09/26/06 Shifting Sands

Good morning,



We are in a wash of news and it is terribly difficult to determine what’s noise and what’s important. I thought this was an appropriate sideline to help us all keep cool heads.



A major shift occurred in the fall of 1989. Before that time, the media did not make excessive use of the terms such as crisis, catastrophe, cataclysm, plague or disaster. The word catastrophe was used 5 times more in 1995 than in 1985. Its use doubled again in 2000. It is also interesting to note that on Monday September 22, 2008 the media noted an Oil CRISIS since oil was back to $120 a barrel. What was it at $149 a barrel this past summer ?!!?! In an article by Frank Furedi, he discusses that as Western societies become more affluent and safe, as life expectancy has steadily increased, one might expect the population to become more relaxed and secure. The opposite has happened, “Western societies have become panic stricken and hysterically risk adverse. The pattern is evident in everything from environmental issues to the vastly increased supervision of children.”



I will let each of you draw your own conclusions as to the why’s and wherefores.



There is a great article in the WSJ this morning – “Debt Market Distress Spreads.” Pay particular attention to the affect on Main Street.



Sources: Art Cashin, UBS, Wall Street Journal, Frank Furedi. This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of September 26, 2008, and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources deemed by Merrill Lynch to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. Past performance is no guarantee of future results. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Investment involves risks. International investing involves additional risks, including risks related to foreign currency, limited liquidity, less government regulation and the possibility of substantial volatility due to adverse political, economic or other developments. The two main risks related to fixed income investing are interest rate risk and credit risk. Typically, when interest rates rise, there is a corresponding decline in the market value of bonds. Credit risk refers to the possibility that the issuer of the bond will not be able to make principal and interest payments. Index performance is shown for illustrative purposes only. You cannot invest directly in an index.