UPDATE IV: Sorry for the damn site going offline (I really wish I could curse right now). I have no idea what happened. My guess, Lehman Brothers got all pissed about my “fortune cookie curse” on them and ordered a web assault on iBC. Apparently, our fate is intertwined with Lehman.
Mini Update within a bigger Update: The site was hacked down by egregious iBankers. We are fighting them on the internets. Developing…
Anyway, BAC just made a massive error, through buying MER. Essentially, the Fed is forcing them to do this deal. Everyone knows, they can get MER for $15 or less. Instead, they are trying to paint the pig gold and tell us it’s a golden bowling ball. It’s not. It’s a stupid pig with gold pain on it.
With that in mind, expect to see BAC at new lows, within weeks. And, on a big spike, I might short some MER, based upon the insane theory that BAC shareholders may say “hmmm, this deal blows, cancel it now.”
Basically, BAC is the biggest bagholder known to modern finance. I am sure Cramer will find the silver lining inside the nuclear bomb crater and suggest we go out and buy banks, again.
Then we have AIG. KKR and JC Flowers just walked away from a tentative deal with them. Basically, they need to raise $40 billion, in order to avoid a credit downgrade. Because of this, they want the Fed to give them a bridge loan of $40 billion: ROFL.
Are they nuts?
Finally, the hapless banks are concocting some new liquidity pool, in order to create liquidity. Shocker. Ignore their efforts and buy SRS, SKF and short LM, with great vigor.
The market should get stomped out tomorrow, led by free falling banks and massive drop in the dollar.
UPDATE III: Merrill’s board is voting on a $29 per share offer (all stock) from BofA. If this dilutive deal goes through, expect the shares of BAC to get mudstomped. This is a highly irresponsible move, on behalf of BofA. I am sure their shareholders would appreciate it if they could wait until Tuesday to negotiate a buy out price. My guess, they could bag MER for $10 or less, if they keep their cool.
UPDATE II: In light of the probable unwinding that will occur, here is a short list of Lehman Brothers’ top holdings:
General Electric Company [[GE]]
Pfizer Inc. [[PFE]]
Target Corporation [[TGT]]
UBS AG (USA) [[UBS]]
Linn Energy, LLC [[LINE]]
GLG Partners, Inc. [[GLG]]
Merck & Co., Inc. [[MRK]]
Microsoft Corporation [[MSFT]]
Bank of America Corporation [[BAC]]
Apple Inc. [[AAPL]]
Flagstone Reinsurance Holdings Limited [[FSR]]
WellPoint, Inc. [[WLP]]
Wal-Mart Stores, Inc. [[WMT]]
Exxon Mobil Corporation [[XOM]]
UnitedHealth Group Inc. [[UNH]]
Google Inc. [[GOOG]]
Johnson & Johnson [[JNJ]]
Baidu.com, Inc. (ADR) [[BIDU]]
UPDATE: Should AIG catch a credit downgrade, they will face a 46 billion dollar cash call: ROFL. That’s like Dr. Evil type money. God help us.
S&P futures indicate a 36 point drop (3%), thus far. CDS spreads have widened by 30 basis points.
NOTE: As soon as I can start cursing again, Dick Bove is getting a “lifetime achievement” As*hat Award.