Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Freaky Friday Potpourri: Russian Roulette for the Financial Set


Lehman is shopping itself around.


With yesterday's heavy heart and crowded head behind us, traders descend on the Street for the final fifth of our freaky week.

And what a week it's been.

What started with a Hail Mary from Hank is running out the clock with four bucks and a cloud of dust.

The crowd is on their feet, for they know that if all the players leave the field at the same time, none of us will win.

In times like these, the best offense is a good defense.

Indeed, if Jerry Garcia was calling this game, it would sound a little like this.

We used to play for silver, now we play for life;
And ones for sport and ones for blood at the point of a knife.
And now the die is shaken, now the die must fall.
There ain't a winner in the game, he don't go home with all.
Not with all.

Forth Down, Hours to Go…

The overnight news in Lehman (LEH) is, well, all over the place.

CNBC is reporting that:

  • Bank America (BAC), HSBC (HBC) and Barclay's (BCS) are the most serious suitors.

  • As of last night, the Treasury and Federal Reserve will not be providing financial support (although they may offer some "leeway" on credit terms).

  • A deal is very much in flux and the potential exists for a group of buyers to purchase pieces of of Lehman.

The Washington Post reports that the Fed and Treasury are actively assisting Lehman sell itself with a deal hopeful by Sunday. They prefer a deal that wouldn't include public money, the paper said, and touched on the notion of a garage sale as well.

Not to be left out, the New York Post is reporting that Washington Mutual (WM) is seeking a buyer and was also engaged in talks with potential suitors yesterday, but it's unclear whether a deal would be reached.

And finally, The Wall Street Journal is highlighting that AIG (AIG) needs to act fast--something we've been talking about on Minyanville--and sell assets to avoid a ratings downgrade that would cause it to post an additional $10 billion in additional collateral.

In short, it promises to be another wild weekend where mindshare will again be split between the pigskin and the portfolio.

Is nothing sacred anymore?

The Two-Sided Sword

That's the the other side of socialization, right? Once it starts, it's hard to stop despite the laws of diminishing returns.

Why wouldn't Bank America (BAC) want an implicit put from the government?

If I just plunked down a pretty penny for Countrywide-only to see JPMorgan (JPM) get Bear Stearns backstopped by the Beltway-you can bet I would want the same consideration.

And it doesn't stop there.

If you're a struggling auto or airline executive, you're likely eyeing Washington right about now.

And if you're Washington, you're trying to stop the popular perception parade. That's easier said than done, particularly in the midst of a credit crisis tied together with a complex derivative machination.

Proving a point in this environment would indeed have profound consequences.

Adding spice to the mix-but not to be forgotten-is next week's FOMC meeting.

The Fed wants to lower rates-I put the odds much higher than the 15% chance Fed Fund Futures are currently indicating-and the early action in the dollar (-80 bips) supports that view.

My sense is that they've got some wiggle room given the 25% commodity pullback since July (as measured by the CRB). The trick will be doing it in a manner that doesn't (further) upset foreign holders of dollar-denominated assets.

In case you haven't noticed, the world isn't thrilled with the single biggest U.S. export this year: contagion.

Keep your head up, your risk tight and thoughts positive as we find our way to an easier day.

Random Thoughts:

  • Who benefits in tapes like this? Disciplined traders-the volatility offers great intraday opportunities and the option of going home light and tight.

  • Nobody loves risk more than I do but there's a time for everything and this isn't the time to be the Greatest American Hero.

  • Campbell Soup (CPB) was up almost 4% yesterday on the back of earnings. We used this soup as a proxy for consumer non-durable margins and these names continue to chug towards 52-week highs.

  • Apple (AAPL)? The non-participation to the upside yesterday was notable, particularly given the relative strength in Google (GOOG), Research in Motion (RIMM) and Baidu (BIDU).

  • The most interesting half hour of reality television is 3:30-4:00 EST, when stock buybacks stop and redemption songs playing loudly in the distance.

  • Crude $100 is big through a trading lens and could be played for a bounce. Through a secular deflation lens, keep in mind that crude is still up 100% since the beginning of 2006.

  • I'm allowing for a Snapper--potentially to S&P 1260?--but my best guess is to fade (read: sell) equity rallies until the credit picture improves.

Answers I Really Wanna Know…

The Important Stuff

Yesterday I fielded e-mails all day from Minyans around the world and I must again express my gratitude. Our community is awesome.

I will also take this opportunity to remind ye faithful that our Annual Festivus to benefit The Ruby Peck Foundation for Children's Education will be on Thursday, December 4th in NYC. Last year, we had upwards of 350 Minyans gather for hugs and handshakes while chowing down and cutting a rug to the Dead, Stones and Beatles. We have the same line-up this year, with a lil' Petty thrown in for good measure.

If you're unable to attend-or even if you are-and wanna do a solid for my grandpa in the name of giving back, please feel free. A little love goes a long way.

Thank you ever so much (as RP would say).


< Previous
  • 1
Next >
No positions in stocks mentioned.
Featured Videos