Freddie Mac problems move markets

After all is said & done, stocks ended up a little. Dow is up 40, advancers were only slightly ahead of decliners & NAZ rose 28 helped by Cisco, up 1.28, after last night's earnings. Volume continues light, at 1.2B on the NYSE. S&P 500 FINANCIALS INDEX, after an AM sell-off taking it down from the interim high yesterday of 302 to a low of 295, rallied back to 299 down 3, not too bad.

Oil closed down on routine news:

CLU08.NYM

...... Crude Oil Sep 08

.... 118.46

..... 0.71 (0.60%)

After an early morning 3 point rally, the Alerian MLP index held in the 261s, officially closing at 261.65 up 3.02. Not too bad. REITs did not rally, just sold off.

Freddie Mac (FRE), down 1.55, dominated talk today. Everybody's trying to figure out how bad their situation is & when they will need more capital. They share many of the same problems with Fanne Mae (FNM), down 2, reporting earnings on Fri. They're getting clobbered by lower home prices sharply reducing equity behind their loans. Foreign investors who bought about $1½ trillion of FRE/FNM bonds are trying to cope the new situation, these bonds originally viewed as AAA are turning out to be junk rated. They know about the mortgage mess because they read about their local banks writing off $B on investments.

Tonight, another biggie financial, American International Group (AIG), largest insurance company, reports earnings & expectations are not pretty. The stock is the worst performing Dow stock this year, down 50%. They share similar financials headaches as the competition only their numbers are bigger & uglier.