Panetta Kicks Congress In The Teeth

Charts: If the S&P 500 trades below 1333 for several days in a row it is likely that another correction will ensue. Ideal chart action would be consolidation or trading flat. If the market were to develop a long running flattish trading channel, then we can pick individual stocks and make some money.

Fundamentals: The US government's payroll survey showed a paltry 18,000 jobs were created last month. The household survey showed 455,000 jobs were lost. If the household survey is correct, then a double-dip recession is on the horizon.

The Greek debt crisis has spread to Italy, with the yield on Italian debt soaring last week. Greece is a midget and Italy is a giant. Italy has more outstanding debt than any other Euro-zone country. It is too big to bail out. Still, the real problem is America's debt, which dwarfs that of any other country. If America were to sharply cut spending, the global sovereign debt crisis would ease.

Over the weekend we learned inflation is accelerating in China and growth is slowing. China's problem is high oil. This is also Italy, Greece and America's problem because high oil is slowing economic growth, which is exacerbating the sovereign debt problem. Which takes us to the Long War.

Long War: The US House of Representatives passed a military spending bill which restricts the CIA's ability to place detainees in Gitmo. This is the House's fourth attempt to clip the CIA's wings. A coalition of hard left Democrats and Tea Party Republicans wants America to stop fighting the Long War. The CIA is in their cross hairs because it is taking the lead in the global conflict.

Shortly after the House passed its bill, Sec. of Defense Leon Panetta announced that the CIA is on the verge of strategically defeating Al-Qaeda. Panetta says the CIA has the location of the top 10 Al-Qaeda leaders and can reach out and kill them anytime, which (he claims) will effectively destroy the bad guys.

It is likely that a few Al-Qaeda leaders either have been killed recently or are about to be killed. But this won't destroy Al-Qaeda and it is nowhere close to being defeated. Panetta's statement has very little to do with Al-Qaeda and everything to do with the House's efforts to stick its beak into Company business.

The American public holds the CIA in much higher esteem than its holds Congress. Panetta can paint a picture of heroic CIA operatives battling for America's freedom and blast Congress for hindering these efforts. For instance, he can point out that the current leaders of AQAP were released from Gitmo because of Congressional interference.