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August 30, 2010 – 4:53 pm

This morning July consumer spending ticked up a little more than expected at .4% while personal income ticked down a little more than expected .2%. I don’t think you can read much into these numbers that we don’t already
know.

The week will be full of economic statistics as the last of July’s reports and the first of August’s reports begin to pile up. The most important will be July’s jobs report out on Friday with the experts calling for a loss of 100,000 jobs with a tick up to 9.6% in the unemployment rate.

Also, this morning we had merger and buy back activity that has been heating up the last few weeks. HP announced a $10 billion stock buyback, Intel is buying another company Infineon for $1.4 billion after buying McAfee for $7 billion a week ago and Genzyme tells Sanofi-Aventus that its bid of $69 is too low. Those were the top deals talked about this morning but there were others that were smaller.

As we end August and enter September the traders will be returning from summer vacations and that will give us a pick up in volume. Trading volume has fallen sharply. Will that increase in volume be up or down? When will
people get tired of the low yield on the safe Treasuries? When will safe give way to actually earning something in a more risky investment? Will that ever happen? Will any of the massive cash sitting on the sidelines move into the stock market? Fear is very high, can it get higher? Right now bonds are where the money is going, at some point that will end, then where will money go?

I wish I knew all the answers although one answer I do have is that stocks are very cheap and dividend yields are much higher than bond yields.

Good trading,
Steve Peasley

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