Time 8:36

Stocks in the News:


Derivatives traders signal bank woes likely to worsen - Bloomberg.com
Bloomberg.com reports interest-rate derivatives traders are betting banks' difficulties obtaining cash to fund holdings and shore up balance sheets will worsen. The difference, or spread, between the three-month dollar London interbank offered rate, or Libor, and the overnight index swap rate, traded forward three months, is greater than similar spreads expiring this month... Derivatives trades are showing that while global markets have rebounded since March, the worst may not be over for banks after racking up $387 bln of losses and writedowns from mortgage-related securities since the start of last year.

LEH:

LEH Lehman Brothers puts, default swaps show investors bet on further drop - Bloomberg.com (30.61 ) -Update-
Bloomberg.com reports investors in the options and derivatives markets are betting Lehman Brothers has further to fall amid concern the fourth-largest U.S. securities firm may need a capital injection. Options traders increased their bearish positions to a two-month high yesterday, after analysts said Lehman may report its first quarterly loss since going public in 1994. The cost of protecting debt sold by Lehman from default rose to 240 basis points from 150 basis points in the credit-default swaps market during the past week.


LEH Lehman bought back shares on 6/3 - WSJ (30.61 ) -Update-
The Wall Street Journal reports a rumor that Lehman Bros. (LEH) was buying back shares yesterday turned out to be true, people familiar with the situation said. Such buying helped the stock pare its losses Tuesday. Briefing.com note: See 05:29 and 05:39 comments for further details.


LEH Lehman hedges lose $500 mln to $700 mln - Financial Times (30.61 )
Financial Times reports Lehman Bros. (LEH) lost $500 mln - $700 mln on certain hedging positions in the second quarter, contributing to what is expected to be a larger-than-anticipated loss that may lead the bank to raise more capital by selling a stake to an outside investor. People close to the matter said Lehman had opened talks with potential investors including asset managers and Asian banks. Lehman has not made a decision on whether to raise more capital, people familiar with the matter said. If it does, the bank is more likely to sell a strategic stake rather than issue common shares. However, all options remain under consideration. Among those interested in providing capital to Lehman is CV Starr, the investment vehicle of Hank Greenberg, former chairman and chief executive officer of AIG (AIG), according to people familiar with the matter. Lehman has also reached out to other US financial institutions, including institutional investors and several Chinese entities. The most likely Chinese investor would be the State Administration of Foreign Exchange. Executives at private equity firms say they have not been approached by Lehman Brothers. The founder of one major firm noted that if his firm took a major stake in Lehman "we'd be penalized. Other investment banks wouldn't show you deals and give you competitive financing."