Reports indicate that Stan O'Neal, Merrill Lynch's CEO for the past five years, is very close to resigning as early as Sunday night(October 28) or Monday morning (October 29). O'Neal has recently received a lot of criticsm, as he has been blamed for Merrill's $7.9 billion write down related to the sub-prime mortgage crisis and his unauthorized attempt for a possible merger with Wachovia. The write-down represents Merrill's largest loss in its 93 year history.
Investors have seen Merrill Lynch's Stock drop as much as 30% this year, and will be extremely interested to see who will replace O'Neal. Rumors indicate that Merrill will conduct an extensive internal and external search for possible replacement candidates.
Showing posts with label credit crunch. Show all posts
Showing posts with label credit crunch. Show all posts
Sunday, October 28, 2007
Market Awaits the Federal Reserve's Decision
On Tuesday and Wednesday, the Ferderal Reserve governors will meet to decide if another interest rate cut is in order. Even though most of Wall Street believes that we will see 25 point cut this week, followed by another 25 point cut at their next meeting on December 11, there are many mitigating issues that could lead to leaving the discount rate stable.
Merrill Lynch's huge $2.5 billion loss just reaffirms how big of a credit cruch we're in, but we're also seeing huge food and energy price increases coupled with a plummeting dollar. This leads the Fed to try to play the balancing act, trying to ease the credit crunch while also trying to curb inflation. Bernanke, known for his support of inflation targeting, might view the 50% increase in crude oil prices as one of many reasons to keep the rate stable, while others believe that maintaining a fluid market amidst this crisis will have to take precedence. Other important factors will be Unemployment, GDP, and Spending. Most are expecting unemployment to remain stable at 4.7%, while core inflation and growth remain small. Either way, you can chalk up the rest of 2007's America's economy to looking bleak at best.
Let's see what Bernanke and his boys do this week.
Merrill Lynch's huge $2.5 billion loss just reaffirms how big of a credit cruch we're in, but we're also seeing huge food and energy price increases coupled with a plummeting dollar. This leads the Fed to try to play the balancing act, trying to ease the credit crunch while also trying to curb inflation. Bernanke, known for his support of inflation targeting, might view the 50% increase in crude oil prices as one of many reasons to keep the rate stable, while others believe that maintaining a fluid market amidst this crisis will have to take precedence. Other important factors will be Unemployment, GDP, and Spending. Most are expecting unemployment to remain stable at 4.7%, while core inflation and growth remain small. Either way, you can chalk up the rest of 2007's America's economy to looking bleak at best.
Let's see what Bernanke and his boys do this week.
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