Financials: Bonds are currently 21 higher at 132'27 and the 10 Yr. Notes 20 higher at 127'22. As I'm sure you are aware Standard and Poor's has lowered their rating for U.S. debt from AAA to AA+. Other rating agencies (Moody and Fitch) have left their rating unchanged for the moment at AAA. Why are Bonds higher: one possible reason is that the U.S. is still considered a safe investment compared with European sovereign debt. Individual European countries to do not have the ability to turn on the printing presses in order to pay their debts and/or devalue their currency like the U.S. I am still holding (unfortunately) the long 10 Yr. Note/ short Bond spread and will be exiting this trade and stay on the sidelines until the markets calm down.

Grains: Grains are lower across the board this morning with Beans down 19 cents, Corn down 13 and Wheat down 18. Markets are lower in response to lower equity markets as traders head for the sidelines. We remain long out of the money call spreads and will re-evaluate this position tomorrow.

Cattle: Early indications are for Live and Feeder Cattle to open lower.

Silver: Sept. Silver is currently 1.38 higher at 39.54. Resistance remains in the 41.00-42.00 area. That being said, we continue to hold a small long position. Gold is currently 45.00 higher at 1696. Over night Dec. Gold made a new record high of 1718.2. I am heading for the sidelines in Gold.

S&P's: Sept. S&P's are currently 27.00 lower at 1170.00. I believe the sell off has more to do with the perception of weakening fundamentals than just the Standard and Poor's lowering of the rating on U.S. debt. I came in long this morning and will head for the sidelines.

Currencies: As of this writing the Sept. Euro is 38 lower at 1.4220, the Swiss 52 higher at 1.3100, the Yen 100 higher at 1.2855 and the Pound 23 lower at 1.6332. I recommend the sidelines for the day.


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