Obama Wake Up!

Charts: The S&P 500 closed at 1106, down .05%. Support at 1100 is holding. Resistance is at 1110. Chart patterns look good. Volume patterns, however, look bad. Monday saw a huge gain but once again on feeble volume. The technical picture isn’t as good as the charts indicate.

Fundamentals: Q3 GDP was revised down from 3.5% to 2.8%. Real Final Sales (RFS) is GDP without inventory adjustments, a government generated number. It could also be called “Real GDP.” RFS showed American GDP growth at 1.9% (all numbers annualized). The Clunker program was in Q3 and had some sort of one-time boost, but let’s be generous and overlook that and say the US economy is growing at 1.9% in the fifth month of recovery. That’s anemic by historical standards. The Euro-zone is probably growing at the same pace as the US. China is probably growing at 10%, with the rest of emerging Asia keeping pace with China. Israel raised interest rates for a second time, the most aggressive tightening move yet by any country, further evidence of emerging market strength. The dinosaur vs. tiger quandary is still alive. ISL is the index for Israel.

Geopolitics: The Wall Street Journal ran an article today describing how the ISI’s pet terrorist organization, LET, has been caught trying to launch several fresh terror operations against India. LET is responsible for the huge Mumbai bombing a year ago. Pakistan has promised to shut LET down but there is evidence that ISI is keeping its pet alive and healthy although on a short leash. A point to bear in mind is that LET is ultra-competent and ultra-deadly, an elite commando terror army. The question that can’t be answered yet is how short is ISI’s leash on LET? What if LET goes rogue and attacks India without ISI’s permission? It would be disastrous if LET did succeed in a big showy terror strike inside India or even worse, a prolonged terror campaign. That isn’t happening yet, the leash seems to be working so far.
The bigger picture is this: America better let Pakistan do what it wants as far as LET is concerned. The Pak Army is a jihadist killing machine that is currently running at full throttle. Pak helicopter gunships are roving the Afghan/Pak border hotspots and chewing up bad guys like threshing machines. Pak infantry and artillery are wading into the heart of darkness and destroying the most powerful Taliban network in the world, the one anointed by Al-Qaeda as the sharp end of the spear.
Meanwhile, On the Saudi/Yemen border, the Saudi Army is running war operations at a steady pace. The Houthi rebels in northern Yemen are being continously pounded by Saudi artillery and F-16 strikes as the Saudi infantry continues to secure its side of the border and preseumably work on establishing its buffer zone. The bad guys are infiltrating the long mountainous border to put fighters inside Saudi Arabia. On its side of the border, the Yemeni Army is also running at full steam. Ominously, the Yemenis are saying that Al-Qaeda in the Arabian Peninsula (AQAP) and the Houthi rebels to the north are cooperating to a much greater degree than previously thought.
The Long War is running pretty hot right now and it does need US involvement even though the Saudi and Pak Armies are doing a good job. Obama, wake up!