Bank of New York Mellon (NYSE: BK - option chain) stock is lower today after the company reported a second-quarter profit this morning of $176 million, or 15 cents per share. Excluding one-time items, BK earned 23 cents per share, missing analysts' estimates of 53 cents per share. BK also announced its quarterly dividend of 0.09 per share down 62% from the previous 0.24. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on BK.

This morning, BK opened at $27.55. So far today the stock has hit a low of $26.48 and a high of $27.67. As of 11:40, BK is trading at $26.89, down $2.22 (-7.6%). The chart for BK looks bullish and S&P gives BK a positive 4 STARS (out of 5) buy ranking.

The Bank of New York Mellon Corp. (NYSE: BK) has become a minority equity investor in International Derivatives Clearing Group (IDCG), the derivatives clearing unit that's a subsidiary of Nasdaq OMX Group (NASDAQ: NDAQ). Financial terms of the deal were not disclosed, nor was the size of the stake -- but it's definitely a symbiotic pact. IDCG will use securities servicing products provided by the bank, and Bank of New York Mellon's chief executive of broker-dealer services, Art Certosimo, will join IDCG's board.

"This strategic partnership with Nasdaq OMX provides our buy side and sell side clients with a flexible platform that meets their derivatives trading, clearing and servicing needs," stated Bank of New York Mellon President Gerald Hassell. Bob Greifeld, CEO of Nasdaq OMX, added that the partnership "lends support to President Obama's proposed reforms of the [over-the-counter] derivatives market."

Late Monday, The Bank of New York Mellon Corporation (NYSE: BK) unveiled its plan to sell $1.2 billion worth of stock in order to repay its TARP loan to the U.S. Treasury Department. The company priced 42 million shares at $28.75 a piece, a discount of 3% to the stock's close on Monday.

Even though BK passed the government's stress test with no trouble, the bank is nonetheless eager to raise funds and pay off its debt to the government. Other financial firms selling stock to repay TARP loans include Capital One Financial (NYSE: COF) and U.S. Bancorp (NYSE: USB).

However, investors seem none too pleased with BK's dilutive stock offering. The security shed 2.5% within the first 10 minutes of today's trading, extending BK's retreat from double-top resistance at the $33 level. The shares first shied away from this region in mid-April, and pulled back from the $33 neighborhood again last week.

It is being reported today in the Business Journal that the safest bank in the United States is Wells Fargo & Company (NYSE: WFC).

According to Global Finance, which will publish its analysis, "World's 50 Safest Banks" in its April issue, international banks dominate the rankings, which show the effects of the sub-prime mortgage meltdown and credit crisis brought on by large Wall Street players. San Francisco-based Wells Fargo is the top-rated U.S. bank at No. 21. European banks now dominate the rankings, with only four U.S. banks among the listing.

Mark Cuban has a new pet project: BailoutSleuth.com seeks to keep readers updated on how their money is being spent as part of the $700 billion bailout of financial institutions.

So far the early returns aren't looking good. Yesterday the site's editor, Chris Carey, wrote that the "Treasury Department put out an announcement about a major bailout-related contract with Bank of New York Mellon Corp. that fell short in the transparency department."

The problem? Nearly all the information on compensation was redacted, leading to less than illuminating lines like this: "The Financial Agent shall receive a monthly fee ---------------------------------------."

It's hard to know what purpose is served by keeping taxpayers in the dark about how much Bank of New York Mellon (NYSE: BK) is being paid for its services. This reeks of the same contempt for taxpayers that characterized the passage of the bailout in the first place.

Concerned citizens should consider bookmarking BailoutSleuth to follow this travesty in real time.

The earnings crunch begins in earnest this coming week, with companies from Johnson & Johnson (NYSE: JNJ) and PepsiCo Inc. (NYSE: PEP) to Southwest Airlines Co. (NYSE: LUV) and Harley-Davidson Inc. (NYSE: HOG) scheduled to report results for the quarter just ended. But with the ongoing turmoil in the markets, much attention is on the tech and financial sectors. This week will provide plenty to mull over on both counts.

Wall Street expectations for tech stocks are fairly optimistic. Analysts surveyed by Thomson Financial are looking for chip maker Altera Corp. (NASDAQ: ALTR) and software/service company iGate Corp. (NASDAQ: IGTE) to be the sector's biggest earnings gainers of the week. Altera is expected to report earnings of 30 cents per share (up 33.3% from a year ago) on revenue of $355.1 million. Altera had previously forecast flat sales for the quarter, and shares fell to a 52-week low last week. iGate is expected to report earnings of 14 cents per share (up 42.9%) on revenue of $55.6 million. India-based iGate recently spun off its Mastech consulting services. Shares are down 45.0% in the past three months, and also reached a new 52-week low last week.

San Jose-based Novellus Systems Inc. (NASDAQ: NVLS), on the other hand, is expected to report that net income tumbled 90.4% from a year ago to 4 cents per share, on revenue of $245.6 million. Novellus fell to a 52-week low early last week, and shares are down 44.5% year to date.

After the implosion of IndyMac Bancorp (NYSE: IMB) and news of the deterioration of Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) last week, there's bound to be a certain level of trepidation as the earnings crunch begins this coming week and many big financial companies report. Here's a look at what Wall Street was expecting (see The week in preview: Expectations as the earnings crunch begins for expectations of other reporting companies.)

Analysts surveyed by Thomson Financial are expecting the following of companies to report lower earnings when compared to the same period of the previous year.

• JPMorgan Chase & Co. (NYSE: JPM): 44 cents EPS (-63.3%) on sales of $16.4 billion (-13.2%)
• Comerica Inc. (NYSE: CMA): 51 cents EPS (-59.2%) on sales of $680.2 million (-7.3%)
• Zions Bancorp. (NYSE: ZION): 75 cents EPS (-47.6%) on sales of $627.3. million (+2.7%)
• Huntington Bancshares Inc. (NYSE: HBAN): 23 cents EPS (-32.4%) on sales of $617.1 million (+50.7%)
• Capital One Financial Corp. (NYSE: COF): $1.31 EPS (-30.7%) on sales of $4.4 billion (+7.8%)
• Wells Fargo & Co. (NYSE: WFC): 50 cents EPS (-25.4%) on sales of $10.7 billion (+7.7%)
• M&T Bank Corp. (NYSE: MTB): $1.50 EPS (-23.1%) on sales of $756.6 million (+1.6%)
• BB&T Corp. (NYSE: BBT): 69 cents EPS (-16.9%) on sales of $1.8 billion (+5.9%)
• U.S. Bancorp (NYSE: USB): 60 cents EPS (-7.7%) on sales of $3.8 billion (+8.3%)
• PNC Financial Services Group Inc. (NYSE: PNC): $1.16 EPS (-7.2%) on sales of $1.9 billion (+8.5%)

A bank stock? In this market? Indeed preferred bank plays exist, with several community banks scoring high on that list. But it's understandable if you may want to avoid the investment banks for awhile.

Still, there are selected investment/commercial banks with superior business models, and among these the Bank of New York Mellon is worth a review.

Bank of New York Mellon (NYSE: BNY) is one of the world's leading asset management and corporate trust services banks, with an astounding $20 trillion in assets under custody and more than $1 trillion of assets under management.

In general, analysts expect BK's merger-adjusted revenue to rise about 8-10% in F2008, and 10-12% in F2009. Analysts also expect BK's merger with Pittsburgh-based Mellon Financial to enhance the company's business mix.

Further, the Bank of New York has also done a good job restricting non-merger expense growth, and it could also benefit as several competitors more-involved in the subprime mortgage sector struggle with credit-related issues. The Reuters F2008/F2009 EPS consensus estimates for BK are $2.99/$3.41.

For more earnings forecasts, see Peter Cohan's Earnings expectations for 10 banks tell a mixed story.

Thomson Financial expects Bank of New York Mellon (NYSE: BK) to earn $0.69 when it announces its fourth-quarter results on January 17th. That's up 19% from the same period in 2006 when it earned $0.58.

Bank of New York Mellon is a New York-based bank that operates through three segments: Institutional Services, Private Bank & BNY Asset Management, and Corporate & Other. In the last year, its revenues were $5 billion and its net income totaled $2 billion. Its stock has gained 13% in the last year, and it now trades at a P/E of 19.9.

Bank of New York Mellon consistently beats estimates. In the second quarter of 2007, it beat the estimate by 1.6%, and in the third quarter it beat by 9.8%. My hunch is that it will beat expectations.

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in Bank of New York Mellon securities.

With the price of Thanksgiving dinner up 11% this year over last, the Fed won't help consumers because it's confident that inflation -- as measured by Personal Consumption Expenditures (PCE) will range between 1% and 2%. Meanwhile, Washington is happy to create lucrative business deals for Wall Street -- in the form of arrangements to manage and keep records of its Structured Investment Vehicle (SIV) bailout.

What is the Fed smoking? I don't know any personal consumption expenditures that are growing at 1% to 2%. The price of oil has quadrupled since January 2001 to $99.29 a barrel, gasoline prices are up 40% since last year, airfares have more than doubled -- a flight from Boston to Florida that cost $300 last year is now $700 -- and the dollar has lost 61% of its value since January 2001. I guess the Fed has decided to define PCE in a way that conveniently confirms its pro-inflation interest rate policy.

Meanwhile, the Treasury Department has backed a Super-SIV plan to bail out banks, such as Citigroup Inc. (NYSE: C) which created the $320 billion SIVs industry and invested the proceeds of SIV-issued commercial paper in now-worthless mortgage backed securities (MBSs).