Early Look: Geithner Says 'No More Lehmans'

The markets are choppy in early trading, after opening on a higher note. Early this morning Europe's markets were trading higher which help improve the tone of U.S. markets at the open. But after a brief bounce to SPX 1180 after the open, the markets have slipped back into negative territory. That said, it is still early in the session.

The improved tone in Europe today flies in the face of the downgrades of some of France's big financial institutions, but it is likely because that was already priced into stocks at this point.

The other news item that helped the markets bounce were comments from Secretary Geithner at a conference in NY where he said that there would be "no more Lehmans" in Europe, and that officials over there were committed to preventing a big institution from failing. Despite his comments, the markets want to see more concrete evidence in the form of a bigger EFSF of some other solution before they take Geithners words to heart.

The euro is bouncing at the expense of the dollar. But this isn't helping most commodities. Oil prices are lower near $89, and gold prices have pulled back to $1281.

In economic news, August retail sales were flat, and up 0.1% ex-autos. Both figures are below consensus estimates.

The 10-year yield is still struggling below the 2.00% level; and the VIX is slightly higher in early trading near the 37.25 level.

Trading comment: Still no change to my recent trading mantra that I prefer staying defensive at this juncture. We used yesterday's bounce to add a little bit to our index hedges. We are still net long in the equity portion of our balanced accounts, but have been decreasing our exposure at the margin.

long SH