Sunday, September 14, 2008
Unfortunately for all at Lehman Brothers, it looks like the King's English Defence has failed to avoid checkmate. Latest reports suggest that the street is preparing for a Lehman bankruptcy as Team 1250 has said "no mas."
As always in these cases, Macro Man now feels badly under-exposed to the short risk trade, having put on some EM FX option structures last week when he felt badly overexposed to Team 1250's machinations.
With much of Asia out on holiday on Monday, liquidity will be just fantastic overnight. What's more than a little frightening is that Lehman may soon have company, if AIG's share price (which shed 30% on Friday and is overlaid with Lehman's on the chart below) is anything to go by.
Strap in, boys and girls: it looks like the roller-coaster ride is just getting started.