Remember that? Dynegy (DYN) was going to save Enron. Until they didn’t! Then what? Enron became a nice little drill bit trading over with the rest of the pinkies for 1/8. Or 1/4. Or 3/8. Whatever.

And Dynegy. How did that trade after they couldn’t buy Enron?

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When Bank of America (BAC) can’t save Merrill (MER), their share price will suffer the same way Dynegy did.

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Peace

The sequel and the prequel have already been written.  About what?  Our friends Merrill Lynch (MER) and Bank of America (BAC).  Look at the pretty little chart below that tells you that the price is telling us that there is WAY more deal risk here than anyone is even making a peep about.  Except the underwriters’ financiers, who have a Chinese wall relationship with the bankers and the auditors.  See what I mean?

This deal ain’t gonna happen.

If it was sold at $28 and it trades at $19 don’t forget the arb spread is three.  (For those of you tryin’ to arb this one out, remember how reelin’ the feelin’ was in the street when the EU blocked the GE (GE) Honeywell (HON) deal.  Risk arb works very well….until it doesn’t).  You see what I see?  It’s called volatility.

Those Merrill cheapies may be cheaper than cheap.  When the carpet gets pulled on this deal the volatility is definitely going to jail and he will not stop to pass GO to collect $200.

Pump up the jam…pump it up.

Peace

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Lots of people are asking me if we are near a bottom.  I do not know the answer to this question.  I can tell you that everything I look at says we are nowhere near a bottom.  In fact, everything is in place for a large dislocation to take place.  Yes, you read that correctly.  This sell off has yet to see the brutal panic selling that we need.  It will come.  It is a matter of when, not if.  Volatility has definitely entered the room.

When will we see a bottom?

“There will come a time when you believe everything is finished.  That will be the beginning.”

-Louis L’Amour