Markets little changed on a very confusing day

Dow is down only 11, advancers are slightly ahead of decliners & NAZ is essentially even. NYSE volume was low at 1.1B. The 4 biggies in trouble, AIG, MER, WM & LEH, traded 700MM in total volume. S&P 500 FINANCIALS INDEX is soggy, down 3 to 282 as financials try to make sense out of the financial mess out there. Merrill Lynch (MER) & American International Group (AIG), are off sharply again to new multi year lows (MER is at a 12 year low). Washington Mutual (WM) was even at 2.80. AIG is under pressure to announce their turnaround plan prior to Sep 25. With their stock heading for zero, that announcement is desperately needed.

•AIG May Announce Turnaround Plan Before Sept. 25 Deadline as Shares Slump

In this unusually confusing world of big finance, here's more thoughts about LEH & its future:

•Bank of America Leads Talks for Lehman as Paulson Opposes Providing Funds
•Greenspan Says Sale of Lehman Should Be Resolved Without Government Help
•Paulson, Fed Stand Against Lehman Funding Signals Attempt to Draw the Line
•Lehman Is No Bear Stearns as Money Markets Show Little Panic Amid Meltdown

It's amazing all the confusion surrounding LEH & how relatively well the markets are taking it.

Oil was about even (although it dropped one penny below 100 during the day) as IKE approaches the Texas coast. This is quite a change form a couple of months ago when this threat could be worth at least 5 points. The Alerian MLP index is having a relief rally. After being greatly oversold, it's up 5 points to 250. Many of the big name players are up 1+ from oversold conditions. However, this is the region it traded at 3 years ago.

I just returned from a meeting with top financials execs. They were guessing about what will happen to LEH, down to 3½, probably this weekend. Their stock is probably history & preferred may also lose out. The problem is making the bond holders whole. Hopefully the gov can stay on the sidelines. A takeover or bailout should bring a stock market relief rally, but bigger problems with financials are not going away soon. Just ask stockholders of AIG, MER & WM.

Fannie Mae & Freddie Mac stories are not over. They still have trillions in debts which have to be be made whole. That's where gov help may be needed, costing taxpayers billions.