Oh boy.. could the past week get any wilder? First, Lehman Brothers reportedly will be filing bankruptcy sometime in the next 12 hours due to failed talks between LEH and suitors. The Fed tried to broker a deal between LEH and Bank of America / Barclays, but talks fell through at the end due to the Fed not wanting to bank some of LEH’s toxic paper as was done with JPMorgan and the Bear Stearns mess.
Lehman Brothers, R.I.P.
On the flip side, Bank of America has offered to buy Merrill Lynch for $29 / share, or close to a 75% premium over Friday’s close. Talking heads are saying MER was the firewall holding up the rest of the financial system and with BAC’s purchase, the transaction has helped to offset some of the instability from the LEH mess. BAC’s on a takeover tear. First Countrywide and now Merrill. Anyone worried BAC may end up turning into another Citigroup?
Futures right now are pointing toward a 300 point lower open tomorrow. Asian markets are closed due to holiday (Autumn holiday?). Personally, my portfolio is split evenly: 6 calls and 6 puts. Hopefully my puts actually fall because I know sure as hell my calls are going downhill tomorrow!
Keep your battle gear by your bedside because tomorrow bulls and bears alike will fight the epic battle.
Well whatdya know? Seems like another one bites the dust. As of 17:30 today, the Treasury Department and the Fed are brokering a deal to have Lehman taken private by Sunday. Here’s the article from the Washington Post. At least it’s another shot in the arm. Let’s see how long this rally lasts? 4 hours perhaps?
Busy weekend this weekend, eh? First on the docket is the financial sector. Lehman this weekend had some sort of secret meeting with its board. Remember the last time a financial met secretly over the weekend (Hint: BSC!)? Over the weekend, LEH has officially removed their COO and CFO and may be in talks to sell the company. Blackstone I believe purchased a 30% stake or is looking to purchase a stake in the company. This morning, LEH posted it’s first ever loss coming in at a whopping $2.8 billion.
More news on the financial front involves AIG. Over the weekend, AIG CEO Sullivan was removed and replaced by a former Citigroup executive and current AIG chairman, Robert Willumstad. No clue about Willumstad, but apparently he may have ties to another former AIG CEO, Maurice Greenberg, whom I believe is currently under investigation by the SEC. In any event, I’m sure all three will prosper handsomely hah!
Finally, not only is medication cheap in Mexico, but so is gasoline. San Diego folks are actually traveling to Mexico just to fill their gas tanks. Scary stuff if you ask me.
Tiger Woods just made a clutch birdie on the 18th hole to force a playoff. This man is just a beast. Coming back from being out 2 months due to surgery to force a playoff for the win is just incredible. As a result, we have another 18 holes tomorrow. Updates to come including why LEH and AIG might be a buy and why crude should fall somewhat tomorrow.