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Please don't confuse what will happen to USB's stock price with anything I do or write.

USB is going up a lot for a very simple reason.

USB is TOO CHEAP in an environment that involves an explosive combination of improving fundamentals internal to the company, falling interest rates, and a budding wave of merger and consolidation in the banking industry.

On a split-adjusted basis over the 1990-2000 period, USB's EPS have been Jacked-up from $.51 to $2.18 (est.)---a 15.6% per year pace.

Similarly, on a split-adjusted basis, the stock price has been Jacked-up from a 1990 $5.70 (high)to today's $22.40---a 14.6% per year pace.

Notice the link?

Stocks go up when earnings rise.

Stocks go down when earnings fall.

Talk doen't cut it; in the long run, it's all about earnings.

A typical P/E for USB is 15.

15 x 2.18 = $32.70 (this year's numbers).

15 x 2.43 = $36.45 (next year's numbers).

From today's $22.34, and assuming no merger, USB returns 63.1% plus (not too shabby) dividends over the next 12 month period.

At that price, I'll be able to afford my own margaritas, and I will.

30 Buy Christmas.

Best wishes,
Mark Hirschey
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