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To: craig crawford who wrote (127221)	6/26/2001 8:14:30 PM
From: H James Morris	Respond to of 164684

Yup, I noticed the slut MER took another beating today beating today.I also noticed that the BKX.X is struggling too. >6/26/01 6:15 PM ET Merrill Lynch (MER:NYSE - news - commentary) rattled the financial sector with a dismal second-quarter outlook Tuesday, but the news likely means even worse things are in store for the rest of the broker pack. That's because Merrill Lynch reports its quarterly results about a month after most of the other brokers, including Goldman Sachs (GS:NYSE - news - commentary), Morgan Stanley (MWD:NYSE - news - commentary) and Bear Stearns (BSC:NYSE - news - commentary). Those firms, whose second quarters ended in May, reported lackluster numbers last week. But if those brokers are experiencing the same problems as Merrill, which is likely, then Merrill's warning indicates that the first month of their current quarters has been lousy, setting the stage for a poor quarter. Merrill said its second-quarter results, which will be released July 17, will be as much as 37% below the consensus expectation of 82 cents largely due to weak stock trading volumes and lower volatility. Lower Merrill fell $7.54, or 11%, to $58.91 Tuesday, while Goldman slipped just 65 cents to $90.30 and Morgan Stanley was off 70 cents to $63.82. "If you think the second quarter was the trough, think again," says James Mitchell, banks analyst at Putnam Lovell. "May was weaker than April and June is much worse than May," he notes referring to investment banking business lines including merger and acquisitions advisory fees, underwriting and trading revenues. "Unless conditions in the capital markets pick up meaningfully in the near term, we expect third quarter earnings to be weaker than the second quarter." (Mitchell rates Merrill hold. His firm has no underwriting relationship with the broker)