Pak Army Kills 156 Bad Guys

Charts: The S&P 500 closed at 1167, up a fraction. The dollar was down today as were treasury yields. Both weakened into the close, good technically. FXI (Chinese blue chips) jumped 2% and is 1% away from the 200-day moving average. Today was a better chart day than the flat reading from the American index would lead you to believe.

Geopolitics: Today was proof of how geopolitics can rock world markets. The final bailout package for Greece clicked into place and the market was poised to rally when a South Korean warship suffered an explosion in its hull and started sinking in a fishing zone that has often seen North and South Koreas' navies clash. The S. Korean Navy combed the area with radar. They got a reading and fired forward guns (shoot first ask questions later). The reading turned out to be a flock of birds. Several birds were vaporized. There was no sign of North Korean warships. As traders began to digest the implications of the S. Korean Navy not finding any bad guys, global markets started to recover hesitantly.
The Russian stock market popped up while all this was going on because Hillary’s nuclear arms reduction treaty was finalized. Russian ADRs soared 2% even though the price of oil was down today. There is something like an 80% correlation between Russian stocks and oil.
Meanwhile, the media is ignoring the real geopolitical news of the last few days. The Pak Army has been advancing on a Taliban stronghold in the tribal lands that border N. Waziristan. In three days it has killed about 90 bad guys. On Friday, the Pak Air Force killed 66 bad guys. Bad guys are getting chewed up by the Pak Army and this probably explains the AQAP surge: the whack-a-mole effect is in full swing.

Specific Stocks: Calgon Carbon (CCC) is the leader in manufacturing activated carbon, the stuff inside smokestack scrubbers for coal-fired power plants, big municipal water plant filters, and the little water filters in your household Brita system. In the last year CCC’s stock has only gone up about 12%, even though its earnings have been growing stoutly. It has a PE of 25% while its peer Koppers Holding (KOP) which makes specialty carbon products for steel and railroads has a PE of 32%. CCC’s earnings have grown 3 times faster than KOP’s. The market is afraid of coal fired power plants because of global warming fears and hence the discount. But here’s the kicker, as the leader in activated carbon, CCC has special products that work in cleaning up illegal Chinese coal power plants, of which there are hundreds. When the Chinese government finds an illegal power plant, it doesn’t shut it down, it orders a cleanup, an endless supply of business for CCC.