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S&P Warns On Lehman, Rumors of a Merger Bubble Up

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We're sorry there's so much about Lehman today but that's the way the world is. Here are the two threads we're pulling on right now to see what unravels. One sounds bullish for Lehman and the other bearish.

Anthony Freed, who covers Lehman extensively on his blog, claims that Lehman is close to announcing a merger with another publicly traded company. The deal, which would be for the entire company, will be announced this week, according to Freed. CEO Dick Fuld will stay on during the transition. Cautionary note: While we have no reason to doubt Freed's credibility, we can't think of any reason to take him an an authority on this either. We have no idea whether there's anything to this story, and haven't heard anything about this other than Freed's report. Certainly, at Lehman's current market cap it must look attractive to some buyers.

Standard & Poor's has put Lehman's credit on negative watch due to today's free fall in the stock. This is the spiral that Lehman investors and executives feared. Fears over Lehman's ability to raise capital and borrow fuel stock declines which fuel ratings warnings which make raising capital and borrowing more difficult. Swoosh!