Taliban Terror Attempt In NY

Charts: The market is in a correction. The broad index closed at 1174, down 2.4%. The trading channel that the S&P 500 was churning in had a low point of 1182, which was violated. The March peak was 1180, a key support level also violated. 1168 is the 50-day moving average. The index hit 1168 twice and found support, the only ray of hope. If 1168 is violated it will be very bad.

Fundamentals: The financial press is saying today’s sharp sell-off was caused entirely by Euro-periphery bonds tanking on sudden fear of Greece defaulting (gosh there is a problem with Greek debt, who knew?). However, what actually happened is geopolitics caused a massive safe haven bid into US treasuries, which forced all risk assets to plunge, including Euro-periphery debt. Of course other factors also came into play: the SEC attack on Goldman, toxic financial reform coming up for a vote, and today the FTC launched an attack on Apple (unbelievable). But consider: the biggest sector loss today was airline stocks even though oil was way down. Airline stocks are the most sensitive to terrorism.

Geopolitics: It looks as though the New York car bomb attempt over the weekend did originate with the one of the Pak Talibans. Pak authorities have arrested several people related to the would-be bomber in Karachi and there are reports he spent time in the Pak city of Peshawar, which is Taliban central. There will be more terror attempts like this in the months and years ahead. Some of these attempts will succeed. The American public has been told by the White House that the war will be over in about a year, rather than three or four centuries. Today we can see Obama’s biggest foreign policy screw-up has been lying about the war’s duration. Will it really last for centuries?
The Sudan truce is unraveling and the nearly century-old Sudanese civil war may flare up again. So far this year the Lord’s Resistance Army (LRA) has massacred about 400 civilians in Congo and Uganda. These two news items are related. The LRA is an ultra-violent central African Christian militia. The Sudanese civil war is a central African conflict between Christians and Muslims. The Long War originated in central Africa as a Christian vs. Muslim dustup in the 1920s with roots snaking back to the Crusades. The Long War heating up in central Africa, its birthplace, is a sign that it’s going to last a long time.