Al-Qaeda In Crosshairs

Charts: The S&P 500 closed at 1110, down .05%. Uptrend intact.

Fundamentals: The October Consumer Price Index rose .3%, 3.6% annualized, much worse than expected. Most inflation data lately has been tame but the shaky trapeze-like recovery is highly dependent on super-low interest rates for a long time, so inflation is more dangerous than in a normal recovery. Housing starts plunged 10.6%, worse than expected. The Home Buyer Tax Credit had expired by October but it has since been renewed and expanded. We don’t know yet if the new HBTC will keep housing afloat or not. The recovery is not only dependent on existing government policies, those policies have to work perfectly. And any new big spending government program (like healthcare) is probably destined to cause a double-dip recession.

Geopolitics: The Pak Army is saying that most of the Pakistan Taliban fighters have indeed retreated from S. Waziristan. But the resistance is as strong as ever. The Pak Army is taking the bad guy capital city of Makeen one bloody street at a time. It has killed over 500 bad guys so far. The fighters that are left are mostly Al-Qaeda types: Arabs and Uzbeks, the inner chamber of the heart of darkness. So America’s wish that the Pak Army should take on Al-Qaeda has come true.