From the Merrill Lynch Stationery Cupboard

Tuesday, July 29, 2008

Sigh. Another day, another writedown at good old Merrill Lynch. And indeed, another asset sale by Merrill that Merrill itself is financing. It's safe to say that someone had an inkling that something might happen, given yesterday's BKX-led meltdown in US equities. It seems as if the NAB news might have put the scare into can just imagine John Thain waking up last Friday and saying, "Ten cents on the dollar? Dammit, we're marked at 35.....quick, someone get me a bid!"

In any event, these writedowns are coming with alarming regularity, especially for Merrill employees and shareholders. Macro Man's sources within #4, World Financial Center have indicated that as a cost-cutting measure, Merrill's corporate communications department have written a boilerplate letter that can be send to shareholders in the event of future writedowns. They've managed to obtain a copy, which he has reproduced below:

Elsewhere, the growth versus inflation conundrum highlighted yesterday is impacting more
countries than just China and Mexico. India, for example, is particularly vulnerable, given its widening current account deficit (and concomitant reliance on foreign capital flows.) It's good to see that the country is taking some unusual measures to combat inflation, including naming a non-national (pictured, left, at the announcement of his appointment) as the new governor of the RBI. This morning, Governor Dogg surprised markets by hiking rates 0.50%, thereby showing his commitment to keeping the inflation genie within its kennel, er, bottle.

Finally, the good old New Zealand dollar has taken a battering today after a horrible set of building approval data and the news that another finance company/fund is going under. While NZD/USD continues to hover above the key 0.7380 support, the EUR/NZD cross has broken multi-year highs. All of this comes, of course, after a rather nasty short squeeze in the NZD after last week's RBNZ rate cut.
In many ways, carrying a short NZD position is a bit like being Rocky Balboa. You know you're going to win in the end, but you might have to take a hell of a battering along the way. Still, things could be worse. At least a short NZD position doesn't have shareholder letters (and CDO skeletons) in its closet.

Posted by Macro Man at 9:20 AM  


Garudian Trust I can understand - those bastards can't even run an airline. Guardian Trust - ditto re newspapers... but Guradian Trust - thows bluddy Kiwis cun't spull, no wunder thur go-un bruke.

Bledisloe cup is ours said...
11:20 AM  

Apparently there was a real connection between NAB and Merrill. See

CDN Trader said...
11:20 AM  

In the photograph: dont know if it is coincidence that the guy shaking hands is a Sikh and the Current PM of India too is one.

gsm_73 said...
1:04 PM  

Apparently Snoop is guesting on the theme song from an upcoming film "Singh is Kinng," which is no doubt where the photo is from. I could have sworn you were right, gsm, and that Singh was actually the president, not the king....

Macro Man said...
1:12 PM  


I am impressed with your ability to straddle different markets
(countries and asset classes). And now your knowledge of Indian Films is certainly admirable. :-)
Ya the guy shaking Snoops' hand is the lead actor in the movie...

gsm_73 said...
4:42 PM  

Haven't NZ banks been funding in Euro and Yen?

Anonymous said...
5:04 PM  

When I first caught the NAB writedown via Bloomberg, my first thought was of MER...and "THAT'S going to set the cat amongst the pidgeons" ;-)

old trader

Anonymous said...
1:58 AM  

Macro Man.. at 12am GMT, the gbp/aud went vertical. At the same time, the usd/chf spikes. Where are these trades coming from, and any thought on their impetus? Trying to learn from you here.

calvino said...
2:02 AM  

I noticed in your boiler plate you put... 20 _ _ for the year.

You should have put 2_ _ _ for the year. You are assuming it will be done this decade and they are going to have to reprint them 2 years from now. :)

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4:30 AM  

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