Hot Potato

by Larry Levin

Today started off with light volume and no trades. The choppy up and down action reminded me traders playing "hot potato," or was it "catch the hand grenade?" Nobody wanted to holding that sucker when it off, so buyers and sellers kept flipping it like a now defunct "real estate mogul" in California . Alas, it was finally caught at 12:10pm CST by Lehman Bothers - BOOM!

Lehman Brothers shares fell as much as 14% when that grenade popped its cork, which brought it to its lowest level since the meltdown of Bear Stearns. There is concern up and down Wall Street that the smallest of the surviving major brokerages will need to raise more capital...again. Lehman’s spokeswoman Kerrie Cohen declined to comment on a report in The Wall Street Journal that Lehman was considering raising billions of dollars in fresh capital.

Bernanke gave a speech about the economy early this morning but it didn't affect the market. It did, however, register with the currency markets because Helicopter-Ben mentioned the terrible plight of the US dollar so often, currency traders took it as a sign that is helicopter was running out of fuel: no more rate cuts in the offing.

"It had a big impact on the currencies markets, because he [Bernanke] spoke more about the dollar than in all of his previous speeches combined. It's enough to acknowledge that the weakness in the dollar is part of inflation, he doesn't want to tell the American people that he's why they are paying higher food and energy prices," said Peter Boockvar, equity strategist at Miller Tabak, regarding Bernanke and the central bank's monetary policies.

And finally, General Motors was full of news today. GM announced the closure of four truck-making plants and a strong shift in its production plans away from its high margin trucks toward low margin cars. GM's closing out a particularly bruising year, with a loss of market share and steady decline in sales, including today's announcement of a 28% sales drop in May.

Real Time Trading Signals*for

Trade Date: 6/3/08

E-Mini S&P Trades*
(before fees and commissions):

1) Engf sell @ 9:40am at 1387.75 = -1.50*2

2) OTF buy @ 11:20am at 1390.50 = -2*2

3) VA sell @ 2:30pm at 1382.00 = b/e (1 lot)

4) Algorithm trades (5)...combined total...-11.50

E-Mini Russell Trades*
(before fees and commissions):


1) None of the ER trades were filled today.



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