GO
Loading...

What Merrill's Selloff Means For Financials

Midday observations:

1) What does Merrill's CDO selloff mean for other financials? Is everyone going to have to sell CDOs at $0.22 on the dollar, as Merrill has? Guy Moszkowski at Merrill Lynch says maybe not. A good part of Merrill Lynch CDO portfolio is 2006 vintage and above, whereas the largest portion of Citi's CDOs is pre-2006. Citi's portfoilo appears to be performing better.

2) Housing still murky. The bad news on the Cash-Shiller home price index is that the 20-city index fell by a record 15.8 percent in May. The good news is that the rate of decline may be slowing down, and--believe it or not--that's the first thing that has to happen. Michael Darda MKM Partners had a good point: "While the rate of house price deflation may slacken soon, the actual bottom for home prices (and housing in general) is probably a ways off."

3) The restaurant business is having serious problems. The privately-held firm that controls Bennigan's has announced a Chapter 7 bankruptcy (that's liquidation) of its company-owned restaurants, while DineEquity,the publicly traded company that owns Applebees and IHOP, announced earnings well below expectations and is trading down 9 percent. Operating profit, however, was roughly in line with expectations.


Questions? Comments? tradertalk@cnbc.com

Symbol
Price
 
Change
%Change
DIN
---
C
---

Featured

  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

Wall Street