Market Thoughts

• The market is only down about 300 points at just before 9:00 pst, and it's off its lows. I was expecting a bigger blood bath. I would not have been surprised with a much larger sell-off.
• AIG is off more than 70% and is trading below $4 per share. This is approaching bankruptcy levels. If the smart firms, like Lehman and Merrill, could not avoid bankruptcy or selling themselves, I can't see AIG, without the brain power of other Wall Street firms, surviving.
• The ten-year Treasury is below 3.50%. This is going to help housing, especially since Freddie's and Fannie's problems seem to have been solved.
• Oil is off about 4% to under $97 a barrell. This not only helps consmers, if price reductions stick, but will ease inflation pressure and allow the Fed flexibility in cutting interest rates.
• Speaking of the Fed, it was not expected to cut rates this week, but the market is now pricing in a 33% chance of a rate cut.