Financials: Sept. Bonds are currently up 1'03 at 136'10 and the 10 Yr. Note up 11 at 129'18. I continue to remain on the sidelines. Support is currently 135'01 (yesterday's low) and resistance 138'22 (yesterday's high). The market is now concerned about French banks and their exposure to sovereign debt from Portugal, Ireland, Italy, Greece and Spain (PIIGS). Personally I feel these markets are overdone to the upside (meaning rates are too low) in spite of Tuesday's FOMC language telling us that short term rates will remain low until at least the beginning of 2013.

Grains: Yesterday beans closed 29 cents higher, Corn 24 higher and Wheat 16 higher. Over night Beans were 3 higher, Corn about unchanged and Wheat 1 lower. We remain long call spreads in Corn. Here's a trade you might consider: Buy 1 March Corn 750 call/ sell 2 March Corn 850call for a credit of 2 cents or better. The logic being that Corn will not go above 950'0 and as long as you can stand and finance the market volatility and March Corn stays below 950'0 this should work.

Cattle: Yesterday Oct. Live Cattle closed 210 higher at 119.52 and Oct. Feeder Cattle 140 higher at 137.325. Over night these markets are moderately higher. I am a seller in Oct. LC at current levels.

Silver: Sept. Silver is currently 20 cents lower at 38.41. Treat as a trading market between 36.00 and 41.00. Dec. Gold is currently 6.00 lower at 1745.00. Yesterday Exchanges raised the margin required to hold futures contracts causing some liquidation. I am comfortable trading this market from both sides (long or short) between 1710.00 and 1810.00, preferring the short side on rallies.

S&P's: Sept. S&P's are currently13.00 higher at 1182.00. A somewhat positive Retail Sales Report showing an increase of 0.5% and a revision to 0.3% from 0.1% for June has pushed the market near yesterday's high of 1184.00. In spite of the weeks wild gyrations this puts the market only 13.00 lower for the week. I am inclined to be a seller at current levels.

Currencies: As of this writing the Sept. Euro is 54 higher at 1.4262, the Swiss 117 lower at 1.3000, the Yen 38 higher at 1.3055 and the Pound 71 higher 1.6278. Yesterday we were able to sell one half of our Sept. Swiss 120 put position at 50 points and will try to sell the rest at higher prices if the market allows.

Regards,

Marc
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