The defense sector has had quite a run over the past 18 months. As people start to anticipate a war scenario, we're seeing a little froth in these stocks.

All this talk about a war with Iraq is adding a tremendous amount of volatility in all the markets. We see it in bonds, gold, oil. The uncertainty of what's going to happen is weighing on the markets.

I think people are just not going to respond to what the Fed does if it's only 25 basis points (a quarter point). In order to have any kind of impact he has to change people's actions, he has to change what people do.

People have been looking for reasons to buy. There's so much money around and that places the bias in the market on the upside.

Now that the baseline of demand has returned and (oil) prices returned to around $20 to $21 a barrel, the environment is such that there will be a return to exploration, and Schlumberger will be a big beneficiary.

I think the Fed is hanging its hopes on a couple of things. The bond price has dropped and yields have gone up and it is doing the job for them. . . the economy as a whole is slightly slower in the second quarter than it was in the first. There's hope that it will tail off to a more sustainable rate.