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Strong Like Bull

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Merrill Lynch avoided subprime shrinkage and posted a 19% gain in revenue and 31% gain in net income from Q2 last year, driven by the global markets and investment banking unit (GMI) and the fact that no one has had to mark-to-market subprime debt.
Merrill's GMI unit posted a pretax gain of 43% from last year, mostly due to international business, which makes up 61% of the unit's revenue and is growing much faster than the unit's domestic component. Equity market revenue and investment banking revenue posted gains of 15% and 41% respectively.
Merrill still has $750 million left in seized collateral from the Bear hedge funds, after auctioning off the only $100 million anyone would buy. Merrill's brilliant $1.3 billion acquisition of First Franklin Financial from National City just before the subprime market tanked hasn't come to bite Merrill in the posterior, since Merrill makes less than 2% of its revenue from U.S. mortgage activities. The Wall Street Journal reports that analysts didn't expect much subprime impact on Merrill's earning's this quarter.
Merrill's international expansion through foriegn investment and involvement in private equity deals have the bank shouldering more risk, but so far these areas have helped drive growth and provided diversification while other markets lagged.
Stan O'Neal's all about this revenue diversification, and is a little paranoid that the market has it in for him. While stroking his giant earnrection, Stan O'Neal touted Merrill's triumph through adversity this quarter, from the Wall Street Journal:

We delivered another strong quarter in a volatile and, at times, hostile market environment, a market in which people started to ignore the immortal words of my favorite band that is not Earth, Wind and Fire - Journey. Not me. Look at these results. These results reflect our revenue diversification, which makes possible strong performance despite uneven market conditions. We are, Merr-ill. We are, Merr-ill. Ad astra per aspera mother fuckers.

Merrill Lynch's Earnings Rose 31% in 2nd Quarter [Wall Street Journal]