Although Merrill Lynch shareholders do appreciate that CEO John Thain is not responsible for the 'legacy' problems that have eaten up the firm's recent profits, nevertheless Thain is coming under pressure to get the show back on the road and start delivering acceptable returns.

But, as The Wall Street Journal points out, that may be more difficult in the short-term than it appears. In essence, Thain has only three ways (or a combination thereof) to go to produce acceptable earnings - he can somehow try and muscle in and take more market share from rival firms to build revenues in core areas like investment banking, asset management and the brokerage business; he can push the boat out and encourage his traders to take more risk in order to bag higher returns; or he can cut back on expenses (and that probably means cutting more heads). Although Thain is thought not to like the idea of additional job cuts any time soon, it may be a better option than putting his business at the mercy of his traders (that didn't exactly go to plan last time out, did it ?).

In the meantime, Thain was on CNBC Monday, trying to explain why he agreed to offload a $30bn CDO portfolio at 22 cents on the dollar last week. He explained that he took decisive action as the buyer (Lone Star) 'may have gone away' and 'the prices of the assets may have declined'. Thain also said that he did the deal in order to help improve staff morale: 'We have over 60,000 people working every day. All the efforts of these people were overwhelmed by the writedowns'.

Thain also ruled out further capital raising 'today', but said that he could not rule out further writedowns as, although 'we have much smaller (positions) in terms of risky assets, it's not zero. And so if asset values continue to fall, particularly mortgage assets, we still have some exposure'.

Finally, Bloomberg reports that, according to two unnamed 'people with knowledge of the matter', former Merrill executive Dow Kim has dropped his plans to start a hedge fund, after some of his initial investors backed out. Kim is thought to have hired around 30 staff in New York for the venture.

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