Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.
On the back of a winning week, stocks are roughly unchanged this morning, with the S&P 500 and the narrower, price-weighted Dow Jones Industrial Average (DJINDICES:^DJI) up about 0.1% each at 10:05 a.m EST.
This week is light in terms of economic data, and the earnings season is slowing down -- as of last Thursday, we had third-quarter earnings data for roughly 90% of S&P 500 companies, according to S&P Dow Jones Indices. Still, the market will be eager to get earnings from Dow components Cisco Systems (Wednesday afternoon) and Wal-Mart Stores (Thursday morning), which are barometers of business technology spending and consumer spending, respectively.
Bank of America: Time to pay the piper...again
The U.S. government requested that Bank of America (NYSE:BAC) pay $864 million in a filing late Friday in the wake of the Oct. 23 ruling that the bank is responsible for bad mortgages sold to Fannie Mae and Freddie Mac by Countrywide in 2007 and 2008. Bank of America acquired Countrywide Financial in 2008 in a deal The Wall Street Journal labeled its "$40 billion mistake" (subscription required to view), in reference to the Journal's estimate of aggregate losses, legal expenses, and settlements directly related to Countrywide.
Make that a $41 billion mistake.
Bank of America will no doubt review its options for appeal, but while the bank has adopted a combative stance, the Oct. 23 ruling against it was a major blow. At this stage, the bank may be better off simply paying the penalty to bury this complaint (although this won't be the last one) and avoid additional legal costs, reputational harm through continuing media coverage and the distraction it creates for management.
Perhaps Bank of America could take a lesson from Wells Fargo (NYSE:WFC), which last month quietly settled with the Federal Home Finance Agency -- Fannie Mae and Freddie Mac's regulator -- regarding charges it had mis-sold mortgages. When I say "quietly," I mean it; the terms of the agreement are sealed. Of course, in order to achieve that spectacular result, Wells Fargo entered into discussions to settle the case with regulators before they brought suit against 17 other banks -- including Bank of America.