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Two Ways To Play: O Lehman Brothers, Where Art Thou?


Strengthen your portfolio in good times and bad.

World Growth Slows

Bloomberg reports the Organization for Economic Cooperation and Development (OECD) cut its forecast for global growth and warned central banks around the world against cutting interest rates as inflation accelerates. Last December the OECD said the world economy would rebound to 2.4% growth from 2.3%. Now, the organization says global growth will average just 1.8% this year and slow to 1.7% in 2009, signaling the weakest pace since 2002. Further, the group is predicting the strongest inflation since 2001 due to surging food and energy costs and recommends that the Federal Reserve leave interest rates unchanged at 2%. For context, read Professor Lance Lewis' Fed Talks Tough On Dollar.

From the Bull Pen: Bulls hear "stagflation" and see upside plays in the gold ETF (GLD); sell-stops can be set below the 200 DMA ($83).

From the Bear Cave: Bears might see a downside play in Best Buy (BBY); buy-stops can be set above recent highs near $47.

Concerns on Lehman

A lot of speculation on Lehman Brothers (LEH) this morning. According to the Wall Street Journal, the firm is considering putting part, or all, of itself up for sale to another Wall Street firm or overseas investors, including companies in South Korea. Yesterday it was confirmed that Lehman was reported to be buying back its shares even while its stock price has tumbled nearly 20% in the last three sessions. Further, a report in Bloomberg showed options traders increased their bearish bets on the stock to a two-month high. Lehman is expected to report its biggest quarterly loss in history during the week of June 16. Read Todd's Lehman Brothers: Rumor or Reality?

From the Bull Pen: Bulls like Visa (V) for a financial play. Professor Sean Udall said the stock could easily reach par in the intermediate term. Near-term sell-stops can be set below $85.

From the Bear Cave: The ultrashort financials (SKF) remain an option. It is an inverse ETF that corresponds to twice the performance of the DJ financial index. Bears can also press the downside in the financial ETF (XLF); buy-stops can be set above recent highs near $25.

For more ideas in real time throughout the trading day, check out Minyanville's Buzz & Banter.

Quick Check Around the World

Asian trading closed skewed red with the Hang Seng -1.04%, Nikkei +1.59%, Sensex -2.81%, Taiwan +0.56% and Shanghai -1.93%.

A quick check of Europe finds the CAC -2.02%, DAX -1.35%, FTSE -1.69%

As of 8:40 AM EST, S&P futures are trading -4.40 points to 1374, and Nasdaq futures are down -8.25 points to 1990.

A Look At Commodities

Commodities are mostly lower. Gold is higher +0.50 to 882.10. Crude oil is lower -0.65 to 123.68. Silver is down -0.075 to 16.760, and copper is lower -0.40 to 358.20.

The dollar index is up +0.091 to 73.327.

On the Radar


8:15 ADP Employment –30 K cons
8:30 Productivity-Rev. 2.5% cons
10:00 ISM Services 51.0 cons
10:30 Crude Inventories –8883 K cons

Click here for this week's full trading radar.

Good luck!
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