What's Driving AIG?

What's up with government owned AIG, Freddie Mac and Fannie Mae... Up 57 percent, 32 percent and 32 percent, respectively, on huge volume.

Some speculation that AIG is preparing a debt-equity swap with the U.S. government which would lighten AIG's interest expense.

Others note that a great bond auction helped FRE.

Financials also strong again. Big volume on Citi ahead of the rebalancing in the S&P 500, which will increase the weighting of Citi. Happens on the close (see my earlier note).

JP Morgan up 4 percent on strong volume-back where it was pre-Lehman bankruptcy! Closed at Sept 12 at $41.17, now at $41.90

REITs moving up midday as well. Two theories: 1) REITs are under-owned by many traders, being forced in by recent rally, 2) traders holding their noses and trying to look past the poor numbers that are still coming, and the "stabilization" story is not yet stale in the REIT game.

But "stabilization" is getting stale elsewhere. Look what happened to Boyd Gaming. Results below expectations for Nevada and Atlantic City (Borgata).

But the company said the magic words--that the big drops that happened last year are over, and business conditions continue to show "stabilization"

But the stock is down 3 percent! The stabilization argument isn't going as far it used to-and will not be terribly useful in the future.

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