Osama's Mentor Likes CIA

Charts: The S&P 500 closed at 1148, up .2%. With small daily gains, graphic chart patterns are positive, the best they’ve been in this bull market. Volume patterns, leadership and other internal metrics are not that good.

Fundamentals: US December advanced retail sales disappointed. Some very bad economic data came out of Germany. Senate leader Reed and House leader Pelosi report progress in forging a single healthcare bill and leaks indicate they are coming up with a more bloated and nasty bill than expected. The weak data knocked down interest rates (good). After the bell Intel is reporting its earnings. Unlike Alcoa, Intel is the King Kong of economic bellwethers and its report will rock the market one way or the other.

Geopolitics: The most powerful cleric in Yemen is Sheik Zendani. Even though he once tutored Osama bin Laden the Sheik is a US ally. The government of Yemen and its supporters like Zendani are hardcore Sunnis with a worldview similar to Al-Qaeda’s, although they don’t want to attack the West as long as American foreign policy is being dictated by a vengeful hawk like Obama. Under a President like Jimmy Carter they would be eager to export Sunni jihad. In a recent press conference Sheik Zendani hinted that it would be a sin under Islam to kill a CIA officer. He also went on to warn the US Army not to put boots on the ground in Yemen, a hint that the US and British Special Forces already there are tolerable and (rightfully) an extension of the CIA. This is the offer the Sheik and his government are making to the US: Help us destroy the Houthi (Shiite) rebels first and then we will both destroy AQAP. While the Houthi rebels are being destroyed Yemen will take minor actions against AQAP to soften it up for the eventual big onslaught and keep it from launching more terror attacks like the botched Christmas airliner attack. Do not send the Marines or the US Army against the Houthi; instead utilize the Saudi Army, Yemeni Army/Navy, CIA, and British/American Special Forces.
China launched a cyber attack against Google. This helped Microsoft because it will do whatever the Chinese government says as far as censoring search in China and was not hacked. Raytheon makes military anti-hacking software.