Go To Disneyland

Charts: The S&P 500 closed at 1126, up .02%. The stock market is treading water, waiting for the New Year. The yield on the 10-year came down slightly (bullish).

Fundamentals: The Chicago PMI survey of Midwest manufacturing activity came in much stronger than expected. With this strong industrial data as a backdrop it is ironic that the US government is getting ready to impose huge tariffs on Chinese steel imports. While this risks igniting a trade war and is very bad news for the world economy it is good news for US steel producers like US Steel (X). It is bad news for US companies levered to Chinese steel mills like Harsco (HSC). Other US companies levered to China fell hard today on the protectionist news.
Team Obama has decided to put together its third multi-billion dollar bailout package for GMAC, the troubled auto and mortgage lender. Combine this with the ongoing bailout of Fannie and Freddie and we see a pattern of the government throwing everything but the kitchen sink at housing.

Geopolitics: In Nigeria, earlier in the week, a little known group of Islamic radicals attacked several other rival Islamic militias, which resulted in a confusing multi-party bad guy on bad guy melee. Nigerian police shot first and asked questions later, resulting in 38 dead bad guys and 1 dead good guy. Separately, security measures are being beefed up at all Nigerian airports after the Christmas AQAP terror attempt on a flight that originated in Nigeria.
More information is coming out concerning the AQAP terror attempt. The plan was hatched by bad guys released by the Bush Administration several years ago from Gitmo. In fact, AQAP is run by bad guys released from Gitmo. These releases were done to pacify America’s peacenik allies in Europe. Going forward, America has to stop worrying about its image in Europe. Yes, it is possible that a French waiter will spit in your coffee while you are vacationing in Paris. Maybe go to Disneyland instead?
In Iran, opposition leaders have fled the capital city, Tehran, and are probably in hiding somewhere in the countryside. More images pour out from the internet of state security forces actually getting beaten back by anti-regime insurgents. The possibility of the Iranian government falling is real. Like it or not it is up to America to make sure that a failed state like Somalia does not arise from the ashes of the Iranian government’s downfall. The US needs to engineer a velvet revolution.