Did the great three-and-a-half year bond party end in June 2004? Look at the latest earnings from Merrill Lynch, previously one of the most reliable barometers for the industry, and you would probably agree. Merrill's profits from fixed income fell like a shot duck. Indeed, revenues from most of Merrill's main business lines also dropped and it was only cost-cutting that saved the bottom line.

But Merrill is no longer the best bond house in the world and hasn't been for several years. It was probably at its peak in the glory days of the late Edson Mitchell and Connie Volstad. To put that era in perspective you have to remember that Mitchell moved to Deutsche Bank in 1995. Merrill is a great house and I admire Stan O'Neal, chairman and chief executive, who saved the firm's bacon two years ago. But Merrill relies too much on equities.