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It's BofA's, Wells' turn in the spotlight


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It's BofA's, Wells' turn in the spotlight

Earnings reports will be brought to you today byBank of America Corp., , , and

BofA reported first-quarter net income applicable to common shareholdersof $2.22 billion, or 21cents per share. It was $2.72 billion, or 25 cents per share, in the first quarterof 2015. The bottomline includes a 7-cent-per-share hit from market-related netinterest income adjustments.

BlackRock reported net income attributable to the company of$657 million, or $3.92per share, for the first quarter, down from $822 million, or $4.84 per share, inthe prior-year quarter. The decrease in EPS reflects the impact of decline in averageAUM and lower performance fees in the first quarter, and lower effective tax rateand one-time nonoperating gain in the prior-year quarter.

Meanwhile, 's could be the turningpoint for bank stocks, The Wall StreetJournal notes, as well as a blowagainst arguments to break up big banks. In any case, the New York-based companyfinally gota taste of life outside regulatory fines, comments Dealbreaker.

Of course, thereal headline grabber was the living willsresult, which, the WSJ writes, saw starpupil Wells Fargo tradeplaces with problem child CitigroupInc. More significantly though, the failing grades bring the industrya little closer to the "unchartedterritory" of forced divestitures, comments Justin Schardin ofthe Bipartisan Policy Center. Rafferty Capital Markets' Dick Bove puts it this way:"TheU.S. hates its banks so much, it is willing to harm the economy," the Charlotte Business Journal quotes. And aFinancial Times piece reacts, "Lehmanhad fewer employees than Citigroup today has compliance staff," and as bankshave gotten so diverse that their chiefs don't understand what they do, so lawmakers"cannot hope to have more than a basic knowledge of the rules they promulgateor the workings of the regulatory institutions they have created."

Incidentally, acomparison of 2013 and 2014 systemic importance scores show U.S. G-SIBs were littlechanged — except for Wells Fargo, which actually grew in systemic importance by18%.

Writing for The New York Times, Stephen Lubben asks whereregulators "are getting their Chapter 11 advice." After all, "a planthat is credible to a banking regulator might not be credible to a bankruptcy lawyer,or more important, a bankruptcyjudge." Speaking of bankruptcy, the House Financial Services Committeeyesterday gave its nodto a bill that would repeal Dodd-Frank's Orderly Liquidation Authority.

One last note about the living wills — the Fed and the FDIC have askedfor a probe into how pressgot wind of the results before the official release.

Back to business-as-usual, JPMorgan, Citi and BofA are looking at waysto finance CLO managers that may be struggling to complywith risk-retention rules, say sources for Bloomberg News. They could be willingto provide financing for periods ranging from fiveto 12 years.

Back March,Melvin Watt of the FHFA said the agencywould soon announce whether it had a win-win strategy for using principal reductionas part of loss mitigation. Sources for the WSJsay the announcement that Fannie Maeand Freddie Mac will forgivemortgage principals could come out today.

Moves in the fintech sphereinclude a possible IPOby Optiv Security, as well as LPLFinancial Holdings Inc.'s decision to use BlackRock's robo advice platform.

In the asset management scene, the comes to a decision about pullingits money out of hedge funds. Sources for the WSJ say a majority vote from trustees is already expected.

And here's whatthe FT calls another nail in the coffinfor commodities pit trading: CME GroupInc. is permanently shuttingits New York trading floor at the endof this year.

In other parts of the world

China's fourbig banks — Bank of China Ltd., Agricultural Bank of China Ltd., Industrial &Commercial Bank of China Ltd. and China Construction Bank Corp.  — along with Standard Chartered Plc and Australia& New Zealand Banking Group Ltd., will be among 18 members to join a yuan-denominatedgold benchmark price in the yuan gold fix, Reutersreports.

As expected, the European Commission has proposed the introductionof public reporting requirements for the largest firms operating in the EU and intax havens to address concerns stemming from the Panama Papers scandal. The newrules would require about 6,500 large companiesoperating in the union to annually disclose their profits and taxes on a country-by-countrybasis. Meanwhile, tax officials from 28 countries will today meet in Paris to launcha global effort to assess the information revealed by the Panama Papers, accordingto TheGuardian.

The day ahead

Early morningfutures indicators pointed to a lower opening for the U.S. market.

In Asia, the HangSeng rose 0.90% to 21,348.67, while the Nikkei 225 was up 3.23% to 16,911.05.

In Europe, as ofmidday, the FTSE 100 was down 0.02% to 6,361.38, and the Euronext 100 rose 0.03%to 880.86.

On the macro front

The consumerprice index, the jobless claims report, the EIA natural gas report, the Fed balancesheet and the money supply report are due out today.

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