Shorts Take Aim At Merrill

Merrill Lynch (MER) is under heavy pressure today following rumors that the company is set to take additional write-downs and seeking new capital injections.  While additional write-downs are certainly possible, it is hard to imagine that the company would need to raise additional capital after its CEO John Thain said that they have raised all the capital they need.  In a Reuters story published earlier this week, Thain said, "We have carried out an enormous cleaning of our credit portfolio. We have more capital than we need, so we can say to the market that we don't need more injections. We can confirm that we have tackled the problem." 

After last week's Bear Stearns debacle where the CEO said they had ample liquidity three days before the company imploded, we can't imagine why any CEO of a financial services company would say such a thing.  As the last few days have shown us, anything is possible in this market.

Put volume in MER has shown a big up-tick today to 290K contracts, but it still remains below the peak levels we saw earlier in the year.