The action in Lehman Brothers is more evidence about how unsteady markets are these days. Shares of Lehman Brothers fell nearly 10 percent early this morning. The rumor spread that the bank would make an announcement this morning, and many assumed (or encouraged others to assume) that it was going to announce more write-downs. This sparked rumors that Lehman Brothers could see a Bear Stearns-style run on the bank, with customers and counterparties bailing out. Options traders started snapping up puts, and shortly afterward the shares plunged.
"Much like the bets in the options market that predicted Bear's demise (please refer to my prior posts that pointed these out before the institution's near collapse), traders are betting that Lehman may be facing the same situation soon, in the next 22 days," the Mock the Market blog explains. "Nearly every out of the money put has traded furiously today, with a particular emphasis on the ap 20's, which have changed hands nearly 10,000 times today with several hours remaining in the trading day."
Lehman spokeswoman called the rumors "totally unfounded" and even blamed short sellers for spreading rumors. The market seems to have bought this line, pushing the stock back from its lows. Some are skeptical, however, noting that Bear Stearns made similar noises even as it plunged toward bankruptcy. Companies love blaming shorts and claiming that they are pushing down stock with rumors, but there's seldom any hard evidence of this. The media allows companies to get away with these claims without ever demanding that they substantiate the claim. Lehman's no exception.
"There are a lot of rumors in the marketplace that are totally unfounded. We are suspicious that the rumors are being promulgated by short sellers of our stock that have an economic self interest," Kerrie Cohen, a spokeswoman for Lehman Brothers, said.
We know that the rumors weren't completely unfounded. Lehman did issue a press release today. Only it wasn't about losses. Instead Lehman announced that Mark Bourgeois had been hired as the new co-head of global institutional distribution. (That's an awesome banker name, by the way. Bourgeois.)
Posted by guest , Mar 27, 2008 1:28PM
the july 17.50-40 put spread traded about 10000 times
Posted by guest , Mar 27, 2008 1:30PM
its ridiculous, bear stearns could go swimming in lehman's liquidity pool
s75
Posted by guest , Mar 27, 2008 2:22PM
Bear and Lehman are like twins...the only difference is that Bear was ruled by Guidos and Leh,an is ruled by the Jews.
Either way their destinies will be similar!
Posted by guest , Mar 27, 2008 2:35PM
money where your mouth is?
Posted by guest , Mar 27, 2008 2:37PM
@2:22
Just shut up
Posted by guest , Mar 27, 2008 3:01PM
Bourgeois' first comment upon his appointment was, "let them eat cake."
Posted by guest , Mar 27, 2008 3:10PM
@2:22 - "Just Shut Up" very mature response when confronted with the truth.
Posted by guest , Mar 27, 2008 3:12PM
@2:22
makes sense. The jews are better with money than the guinneys. Lehman probably has anothe rmonth or so before they go insolvent too!
Posted by guest , Mar 27, 2008 3:20PM
pffft. amateur hour in here.
Posted by brianvan , Mar 27, 2008 4:03PM
Lehman Brothers to announce substantial losses tomorrow. That is, someone lost the scissors from the copy room on the 24th floor. RUN ON THE BANK!
Why would LEH announce more write-downs today? Middle of the week. Quarterly results just published nine days ago. Is everyone on Wall St. retarded all of a sudden?
Oh, wait, yeah they are. Same traders who went long on mortgages going short on LEH. Guess that tells me what to do! Muhahahahaha!
Posted by guest , Mar 27, 2008 4:11PM
"Same traders who went long on mortgages going short on LEH."
Say what?!
Its the same guys who went short mortgages that are going short LEH.
Hello? Mcfly?
Posted by guest , Mar 27, 2008 4:19PM
Bueller?
Posted by guest , Mar 27, 2008 4:19PM
pure poppycock
Posted by guest , Mar 27, 2008 4:20PM
swimming in the liquidity pool...yeah
Posted by guest , Mar 27, 2008 4:23PM
Alan Schwartz....what a Guido name.
Posted by guest , Mar 27, 2008 4:24PM
Do the brokers have to publish weekly balance sheets to make people happy?
Posted by guest , Mar 27, 2008 5:48PM
Finally. Now that the crisis is a financial makets crisis the industry decides to feed on their own instead of showing restraint. Soon these greedy pigs will understand that there will no longer be a market if they kill off everybody.
NONE of this is new. Manipulation like this has been around for decades. All that has changed is that the issuer manipulated is no longer some small cap security but a major US bank. Suddenly regulators and Congress care. Suddenly this is a crisis where before it was just about a few small companies we were willing to sacrifice.
Posted by guest , Mar 27, 2008 9:57PM
I'm not sure what @5:48 pm is trying to say, but I think he's trying to comment on the Bear Stearns/JP Morgan mess.
Posted by guest , Mar 28, 2008 8:14AM
that made no sense at all. just let it go.