Friday's Roller-Coaster Ride

Now we know why we call this a roller-coaster ride. A couple quick points before we begin what I suspect will be a difficult session:

1. Merrill’s number was not pretty and the fact that Thain said they are not selling their CDO exposure at discounted prices or doing a fire sale suggests that they are choosing to keep a fair amount of junk on their books. I don’t like that. Thain also said that they had $1 trillion in assets and when asked if he would consider additional asset sales, he said, “There are in fact other options.” What does that mean? Will they raise more cash by issuing more stock? Will they look for a partner overseas? Read into that line. There is more to it.

2. Jamie Dimon said a lot on the JPM call yesterday. He did not pull any punches. Clearly he is considered the darling of the industry and he’s looking for other purchases but he himself suggested that they did not expect things to get worse. When talking about how the bank loosened lending standards, he said, “We were wrong. We obviously wish we hadn’t done it.” Keep an eye on that. The stock is up over 25% in two days but he did caution that things could get worse especially with prime borrowers.

3. I don’t know about you but I don’t like it when Google’s Eric Schmidt says for the FIRST TIME, that this is “a more challenging environment.” He also did something that I haven’t seen before and brought on the call his Chief Economist Hal R. Varian to talk about the outlook. VERY UNUSUAL. Note they did say that they saw fewer searches in categories like finance, real estate and luxury goods. That tells you what the consumer is thinking. They’re cutting back.

4. Citi. You know Citi, right? They are due to report this morning before the market opens. I suspect it will be pretty bloody, much like Merrill, but a look at the key financial websites this morning and you can't find one with CITI on the COVER. What is up with that? Citi has quietly been raising money and selling assets and it has largely been going unnoticed. Today will not be a good day. Why aren't they the cover story for every website? Is this good news for Pandit?

5. Oil….uggg…down $16 dollars in three days, now up $3 on IMF increase in global economic growth to 4.1% from 3.7%. What are they looking at that the rest of the world is not? Also Nigeria disruptions…..may not be pretty today.