A bounce in oversold markets

Markets rebounded, largely on rumors flying around. Last night Asian markets sold off 3% or more (led by big losses at banks) following US markets. Oil futures were higher last night following gains in the US. Morgan Stanley (MS) was rumored to be combining with Wachovia (WB). Then they were trying to get a major investment from a Chinese bank which was denied (check on latest updates below). Today a trader said because shorts are hammering Morgan Stanley (down another 8% today), it may be forced to combine with a bank to remain alive. Confusion continues in full force as authorities have to make up the rules as they go along. Here are latest thoughts about Morgan Stanley along with a long term graph showing how far they've fallen in recent days & weeks:

•Morgan Stanley Said to Be in Talks to Sell Stake to China Investment Corp.


Morgan Stanley (MS)





Today Dow is up only 54 & dropping as I write, advancers over decliners less than 2-1 (rather quiet all considered) and NAZ is up 4 on worries the banking recession will bleed through to techs. S&P 500 FINANCIALS INDEX is 244, flattish & down 5 since I began writing. The Alerian MLP Index is even, drifting at 221, a 3 year low (matching the major indices at 3 year lows). Yesterday it had an 11 point drop aggravated by Jim Cramer comments. He said with $90 oil, MLPs were not good investments, naming some of the biggies I follow on the right. However, they do not sell oil & gas, just move it along their pipelines so they should not be affected greatly by swings in commodity prices.

Oil continues on a roll, just another confusing situation to keep track of:

CLV08.NYM

Crude Oil Oct 08

...100.28

... 3.12 (3.21%)

Reserve banks AROUND THE WORLD, this is not just a US problem, are going overboard adding reserves trying to prop up financial markets. Little noticed among all the confusion is the dollar after a very big short term rally is now weak in recent days. The Euro after sliding to about 1.38 is up to 1.44 in just a few days.

•U.S. Stocks Rise on Central Banks' Fund Injections, Short-Sale Crackdown
•Fed, ECB, Bank of Japan Lead Global Plan to Pump $247 Billion Into Markets

Macro economic news continues to come, but is getting overlooked. Jobless claims rose 10K to 455K in the aftermath of the hurricane.

• Jobless claims rise due to Hurricane Gustav- AP

As I'm writing, markets are selling off. The PM may see more selling helping to make for one of the market's worst weeks in some time!