +1.36 +0.97%), British Pound (165.84 +2.31 +1.41%), Yen (102.50 +0.65 +0.64%), and Cdn Dollar (90.65 +0.46 +0.51%) all rallied against the USD. The $USD had been testing the short-term resistance at 81, having found support at just under 79.

In active US bond market trading, the US Treasuries reversed the prior day’s smashing Thursday, wiping out the losses. The US long Bond lifted ($USB 115.00 +0.88 +0.77%). The yields for 30-year (3.862 -0.74 -1.88%), 10-year (3.862 -0.74 -1.88%), and 5-year (2.848 -0.68 -2.33%) sank. Treasury bill yields were unchanged (0.170).

Thursday, $GOLD closed flat (954.50 +0.20 +0.02%). Friday morning, following the very bad European Industrial Production report, the $USD soared and the Euro sank, and $GOLD took a major hit.

Thursday we had bought the bonds (TLT), figuring this reversal of earlier in the week would continue after the one-day sell-off. We were awaiting a purchase opportunity for gold and silver, and were very busy this morning on the pull-back.

The spot (cash) market prices for precious metals were as follows (i) later, and (ii) earlier Friday morning:

Gold (i) (946.76 -8.34 -0.87% 08:19am ET) (ii) (937.62 -17.48 -1.83% 09:47am ET);
Palladium (i) (251 -3 -1.18% 08:18am ET) (ii) (251 -3 -1.18% 09:47am ET);
Platinum (1243.5 -24.5 -1.93% 09:47amET);
and Silver (i) (15.0305 -0.3295 -2.15% 08:19am ET) (ii) (14.8185 -0.5415 -3.53% 09:47).

Dollar futures were up Friday, and rising. The Euro was lower (1.4005 -0.0123 -0.87% 08:06am ET), and sinking.

Crude Oil futures continued lifting Thursday (72.64 +1.31 +1.84), but Friday morning were sinking (71.350 -1.330 -1.84% 08:06am ET).

US equity futures for the DJIA were lower earlier today (8736 -15 -0.17% 08:07am ET), which is down about where the DJIA traded a minute after opening, before lifting a bit, then settling back to 8732 (9:56am ET).