Haqqani Draw Blood

Charts: The S&P 500 closed at 1138, down 1%. Support held at 1132. This level has been tested six times, making it a battleground and therefore more important. A break below 1132 and then 1120 would cause significant technical damage.

Fundamentals: The Chinese government announced its fifth recent tightening measure. Real Estate prices are surging in coastal China and Hong Kong, entering bubble territory. China has no choice but to scale back its stimulus. The global recovery has been led by China up till now, but going forward America has to provide leadership. The special election in Massachusetts has probably killed Obama-Care. This means that American policies will not derail the global recovery. Unfortunately that is a far cry from America actually leading the global recovery.

Geopolitics: On Monday the Haqqani network killed 12 people in central Kabul, disrupting a swearing in ceremony of government officials and striking a blow at the heart of the Afghan government. The bad guys got through a dozen checkpoints before attacking. Once the fighting began Afghan security forces did a great job killing all the bad guys and minimizing civilian casualties. NATO runs the security for most large Afghan cities. But Kabul security is run by the Afghan Army. This terror strike shows the weaknesses and strengths of the Afghan Army. It did a bad job manning the checkpoints because that is boring work. It did very well once the exciting gun battle started because the Afghan Army is filled with courageous warriors. These warriors need to become soldiers.
The Haqqani network has become the most powerful Taliban in the world. It was created by the CIA in the 80s to fight the Soviets. Its fearsome competence derives from its origins.
The Drone Blitz continues to chew up bad guys. A drone wolf pack that had been circling a certain town in N. Waziristan for three days obliterated a car fleeing the town, killing 6 Taliban leaders, probably members of the Haqqani network or the closely aligned Pakistani Taliban. Al Qaeda is taking over both organizations.