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European Contagion

August 5, 2011 – 4:06 pm

It was the jobs number that gave us an early morning pop up in stock prices but that began to fade almost immediately. No one can predict what will happen by the close of the day. The July jobs number came in at 117,000 new jobs and June’s dismal number of 18,000 was revised up to about 50,000. Both numbers were better than expected.

The problem is more about Europe than what is happening in the U.S. Their lack of leadership in dealing with their financial mess is a big problem. Of course the U.S. has its own problems but Europe is unique as a group of very different countries which are dealing with one Currency. It makes for an unusual situation.

Fear is very high so a short term rally is probable. However, it will be what happens in Europe and what our economic statistics will tell us in the month of August that will guide us going forward.

August is generally the worst month of the year and it is repeating that pattern as it did last summer. Last year the market bottomed in August caused then by Greece. This year it was Greece again and now Italy and Spain. The Europeans need to get their act together. Their sickness could affect our economy. Our consumers are already worried enough about the economy; they don’t need another issue to cause stress.

Good Trading

Steve Peasley

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