Monday, September 15, 2008

Merrill Lynch Embraced by B of A

Merrill Lunch (MER) will get hitched with Bank of America (BAC). At least The Raging Bull can say someone wanted it. The music in Wall Street’s game of musical chairs has stopped and it is critically important to sit down. Lehman (LEH) could not find a chair. Bear Stearns (BSC inactive) was rudely thrust into one but the complaints seem to have dissipated.

The question about Bank of America is how many more chairs they can pull up to the table. Not that long ago they took in Countrywide which is widely assumed to have many malignant financial tumours. There have been many acquisitions by Bank of America in recent past, most of which will have some warts on it.

Watch for write downs as Bank of America digests their strategic moves. The time and psychology is correct. Investors expect bad news. If they do not clean out the closets and shake out the rugs they will only be setting themselves up for future disappoints.