Financials Lower Despite Lehman's Attempts To Shore Up Its Balance Sheet

The market is getting a small bounce in early trading, but the gains look paltry compared to yesterday's selloff. The financials are one of the few groups that are lower this morning, despite some announcement's by Lehman Bros. (LEH) that it is taking bold steps to strengthen its balance sheet. (LEH was down an eye-popping -45% yesterday)

The brokerage firm posted a $3.9 billion loss for the third quarter, and announced several initiatives: its cutting the dividend to $0.05 from $0.68; it plans to sell a 55% stake in its investment management business (maybe $3 billion); it will spin off its commercial real estate assets into a new company; and it is in talks to sell $4 billion of its UK residential mortgage portfolio.

Hopefully, these initiatives will raise enough capital to let the firm live another day. The action in the stock yesterday makes you think that there are many investors out there who aren't so sure, even as the Fed led us to believe that after Bear Stearns it would not let another big firm fail.

Fedex (FDX) is getting a nice bounce after guiding its earnings higher due to increased savings from the drop in fuel prices. ImClone (IMCL) said the $60 offer from Bristol-Myers (BMY) is inadequate. And semis are higher after Texas Instruments (TXN) tightened its guidance for the upcoming quarter.

Oil is higher this morning, after OPEC said it would stop producing above its quota (then why even have a quota?!?), which will mark an output cut of about 500,000 barrels per day. Oil bounced to $104, but still can't make much headway. The energy stocks are bouncing after yesterday's drubbing.

The volatility index (VIX) spiked +12.5% yesterday, but is lower this morning. The 10-year yield is hovering around 3.60%.