Presented with little comment suffice to ask why the rest of the mortgage-exposed financials would not also be rallying if this move higher in BAC stock was all based on mortgage refi program rumors [4]off of Bernanke's white paper released yesterday [5] and in general because it is an election year and Obama will do anything for a short-term vote grabbing fix? It appears just as likely that there is active arbitrage catch up between BofA's CDS and stock from a notable underperformance in mid-December back to 'fair' now.
[6]
BofA (yellow) has hugely (idiosyncratically) outperformed YTD.
[7]
BofA stock notably underperformed relative to CDS in December and this rally - topped off today - seems like it is as much driven by reversion in this arbitrage strategy as it is a breakout of a 50DMA or real money being put to work. CDS for BofA is not moving anything like as exuberantly as stocks...
Naturally all of this is only relevant for those who care why the are actually buying (or selling) stocks as opposed to blindly following the herd. Unfortunately these days the former have been literally stampeded to death by the latter.
Chart: Bloomberg