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In front of Shylock's house, Shylock chats with Lancelot, who's just brought him the dinner invitation from Bassanio.
Lancelot is a clown and a servant. Like all Shakespearean clown figures, Lancelot's job is to fool around, make smart-alecky comments, and bag on all the other characters in the play.
Shylock says Lancelot will soon see the difference between being in his service and being in Bassanio's. He then roughly calls in Jessica and tells her he's been invited to dinner. He says this isn't a friendly dinner invite but mere flattery. He's committed to feed upon his hatred of the Christians.
Shylock tells Jessica that she'll have to look after the house. He says he fears something bad is about to happen, since he dreamed about money bags, supposedly a bad omen. Lancelot teases Shylock about his superstition, making up some silly omens of his own, but Shylock ignores him and warns Jessica of some revels that will fill the street that night. She's not to put her head outside the window or otherwise let any foolish merriment seep into his house. Shylock especially doesn't want any sounds of music coming through the windows, which you can read more about in the "Symbolism, Imagery, Allegory" section.
Shylock then heads off to dinner, though he says he'd rather not. As he leaves with Lancelot, the clown delivers a seemingly harmless little rhyme to Jessica, telling her that a Christian (Lorenzo) will be worth looking out her window for later tonight. Shylock wonders what he said, but Jessica quickly deflects his inquiry, leaving her father to wax on about how Lancelot's departure is no great loss, as he was lazy and slept too much anyway.
If anything, Shylock is grateful that Lancelot will assist Bassanio in wasting his borrowed cash. Again reminding Jessica to lock up the doors and stay inside, Shylock exits.
Alone at Shylock's house, Jessica declares she will soon be rid of her father and he rid of a daughter.