Super-Hawk Obama

Charts: The S&P 500 closed at 1107, up .66%. This is day 3 above the 100-day moving average. One more day and long term technical damage is mostly repaired. The 50-day moving average is 1108. The index hit the 50-day line, found resistance, and bounced down. It will be good if it struggles for a long time with the 50-day line and then eventually wins. Volume continues to be terrible, so the rally is shaky. Yield on the 10-year note is screeching up (not good).

Fundamentals: Inflation data came in today hotter than expected, bad for bonds but good for material stocks. I have been rotating out of bonds and into two material stocks: DuPont (DD) and Cree (CREE). Let’s start with DD. America produces nat. gas cheaper than anybody. DD is levered to cheap US nat. gas (as a chemical feedstock), global agriculture, and industrial activity. DD is the world’s leader in titanium dioxide (used in paint); yesterday it raised the price of titanium dioxide. With nearly a 5% dividend, DD can replace bonds in your portfolio. CREE is the leader in LED lighting and it is opening a huge LED factory in China soon. In time every incandescent and florescent light bulb on the planet will be replaced with LED chips, a growth story of epic proportion. CREE is the leader in producing and finding applications for Gallium Nitride and Silicon Carbide. This levers it to a host of growth industries such as hybrid vehicles, solar power, and military applications relevant to the Long War.

Geopolitics: In Pakistan, last week the ISI and CIA captured the two most powerful Afghan Taliban “shadow governors,” or bad guy leaders that run Taliban governments within Afghanistan. Adding to the bad guys’ pain, last night the ISI/CIA captured 9 top Al-Qaeda operatives in Karachi. All these bad guys are being interrogated by the ISI (go long on cattle prods). Ever since the CIA agreed to give the ISI its own drone fleet, the two spy agencies have become so closely entwined they are virtually a single entity. Rubbing salt in the wounds, a senior NATO officer told the New York Times that Special Forces soldiers have killed “three or four” other Afghan Taliban shadow governors in the last few weeks.
The UN is criticizing an American policy that prevents food aid from reaching hungry people in Somalia. Aid workers end up giving much of the food to Al-Shabab, a bribe that allows them to give the rest to civilians. The US won’t put up with Al-Shabab getting a single crumb, even if some innocents go hungry. We are forced once again to quote General Sherman of Civil War fame, “War is cruelty. There is no use trying to reform it. The crueler it is, the sooner it will be over.” Super-hawk Barak Obama may lose his Nobel Peace Prize, but he will never lose a single battle in the Long War.