How Do You Spell Armenia?

Charts: The S&P 500 closed at 1139, up 1.4%. The index is comfortably above the super important Fibonacci support level of 1120. Almost every technical indicator has turned positive. Only one is bearish: investor sentiment, which is signaling complacency. The shaky rally has morphed into a sturdy rally.

Fundamentals: Greece crushed its government unions, announced gigantic spending cuts, and successfully floated a much anticipated bond issue. Portugal is just beginning this process and off to a great start. A good domino effect is rippling through highly indebted Euro-zone peripheral countries.
The big US jobs report came in much better than expected today and the Fed reported that consumer credit increased last month. This is the reason for the rally.
The Premiere of China made a speech implying that instead of further monetary tightening the Asian colossus will curb real estate investment and leave the rest of the economy alone. Consumer inflation is tame in China but a real estate bubble is forming. China has been using a sledgehammer to swat a fly. Now it will use a flyswatter. Stocks highly levered to growth in China had been suffering lately but today came roaring back.

Geopolitics: Iraq’s national election is underway. We want the incumbent, Maliki, to lose and the challenger, Allawi, to win. Through debaathification Prime Minister Maliki has been persecuting the minority Sunnis, playing into Al-Qaeda in Iraq’s hands (AQI is Sunni, the Baath party was Sunni). The biggest mistake that Bush made in Iraq was the so called debaathification campaign where every member of Saddam Hussein’s Baath party was fired or worse. A secular minded Shiite, Maliki has continued this pigheaded campaign. Allawi is a Shiite as well but he will put a stop to the mindless persecution, destroying AQI’s major recruiting tool. Furthermore, Allawi has very old and strong ties to the CIA. When the US Army leaves Iraq the CIA must move in to fill the void. Allawi will make sure that happens.
General McChrystal is telling us that the Battle of Marja is a dress rehearsal for the much bigger Battle of Kandahar coming in late summer. He is creating an entirely new command structure just for the Battle of Kandahar, reconfiguring almost all his resources around this goal. If Kandahar will be that much bigger than Marja won’t it be the pivotal battle that decides the fate of the Afghan war? No, pivotal battles aren’t necessarily the biggest ones. The pivotal Battle of Stalingrad was smaller than the Battle of Berlin in WW II. Therefore Marja is everything. How is it going? Fighting has died down since Monday. NATO is busy clearing every land mine, IED, and booby trap in houses, streets, and fields over a 155 square mile area, a huge task; and the bad guys are probably playing possum out there. During the searches, the good guys are not confiscating or removing bags of dried poppy seeds or raw heroin. In a policy shift, NATO is now fighting a war, not acting like the DEA. Stupidly, there are DEA agents in Marja, but these bad good guys are being sidelined.
A Congressional committee passed a resolution condemning Turkey for its WW I massacre of Armenians, enraging every Turk on the planet. With all the trouble we’re having keeping Turkey as an ally this is incredibly stupid. Turkey recalled its US ambassador. But Hillary is doing a fantastic job soothing Turkish feelings, explaining how brain-dead Congressmen are and how the average American can’t even spell the word Armenia.