It is being reported in multiple sources (three different links there), that John Lackey is taking a physical for the Red Sox and is close to signing a deal in the 5 year $82.5M range (similar to AJ Burnett's). Obviously such a deal strengthens the Red Sox rotation, though not to the point that it is superior to the Yankees (frankly, I didn't think landing Halladay would give them that). It is, however, a definite improvement if not outright cause for concern. A Lackey signing almost certainly means Bay and the Sox will not be reunited next season.
CNNSI.com is reporting that the Angels have begun discussions with Hideki Matsui. Meanwhile, Damon has been reported as saying that the Yankees have yet to even make him an offer. Granted, Boras has told the Yanks not to bother if it isn't at least 3 year, $39M ($13M per), and so the Yankees have apparently not bothered. The only problem this raises is that Matsui is the Yanks back-up plan if Damon goes elsewhere. If Matsui signs, it's Damon or bust (though I still don't think they'll upgrade their offer beyond Abreu money).
Lastly, Fox Sports is reporting that the Jays and Phillies may be close on a three team deal that sends Halladay to Philly and Cliff Lee somewhere else. It is not clear who that third team might be, but the article has theories (Angels and Mariners). Frankly, I hope it's us, because in such a scenario we may only need to lose Montero and not much else for a top-tier pitcher, that, however, may be a long shot. Apparently the speculation of a three-team deal is being driven by Halladay's appearance in Philly, since there is absolutely no reason to go there unless you're taking a physical (ouch).