The parade of constructive commentary earlier this week from Wall Street CEO's, including Morgan Stanley's John Mack and Lloyd Blankfein of Goldman Sachs, is being somewhat discredited by sober commentary from Lehman's CFO Erin Callan, who seems to be targeting her comments directly at her Wall Street rivals:
``March was a very, very tough month,'' Callan, 42, said in a Bloomberg television interview in New York today. ``I don't see what the real catalyst for change would be over the next several months. We've got to look out to 2009 for where we're going to change.''.....adding ``Others may be more optimistic about how soon it will come to an end,'' Callan said. ``I do think there is reason for some optimism about the industry and the markets as a whole for 2009.''Bloomberg
Callan can't beat 'em, so she might as well drag them into this morass. Maybe she can blunt Goldman's advantage in its cost of capital, ie. their stock price. Callan is fighting back in the media, as opposed to dirty rumor mongering, which is favored by some of Callan's peers. How long until Meredith Whitney or Dick Bove enter the fray? They have 90 minutes left to throw a haymaker or sucker punch.
Lehman CFO Says Market Recovery May Take Until 2009 Bloomberg ----------------------------------------------------------------------------------------------------------------------
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Comments:
In Sparky’s opinion, Lehman’s CFO Erin Callan is not only brilliant, but also desirably analytical. Her ability to see the sub-surface connections between events, and to see how these events tie into the big picture, are truly admirable.
It was probably for these reasons that she’s calling a spade a spade; unlike many of her overly-optimistic peers.
But that all being said, Sparky is still of the opinion that the largest US-based prime brokers (BAC, C, GS, JPM, MER, MS, and WB) are shorting LEH shares into the ground; and for weeks now, the Tape has been confirming this daily.
Specifically, if you watch LEH shares trade on Level II you’ll notice that virtually all sells, even big-block trades, are Bid hits. Moreover, even though most online quoting services are now referring to 25 million shares days as “low” volume, this usually based on 10-day averages; it wasn’t too long ago (February 29th to be exact) when the 5-year daily average volume was only 6.1 million shares!
Now, all of a sudden, we’re seeing 5 or 6 million shares trade with the first hour of each session! Sadly, in Sparky’s humble opinion this is just another tell-tale sign of heavy shorting.
It appears to Sparky that the hedge funds, as well as all of LEH’s slippery aforementioned peers, made so much money, so fast, and so easily during the recent Bear Stearns bear raid that they are now swarming around Lehman Bros like a school of starving sharks that has just tasted blood for the first time in a long time.
Good luck Lehman Bros; but Sparky’s afraid you’re already toast - it’s in the stats.
Wishing you all a great weekend ~
Sparky
Posted by on 04/11/2008 at 04:42 PM
Well, in my experience, candor like that is eventually rewarded by the market.
In terms of an increased valuation.
Perhaps I am naive, but I think they will make it. Although multiple expansion is probably the last thing on Erin’s mind right now.
Dick Fuld made a great hire/promotion in her, however. Very impressive in her public appearances, but the eventually the numbers will have to do the talking.
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