Wild, Wild West on Wall Street

There may be no need to put restrictions on shorts, the enormous rally in the last 2 days should have wiped them out! Markets in Asia, Australia & Europe rose dramatically, typically 5+% following the big rally in NY yesterday. Today Dow roared up 381 (continuing strong), advancers ahead of decliners 5-1 (could have been a little better) and NAZ was up 63. This is also option expiration day, adding to the wild quality. Financials led the charge, S&P 500 FINANCIALS INDEX was up 21 to 294 (although off its high of 307 in this crazy stock market). Marginal financial/banks are flying. For example at midday yesterday Wachovia (WB) was 10, now it's 19. That's what I call spinning on a dime!

No surprise this an outstanding day. Last night Asian/Australian markets followed through on the big gains in US markets. Those markets rose 3-6% with many banks bid up 6-10% or more. Of course, these gains were coming off heavily hammered markets selling at 2-3 (if not more) year lows. Dow futures were trading up a couple hundred in anticipation of another strong market on Fri.

Seat of the pants and gut instincts have taken control of the markets. There is a lot to absorb here. Last night Congress presented a united front backing a bold action plan. Now they will have to pass legislation which will require $B & $B. One estimate puts the cost to tax payers over $500B which would compete with the cost for the war in Iraq.


My favorite MLP story:

Constellation Energy Partners (CEP) is a small MLP I've been following for a year which has been hammered down below 10 (but rebounded above 12 today) even though their distribution was increased to the present level of $2.25. That's right $2.25. Their senior partner is Constellation Energy (CEG), a big energy company, which has gone over big bumps (very volatile) this year especially in recent weeks. Warren Buffett just announced that CEG will be merged into his company Mid America Corp.

CEP reaffirmed their intention to pay the declared distribution. That yield is eye popping. While there is a lot of uncertainty, having Warren Buffett in the background seems to provide a certain level of comfort for an investor. Being an MLP means less than 20% of the distribution should be taxable. Also, they will send out a K-1 tax form on March 15 using terms like depletion & amortization plus profits for various states where they do business. The brave who are looking for a very high yield might want to check out CEP to determine if it's a good investment

Constellation Energy Partners Reaffirms Third Quarter Distribution Guidance

•Buffett in deal to buy Constellation Energy Group at a discount

Oil is back over 100, even if it's being overlooked. The Alerian MLP Index is up 15 to 236, has to be its biggest daily gain ever.

CLV08.NYM

Crude Oil Oct 08

__101.29 __

3.41 (3.48%)

The US economy still needs a lot of help. This AM on Bloomberg TV, a housing executive said the slump in housing will last into next year. Autos should track that performance. After the financial mess, the fundamental problem is housing (maybe autos should be added) which still has to be addressed!

Earlier this week, I pointed out that it was too early to get Chicken Little's phone number. I was right. But over optimism & enthusiasm may have gotten the better of many today. Try to remain cool while enjoying the gains.