Interesting Developments
MER gets taken out, and if I were a BofA shareholder, I would be a bit upset. No doubt there will be an obvious hit to BofA, but ultimately benefitial for the long-term holders… still, the price of the buyout was too pricey. MER would have opened in the low teens, and probably headed for bankrupcy next, yet gets bought out for Billions. BofA did MER shareholders a HUGE favor.
The markets will be seeing some major declines… major declines as the futures indicate. Do not know if capitulation will take place until we are open, but tomorrow may be a good time to get back into JPM (with an initial position). I will be in a conference all day Monday and Tuesday, away from a computer, but will put a limit order at 36 or so.
Do not forget, this financial crisis is taking place within a consumer led recession, and until the American consumer flushes out its negatives (ie… higher income growth, job creation, allowing for some savings… etc), the true market bottom may not take place.
The only real uncertaintly left with respect to major financial institutions is AIG. Once they get flushed out, the landscape looks a lot better.
(PS… I do not like the idea that the Fed will take equity as collateral)
