FOMC member Kohn speaks this morning and the idea that further rate cuts are back on the table brings the "well, everything will be OK now" talk to the markets. It is the inexperienced people who will view this an "all clear" and jump on board and buy anything that moves. Watch the action today very carefully. When you see wild swings in the market, like we continue to see almost daily, it shows that there is continued selling in large amounts by the larger institutions.

Wells Fargo (WFC) said overnight that they will be taking a loss of $1.4 Billion on mortgage / sub prime issues. And more importantly they announced that they are reducing their lending going forward. Recall that last month we spoke of the problem of banks reducing their lending, it adds to the housing problem because the number of qualified buyers will keep decreasing, and this further increases the housing sector deterioration.

Durable goods orders came in this morning and they were almost 1% lower than what was expected. Another sign of spending reductions. While the pre market ‘pop’ looks nice and makes people ‘feel good’, watch to see how today plays out. We will be watching for continued signs that the institutions are cashing out.