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Bank of America joined the crowd of financial institutions reporting good earnings last week. The Charlotte, N.C., bank beat the expectations of analysts by saying today that it had a US$2.42B Q-2 profit after the payment of preferred dividends. Bank of America has struggled through the acquisitions of lender Countrywide Financial Corp. and investment bank Merrill Lynch & Co., and looks like it is getting its financial house in order. After rising in early trading, Bank of America shares fell 35 cents to $12.82 in mid-day trading. The second-quarter profit amounted to 33c per share and compared with a profit US$3.22B, or 72c, a year earlier. Although the numbers were below last year’s, the earnings still beat the forecasts of analysts surveyed by Thomson Reuters, who predicted the bank would come in at 28c per share.

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Crude Oil hit an eight-month high last Wednesday before reversing as investor sentiment waffled in the face of negative economic data from the US. Volatility in the energy markets defied predictions for a docile trading week cut short by US Independence Day, with Crude breaching US$73bbl during Asian trading before stumbling back below US$70. Weaker-than-forecast US consumer confidence data and the US$ rising against the Euro were seen by some as prompting the later falls, while others argued that the unusually high trading volumes overnight in Asia were evidence that large investment funds had been changing their Crude Oil positions for the end of the quarter, causing a temporary price rise. Nevertheless, Crude Oil registered its largest quarterly gain since 1990. Barclays Capital argued that the surge in energy, metals and agricultural products that has pushed the Reuters / Jefferies CRB commodities index up 25% since the start of March marked a “revolution” in how investors view the commodities cycle. “The usual relationships between commodities prices and the economic cycle [have] been redefined,” Barclays Capital said in its summer 2009 outlook.

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The benchmark S&P 500 should move back to its October 2007 record high above 1,500 by the end of 2012, provided the US economy sees a V-shaped recovery, JPMorgan Chase Chief U.S. Equity Strategist Thomas Lee said last Wednesday. “The global economy is in the midst of a synchronized recovery,” Lee said at the Reuters Investment Outlook Summit “If we end up with a V-shaped recovery, we could go back to our record high of 1,500 in 2011-2012,” he added, referring to the S&P 500. Lee also reiterated his year end 2009 target of 1,100 for the S&P 500, saying the United States will likely come out of its recession some time this summer, followed by the rest of the developed world. In October 2007, the S&P 500 hit a record closing high of 1,565.15, before falling back. In March of this year, it slumped to a 12-year closing low, but has rebounded by about 35% on hopes the recession that begun in December 2007 was moderating. Lee added that a market correction in the wake of the recent run-up would be “healthy,” and could lure back investors who opted to sit out the recent rally. “This rally has left many investors uninvested or underinvested. The pullback is the entry point to really see more meaningful money put to work,” said Lee, who has been named a top analyst in Institutional Investor magazine’s annual all-star poll. He favors the financials, industrials, technology and consumer discretionaries sectors, in that order, saying the sectors would be the biggest beneficiaries of an economic recovery. Within financials, he favors asset managers. The S&P financial index .GSPF is up 84 percent since the broader market’s 12-year low on March 9, 2009

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Consumer sentiment improved this month helped by falling gasoline prices, retail discounts and lower inflation.

The University of Michigan Surveys of Consumers said its index of confidence for December rose to 59.1 from November’s 55.3, aided by the fall in one-year inflation expectations to their lowest in five years, the highest since September and contrary to economists’ expectations of a fall to 54.8, according to the median of forecasts in a Reuters poll.

Despite the improvement, sentiment remains depressed by historical standards. The University of Michigan confidence index dates back to 1952.

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Wynn Resorts Ltd (WYNN) plans to open its Encore Casino on the Las Vegas Strip with low room rates to boost occupancy.

CEO Steve Wynn told Reuters, “The last couple of weeks have been the worst I have ever seen. We had 53% occupancy for a couple of nights at the Wynn Las Vegas resort. WYNN expects to be in the high 80s, low 90s % on occupancy right away by offering rooms at $199 a night.

Reasonable rates for luxury accommodations at Wynn and Encore will put downward pressure on prices for hotel rooms all along the Strip.”I’ve always opened up hotels in boom periods. It is a fascinating moment to open a hotel in a market that’s extremely tough,” Wynn said. Wynn Resorts, which is expected to open an Encore in China’s Macau a year from now, has no immediate plans for additional resorts, and getting the two Encore projects up and running smoothly will take the company to mid-2010 according to CEO Wynn.

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