CNBC is going hot and heavy for the notion the JP Morgan really wants to become one with Wachovia. Or maybe Suntrust. I think it is more complicated than that.
When you see that Merrill Lynch also suddenly got hit today with rumors of a profit write-down at the same time info swirls about Morgan being able to digest Bear Sterns and still swallow Wachovia — does that suggest anything?
To me it suggest that Morgan — or someone — is worried that Merrill might beat everyone to the punch on Wachovia. Like I said weeks ago, I know there are investment bankers at ML who are kicking themselves over the opportunity presented by the sudden slide in Wachovia’s market cap. But that assumes that ML itself has squared up its balance sheet.
The only certain thing is that Wachovia remains in play and that fact is a major topic of conversation among Charlotte’s power elite. The cocktail napkin calculations show that even if Wachovia is still sitting on $30b. more in write-downs of bad loans, there will be continued interest in the QC giant as long as it trade in its current range of $17-19 per share.
