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Lehman Brothers, believing that the Australian dollar has bottomed out, is recommending an fx options strategy to take advantage of Aussie upside against the mighty greenback. Ron Leven, currency strategist in Tokyo, said the Aussie dollar is forming a base around USD0.50 and has the potential to reach USD0.53 in the near future. Leven suggests buying a three-month at-the-money Aussie dollar call with a knock-out placed at USD0.49 and selling a three-month Aussie dollar call struck at USD0.53, at an approximate cost of 70 bps. On Wednesday, the Aussie stood at USD0.5027.

Hedge Funds of Australia, an asset management firm based in Sydney, is planning to launch an on-shore hedge fund that will make extensive use of derivatives. Spencer Young, managing director, said the firm is in the planning stages and looking for a start date in the next 12 to 18 months. Young declined to comment on a specific strategy for the fund, citing stiff competition in the Aussie market, but noted he's looking to hire three to four asset managers.

Five-year protection on Eastman Kodak widened by about 10 basis points to 95 basis points (mid-market) last week after the company announced its first-quarter results on Tuesday. The photographic supplies and equipment company reported that its first quarter profits fell to USD150 million, a decrease of 48% from the previous year's first quarter.

Santander Central Hispano Asset Management has written a roughly EUR300 million (USD264.74 million) exotic put on shares of Banco Santander Central Hispano. The sale was designed to provide equity exposure in a EUR300 million guaranteed note the asset manager launched last week.

Korean security house Good Morning Securities is looking to hire two marketers/structurers for fixed-income derivative products as part of a push into the over-the-counter derivatives market and already has hired two traders to guide the process. J.W. Ahn, Korean won interest-rate derivatives trader at Deutsche Bank in Seoul, is taking the new position of head of new products trading, responsible for fx and interest-rate products. Mino Rhee, Korean equity derivatives trader at Commerz Securities in Tokyo, will head up equity derivatives trading, relative value and arbitrage.

American Express Asset Management plans to rotate $200 million of MBS into corporates because it thinks the economy is not as weak as widely supposed, especially with consumer demand bolstering sagging corporate profits, says Jim Snyder, portfolio manager with the Minneapolis, Minn.-based firm.

Source: Thomson Financial/Securities Data. For more information, call Rich Peterson at (973) 645-9701.

HighMark Capital Management is preparing to sell longer-term corporates and buy shorter agencies and ABS for 20% of its portfolio, which would be an $800 million move. The move will shorten duration by 15%, in two progressive stages, aligning the duration to the benchmark by the summer, and shortening it by 5% by year-end, in anticipation of a corporate bond sell-off likely to take place in the second half of the year, after interest rates bottom out this summer, says Richard Grahman portfolio manager at the San Francisco-based investment firm.

A 37-year-old San Francisco man may want to consider a career change after he was arrested for a string of bank robberies. According to Reuters, police used the resume he'd accidentally left at the scene of the crime to track him down. "Here's the story: You shouldn't drink or take drugs and drive," San Francisco police Lt. Bruce Marovich told the Chronicle. "You shouldn't rob banks and do the same thing. That's what he was doing."

Cumberland Advisors, a Vineland, N.J.-based firm is expecting a long term increase in CPI, and has been moving out of seven- to 20-year traditional treasuries and into inflation-indexed treasuries. David Kotok, Cumberland's cio, says he had been effecting a gradual shift until the Federal Reserve's surprise rate cut in January. Since then, he has been moving into TIPS to the greatest extent that he can, within the objectives that his clients have established; the firm manages several hundred accounts, largely for high net worth individuals.

David Albrycht, portfolio manager at Phoenix Investment Partners in Hartford, Conn., has sold some $20 million each in corporate and emerging market paper over the last month, in favor of slightly higher credit quality. Concerns about rising default rates in the high-yield market have prompted him to sell positions in companies such as Nextel Communications and Anthony Crane Rentals he says. Albrycht, who runs three fixed-income funds totaling about $500 million, has used the cash to rotate into positions that include Century Aluminum 113Ž4 % '08 (Ba3/BB-) and Dresser Inc. 9 3/8% '11 (B2/B).

360 Networks is being shuffled in the market, trading in the 55-60 range. Dealers say $30-40 million traded last week and that levels are down slightly from the 65-68 range the previous week. "They're just feeling the effects of all the telecom paper," said a dealer of the heavy trading volume. Another pointed to a recent downgrade of the bank debt to Caa3 from B2. The Vancouver, British Columbia-based company offers broadband network and services. Calls to a spokesman were not returned by press time.