Lehman's Problem: No Deal To Raise Capital

Not enough: that's the general verdict of the Street on the Lehman announcement. They pre-announced a loss of $5.92. They're selling a majority stake in its investment management division and spinning off commercial real estate assets into a separate public company. The good news: raising capital and selling investments is what the Street wants.

The problem: no actual deal to raise capital was announced, in fact Korea Development Bank made a point of noting that there was "a disagreement over conditions of a transaction;" in other words, they were far apart on price. Even if a deal was announced, it's not clear that enough capital can be raised.

    • Lehman In Talks To Sell Key Unit; Stock Rebounds

Financials are generally trading down, with Merrill, Citi, BofA down 2-3 percent. Europe down about 1 percent, but some of the European financials like AXA and UBS are trading up.


Despite the pessimism, we are likely oversold and could see an intraday bounce at any time.


1) Texas Instrumentsnarrowed its guidance, basically reassuring Wall Street that earnings and revenues were on track, good news considering some of the negative comments from cell phone and telecom equipment makers.

2) FedEx surprised everyone and raised guidance (but only for the first quarter) after the close yesterday. Falling fuel prices is a big help. Note that they left their full year guidance unchanged, due to the weak macroeconomic picture.


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