Well they didn’t disappoint, Bank of America joins the bailout/writeoff club big league, they even went one better and managed to miss already easy street estimates. BofA posted Q1 earnings of $1,21Bn or 23 cents a share, the estimates were looking for 43 cents. Thats not just missing the barn door, thats being at the wrong farm. BofA made a provision of $6.1Bn against losses in its home equity, home builder and small business portfolios. Is it just me or is $6-7Bn the favourite writedown number these days? 

Charge offs hit $2.72Bn, trading losses hit $1.31Bn, including $1.9Bn in CDO and leveraged loan losses and the only positive was a $776Mn gain on the Visa IPO. The best bit till last though, BofA made the allowance for loan and lease losses to $14.39Bn. As Mr Lewis, the chairman and CEO stated:

• “Despite revenue growth in most of our businesses, these results clearly did not meet our expectations,””The weakness in the economy and prolonged disruptions in the capital markets took their toll on our performance.”

So with all this carnage on the books, how did the share price manage? Here is a chart:

Above is a 15 minute chart covering the last 6 trading days. Notice the marked gap up on Friday and the spike to £39.59? Now we all know markets can be irrational but this is becoming a pattern on some company shares going into results. A nice run up into a blow off and then gap down on results and massive support. Look at the tails on those candles for Monday. What value can there be in hold BofA at these levels, when the Countrywide “purchase” isn’t yet complete? I know, daft question, the market does what it does. Then I remembered a chart from 2007, a weekly chart of Freddie Mac which sported a triangle.

Here is BAC as a weekly chart:

Patience and a long memory can do wonders sometimes. What are they waiting for to resolve? Who knows but now we know what to watch, the drop out of the triangle on FRE was from around $60 if I remember correctly.

Lets have a look, Freddie weekly chart:

I shall keep BofA on my watchlist.

Why do I point out charts like BofA and Freddie? Simple, these are considered to big to fail, time is granted to them to secure a future before the market takes it pound of flesh.

Some banks are not so lucky:

• CLEVELAND (AP) – National City Corp. announced Monday it secured a $7 billion capital infusion from equity investors to help it survive the home mortgage crisis, at least temporarily quashing speculation the nation’s 10th-largest bank would have to be sold.But the move did not appease investors who sent National City’s stock tumbling 28 percent to its lowest level in about 17 years after the bank also posted a $171 million first-quarter loss and slashed its dividend.National City said it secured $985 million from New York-based Corsair Capital LLC, which has experience with troubled financial institutions internationally. The remaining balance will come from other investors, including current institutional shareholders.

  The bank, which operates largely in the Midwest, cut its dividend to 1 cent per share from 21 cents to help strengthen its capital position.

  National City’s Chief Executive Officer Peter Raskind told analysts in a conference call that the capital infusion will help stabilize the bank.

  “It reassures customers we are here for the long haul,” he said.

So reassured that investors stopped selling, at the 1990 support. Remember, this is the 10th largest bank in the US, anyone else feel reassured?

Market Snippets

BANGKOK (Thomson Financial) – More than 10 million people in parts of Thailand’s rice bowl region have been hit by drought, the government said Monday, causing further concerns as prices of the staple grain soar.

Thailand’s Disaster Prevention and Mitigation department reported that 55 of the kingdom’s 76 provinces were struggling with drought, mostly in the central, north and northeastern regions.More than 151,000 rai (60,000 acres) of farmland has been affected, they said in a statement, including half of the key central rice growing provinces.

CHICAGO (AP) – Agriculture futures traded lower Monday on the Chicago Board of Trade. Wheat for May delivery fell 24.25 cents to $8.4575 a bushel; May corn slipped 19.25 cents to $5.8025 a bushel; May oats dropped 6 cents to $3.72 a bushel; May soybeans declined 46 cents to $13.155 a bushel.

Commentary by Mick Phoenix

on behalf of An occasional letter from The Collection Agency

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. The views in the article are for informational purpose only.