Several Mice Are Roaring

Charts: As growth investors, what we want to see is apathy, where volatility is so low nobody cares about the stock market. When this happens correlation between stocks disappear and at long last we have a stock pickers market. The first hints of apathy are emerging.

Fundamentals: The European Central Bank is funneling billions into European banks, who in turn are buying Italian and Spanish debt. True central bank QE would have the ECB buying the bonds directly; in that case there is no limit to how many bonds it could buy. But European banks will soon hit a wall and the purchases will have to stop. Italy needs to be well on the path to free market reform when that happens or the global stock rally will reverse. So in future blogs we will follow Italy's restructuring progress, which is so far going better than I predicted. The thing to remember is that Italy is not a giant Greece. Italy has powerhouse multi-national exporters like Fiat and Gucci.

Long War: The USS Abraham Lincoln aircraft carrier battle group has been joined by small British and French flotillas. This armada is now in the Strait of Hormuz, facing down the Iranian Revolutionary Guard Navy. Right before the armada sailed into Hormuz China told Iran that if the bad guys were to close the strait, then the Great Dragon would consider this an assault on "many nations." So Iran is crossing swords with two superpowers. What has pushed China and America into such a bold stance?

The great powers are acting to preclude an Israeli attack on Iran. Israel is a mouse roaring.

CIA drone strikes have resumed at a normal pace (maybe one or two strikes a week). The peace talks between America and the Taliban are taking shape and drone strikes will be used as a negotiating tool. And we are told the most recent drone strike took out Al-Qaeda operatives, not Taliban; which seems to indicate that peace talk drone strikes are already happening. Another interesting aspect of these talks is crystallizing, Qatar is not so much acting as a host to these talks, but actually running them in all significant details. Karzai's government in Afghanistan is lobbying Qatar for a position at the talks. Qatar seems to be deciding who represents the Taliban. The US has agreed to release 5 Gitmo detainees as a goodwill gesture to the Taliban to get the talks started. The detainees are being delivered to Qatar and the tiny emirate will do with them as it wishes. Qatar is a mouse roaring.

Turkey is too big to be a mouse. Let's call it a large rat. As the government of Iraq tries to rebuild itself as a Shiite dictatorship aligned with Iran, Turkey is subtly threatening to invade Iraq and pressure Maliki's government in other ways. Turkey is a roaring rat.