Merrill Lynch releases it third quarter profit figures Tuesday. Although the consensus of 17 analysts polled last week by Thomson First Call indicates that the Wall Street firm will post a profit decline of around 11%, much will depend on how Merrill played the bond market in the period.
Falling interest rates and a flattening yield curve made for an unexpected bond market bonanza for much of the third quarter. Goldman made hay, Lehman did well and Morgan Stanley caught a cold. We won't have long to wait to find out about Merrill Lynch. Whatever kind of third quarter figures Merrill posts, however, the future is expected to be relatively bright for the firm. According to Thomson Financial, thirteen out of eighteen brokerage firms currently rate Merrill a 'buy' or 'strong buy'.
Meanwhile four former Merrill Lynch staffers are amongst those on trial in Houston, accused of entering into a sham Nigerian barge deal in 1999 which helped failed energy company Enron artificially inflate profits.
Former Enron Treasurer, Ben Glisan, wearing his green prison-issue garb, testified on Wednesday that he worked on the deal and admitted that it wasn't what it seemed. 'It was reported as a gain', he said. 'I didn't believe it was an economic gain'. Glisan is helping US prosecutors and is one year into a five year prison term for criminal conspiracy relating to the Enron affair.
The case continues.