Bank of America (BAC) Surges 16% Today, Up 125% From Recent Lows
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Bank of America (NYSE: BAC) is up 16% today, its fourth straight up day. The stock is up 125% from its recent low and 82% just this week. Can anyone say volatility. Wow!
BofA CEO Ken Lewis delivered a speech in Boston today, with his comments fanning the positive mood for the stock. Importantly, Lewis said, "Bank of America should generate more than $100 billion in revenue this year, and close to $50 billion in pre-tax, pre- provision earnings." He said this kind of cash flow can solve a lot of problems.
Lewis also followed recent comments from Citigoup's (NYSE: C) CEO Vikram Pandit and JP Morgan (NYSE: JPM) CEO Jamie Dimon, saying the bank was profitable for the first two months of the year.
Commenting on the state of the economy, Lewis said it is hard to find tangible glimmers of hope in the economic data we're seeing, but that said, Lewis thinks "we are going to break the back of this thing, and I still believe we'll do it this year." He continued, " There is too much ammunition being fired from too many directions to not bring this beast down."
On the credit bubble, Lewis said this crisis is similar to every great market bubble in history and everyone is to blame, not just the banks. Lewis said, "Excess liquidity led to a credit bubble that grew out of control for years. Almost every group of participants in the economy - lenders, borrowers, regulators, policymakers, news media, appraisers, rating agencies, investors, investment bankers - had a motive to push economic excesses forward, and most did."
Lewis said the banking industry isn't in nearly as dire shape as some would have us believe.
Lewis thinks the stock price is being largely driven by fear, not economic and business fundamentals. The fear relates to how deep and long this recession will be and fear about what the government may do that could dilute or wipe out shareholders. Lewis said those fears are "irrational."
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