Speculation on a Really Slow News Day

Labor Day is over.  Financial market participants are back from vacation.  The action is supposed to heat up, with exciting news and announcements ending the summer market doldrums.  Instead we get groundbreaking new stories such as this one from the Associated Press entitled "Merrill slides against mostly rising market."  Don't bother clicking on the link, I'll summarize:  Merrill's stock is down today while other brokerage stocks are higher.  The reporter called Merrill for a comment and no spokesman was available.  Had a spokesman been available they may have had the following to say: "Um, hmmm, that's odd.  Hold please...We just fired our fundamental analyst last week for not forecasting that we'd lose $40 billion dollars this year so no comment from him, but our technical analyst says our stock was clearly overbought last week."  

If the Merrill news was not hard enough news for you, there was yet another report on KDP's continued interest in taking a stake in Lehman Brothers.  The new version of the story is that KDP is rounding up a consortium of Korean Banks to possibly buy Lehman.  The Korean market liked that news so much that it promptly plummeted 4% yesterday.  No sources were cited in the story, which firmly puts it in the category of "rampant speculation."  At this point, I wouldn't be surprised at all if insiders at Lehman were donning their best fake Korean accents and calling up reporters to keep the story alive.  Drastic measures are necessary to keep the market focused on the idea that somebody wants to buy something that Lehman has to sell.  Otherwise, Lehman has to come up with a new hare-brained scheme involving good banks and bad banks and crazy spin-off recaps with financing included to report in conjunction with the large losses it will surely report this quarter.  The good news is, the truth will be revealed in a few short weeks when Lehman reports earnings.  Speculation in the meantime is sure to continue.