India Needs Love

Charts: The market had fallen into a pattern of wild swings in big volume, up one day and down the next. This is called churning or stalling, high volume and high volatility movement that goes nowhere. When the market is furiously running in place it can signal a market top. Today the S&P 500 closed at 1187, down 1.7%, again taking out key support and breaking down out of the stalling pattern. It looks like a correction has started.

Fundamentals: The Congressional grilling that Goldman Sachs is undergoing has revealed that the SEC doesn’t have a case. In a panic, the SEC asked a US Attorney General to open a criminal investigation against Goldman, masking incompetence with ultra-aggressiveness. This is the sort of attack on the private sector we would expect from Hugo Chavez. Investors are terrified that the rule book is being thrown out the window and anything goes.
Yesterday the Republicans ended their filibuster with the understanding that the Demos would give way on the more toxic aspects of the pending financial reform proposal. Today the lead Republican, Sen. Shelby, said the Demos lied and aren’t compromising on anything. If Republicans don’t grow a set and return to a rock solid filibuster, a world of pain beckons.

Geopolitics: The Pentagon’s big report on the Afghan war points to one major problem: The bad guys are able to infiltrate back into areas that the Marines have cleared, such as the city of Marja. In Iraq and Pakistan this has not been as big a problem because local tribes that live in the cleared areas have been effectively armed and trained by the good guys. These Pak and Iraqi tribes have been able to keep the bad guys out. The tribal structure of Afghanistan is so weak this hasn’t yet been possible. This is why the Pentagon is saying the Afghan war will take much longer than anybody anticipates. But the good guys will still win.
India and Pakistan are restarting their peace talks. One of the major points of contention is shared waterways, which is being addressed in these talks. America has blatantly been favoring Pakistan over India, which has been the right move up till now. It’s time for India to get a little love. Pakistan is saying that the talks will address the issue of terrorism, India’s main concern. So here’s the love.