Long War: When he was an Army general, Petraeus left bigger fingerprints than he does now. Therefore it is easier to analyze this part of his career and gain an insight into what he is doing now. Consider the Sunni Awakening Movement in Iraq.
The Baker report had just come out and the Joint Chiefs in the Pentagon were ready to pull the plug in Iraq and create a Vietnam defeat that would have been catastrophic for long term world peace and the global economy. Against this backdrop President Bush and Gen. Petraeus built a parallel Joint Chiefs organization inside the White house and launched the Awakening Movement strategy against the will of the Pentagon.
Petraeus reached into the bowels of Iraq's Sunni tribal structure, using Egyptian Intelligence as his instrument of persuasion. He convinced the Sunni tribal chieftains to declare war on Al-Qaeda. He guided that war from the White house just like Ollie North did for Reagan. He won that war within a war.
Now consider his ability as a US Army general in Iraq to muzzle the press. We won't go into details as to how he did it but the press was muzzled and this played a big role in turning the Iraq War around.
Okay, how does that help us today? Yemeni tribesmen are rising up, banding into effective militias, and attacking Al-Qaeda in increasing numbers. The pattern is similar to the Sunni Awakening Movement. The Yemeni press is reporting about 50 times more CIA drone strikes in Yemen that the Western press is reporting. Again to save space we will state that the Yemeni Press is more accurate than the Western press without going into details. This smells like a Petraeus press muzzling maneuver.
Monday, April 30, 2012
Friday, April 27, 2012
Looking For Fingerprints
Long War: Suicide bomber attacks against Assad's Syrian Army are occuring in a steady drumbeat. These terror strikes come straight from Al-Qaeda. Bad guys are attacking bad guys. The Free Syria Army is unable to hive off the jihadist elements within its own ranks. These elements are responsible for the slow destruction of the ceasefire. The ceasefire will probably collapse and the UN will pull out its personnel.
If the Syria Civil War returns to full strength then it is not only imperative the Free Syria Army win, it is also imperative that its Al-Qaeda link be severed. Giving the Syrian rebels the weapons, training, and leadership necessary to win will go a long way to blowing Al-Qaeda out of the tub. The reason why there is a jihadist link at all is because the Free Syria Army is not getting enough help from the Western alliance.
Official American policy on Syria is to apply sanctions to Assad's regime and no covert action will be taken. Our job, as always, is to look for fingerprints in Syria, to see how the CIA is violating offcial American policy.
Ah-ha! Do I spot one? Turkey is building large permanent refugee camps for displaced Syrians inside its borders, well away from the combat; as if Turkey is hunkering down for a long guerrilla war.
If the Syria Civil War returns to full strength then it is not only imperative the Free Syria Army win, it is also imperative that its Al-Qaeda link be severed. Giving the Syrian rebels the weapons, training, and leadership necessary to win will go a long way to blowing Al-Qaeda out of the tub. The reason why there is a jihadist link at all is because the Free Syria Army is not getting enough help from the Western alliance.
Official American policy on Syria is to apply sanctions to Assad's regime and no covert action will be taken. Our job, as always, is to look for fingerprints in Syria, to see how the CIA is violating offcial American policy.
Ah-ha! Do I spot one? Turkey is building large permanent refugee camps for displaced Syrians inside its borders, well away from the combat; as if Turkey is hunkering down for a long guerrilla war.
Thursday, April 26, 2012
Do You See Fingerprints?
Charts: The market is in a technical rally. The charts are saying the correction is over. Sometimes charts are wrong.
Fundamentals: Corporate profits as a percent of GDP are at an all time high. The were at about this level in the 1930s. So these are the two periods where corporate profits could grow without the economy growing very much. Productivity increases are not yet peaking. Corporate America keeps getting more efficient. This is also one of the reasons why employment is not increasing.
Long War: The CIA just got bigger. CIA Director Petraeus reached out, grabbed the US Army's intelligence arm (which is called DIA), and said: "You are now part of the CIA." The media is reporting this story as the DIA is being reorganized to resemble the CIA's Clandestine Services division. Yeah right. Meet your new boss. You army maggots are going to learn the CIA way or its the highway. Next Petraeus will grab US Army Special Forces.
Petraeus got the White house to liberalize rules of engagement for drone warfare in Yemen. Petraeus asked for but did not get the right to use drones in close air support of pro-American Yemeni troops. He will probably use the drones for close air support anyway, regardless of whether or not he has permission, because Yemen is the Wild West.
The highest ranking Israeli military officer is saying Iran is not making a nuclear weapon and has no actual weapons program, only an uranium enrichment program. This directly contradicts Israeli PM Netanyahu and is actually close to insubordination, throwing Israel's top leadership into extreme conflict because the PM couldn't order an air strike against Iran if his ranking military officers disagree that such a strike is necessary. We must ask the obvious question: Does this incident look like it has CIA fingerprints on it? You tell me.
Fundamentals: Corporate profits as a percent of GDP are at an all time high. The were at about this level in the 1930s. So these are the two periods where corporate profits could grow without the economy growing very much. Productivity increases are not yet peaking. Corporate America keeps getting more efficient. This is also one of the reasons why employment is not increasing.
Long War: The CIA just got bigger. CIA Director Petraeus reached out, grabbed the US Army's intelligence arm (which is called DIA), and said: "You are now part of the CIA." The media is reporting this story as the DIA is being reorganized to resemble the CIA's Clandestine Services division. Yeah right. Meet your new boss. You army maggots are going to learn the CIA way or its the highway. Next Petraeus will grab US Army Special Forces.
Petraeus got the White house to liberalize rules of engagement for drone warfare in Yemen. Petraeus asked for but did not get the right to use drones in close air support of pro-American Yemeni troops. He will probably use the drones for close air support anyway, regardless of whether or not he has permission, because Yemen is the Wild West.
The highest ranking Israeli military officer is saying Iran is not making a nuclear weapon and has no actual weapons program, only an uranium enrichment program. This directly contradicts Israeli PM Netanyahu and is actually close to insubordination, throwing Israel's top leadership into extreme conflict because the PM couldn't order an air strike against Iran if his ranking military officers disagree that such a strike is necessary. We must ask the obvious question: Does this incident look like it has CIA fingerprints on it? You tell me.
Monday, April 23, 2012
CIA vs Israel?
Charts: On Friday the S&P 500 closed exactly at its 50-day moving average. Since the correction started a couple weeks ago the broad index had been swinging rapidly over and under the 50-day line. By settling exactly on the battlefield number the charts were saying the next big move would be technically significant. Today we had a monster down day. The charts then are saying weakness breeds weakness and more loses are likely.
Fundamentals: Southern Europe is contracting faster than expected. The multi-trillion dollar bail-out funds owned by the EU and IMF are probably going to be tapped by Spain. The markets are beginning to fear that Germany won't allow another bail-out of a Periphery country. The markets are most likely wrong and Germany will allow Spain to get bailed-out, but not without a lot of kicking and screaming. Germany's kicking and screaming might be enough to cause global economic damage.
Long War: Egypt is saying it will break its fuel contract with Israel. Pipeline deliveries will shut down shortly. Jihadist bombers in the Sinai had over the past year shut down 50% of the pipelines leading from Egypt to Israel already. Whether the gas was flowing or not, breaking this contract is a big deal because this commercial contract is actually part of the Camp David Accords and forms the backbone of the peace treaty that ended the Arab-Israeli wars.
The above news item, on the surface, seems to be very bad news. And almost certainly the surface level analysis is right and this probably really is bad news. An alternate analysis occurs to me that would put it in a different light. Even though the alternative is probably wrong let me throw it out for grins.
We know from his public statements as a US Army general that CIA Director Petraeus is very hostile to Israel, more hardcore on this position than any other US general. It seems strange that the CIA is allowing terrorists in the Sinai in the first place. With its ability to marshal the resources of Egyptian intelligence it had always been able to clear the Sinai of anti-Israeli terrorists, until recently.
And the way the Egyptian gas contract was broken was strange. Egyptian gas company executives made the call, not anybody actually in the Egyptian government.
And then two months ago the Iranian government claims that it captured a large number of Israeli assassins, hinting that it was part of the ring of assassins who had killed so many Iranian nuclear scientists. And then the Iranians shut up publicly about their big haul, like they maybe actually had something and realized they needed to keep their mouths shut.
I keep getting this weird feeling that Petraeus is sticking it to Israel.
Fundamentals: Southern Europe is contracting faster than expected. The multi-trillion dollar bail-out funds owned by the EU and IMF are probably going to be tapped by Spain. The markets are beginning to fear that Germany won't allow another bail-out of a Periphery country. The markets are most likely wrong and Germany will allow Spain to get bailed-out, but not without a lot of kicking and screaming. Germany's kicking and screaming might be enough to cause global economic damage.
Long War: Egypt is saying it will break its fuel contract with Israel. Pipeline deliveries will shut down shortly. Jihadist bombers in the Sinai had over the past year shut down 50% of the pipelines leading from Egypt to Israel already. Whether the gas was flowing or not, breaking this contract is a big deal because this commercial contract is actually part of the Camp David Accords and forms the backbone of the peace treaty that ended the Arab-Israeli wars.
The above news item, on the surface, seems to be very bad news. And almost certainly the surface level analysis is right and this probably really is bad news. An alternate analysis occurs to me that would put it in a different light. Even though the alternative is probably wrong let me throw it out for grins.
We know from his public statements as a US Army general that CIA Director Petraeus is very hostile to Israel, more hardcore on this position than any other US general. It seems strange that the CIA is allowing terrorists in the Sinai in the first place. With its ability to marshal the resources of Egyptian intelligence it had always been able to clear the Sinai of anti-Israeli terrorists, until recently.
And the way the Egyptian gas contract was broken was strange. Egyptian gas company executives made the call, not anybody actually in the Egyptian government.
And then two months ago the Iranian government claims that it captured a large number of Israeli assassins, hinting that it was part of the ring of assassins who had killed so many Iranian nuclear scientists. And then the Iranians shut up publicly about their big haul, like they maybe actually had something and realized they needed to keep their mouths shut.
I keep getting this weird feeling that Petraeus is sticking it to Israel.
Thursday, April 19, 2012
Bumpy Ride Ahead
Charts: The S&P 500's 50-day moving average is 1378. The broad index closed below the 50-day line today. The market is therefore in a correction.
Fundamentals: The European Central Bank pumped $1.3 trillion into European private banks at the beginning of the year with the understanding they would buy Euro-periphery government bonds, which they did. That $1.3 trillion is now gone and the Euro debt problem is once again out of control. The ECB has to pump another trillion dollars worth of cheap loans into its banks or all hell will break loose. The ECB will only act once hell starts breaking loose, not before. Buckle up, its going to be a bumpy ride.
Long War: The UN has hammered out an extensive monitoring mission with Assad's government in Syria. Now the UN is talking with the rebels to get them to sign on. The rebels have to start policing themselves and purge Al-Qaeda militants from their ranks for the ceasefire to keep holding. I'm not going to guess whether that is possible or not. Al-Qaeda attacks within Syria seem to be going down. The ceasefire is holding by the skin of its teeth.
The new rebel government in Mali is not tackling the Kingdom of Al-Qaeda that has sprung up in its backyard, despite promising the Western alliance that it would do so. It is intolerable for Al-Qaeda to build sovereign nation-states and not face withering attacks. A CIA drone campaign will someday have to be launched in Mali.
All these major Long War issues are CIA problems, in other words there is nothing the Pentagon can do about them. I keep thinking there isn't enough CIA to go around. And then I remember how CIA Director Petraeus launched the Sunni Awakening Movement in Iraq, the most brilliant military campaign in the Long War so far. So there is a sort of race between Petraeus' brilliance and the lack of resources he has been given.
Fundamentals: The European Central Bank pumped $1.3 trillion into European private banks at the beginning of the year with the understanding they would buy Euro-periphery government bonds, which they did. That $1.3 trillion is now gone and the Euro debt problem is once again out of control. The ECB has to pump another trillion dollars worth of cheap loans into its banks or all hell will break loose. The ECB will only act once hell starts breaking loose, not before. Buckle up, its going to be a bumpy ride.
Long War: The UN has hammered out an extensive monitoring mission with Assad's government in Syria. Now the UN is talking with the rebels to get them to sign on. The rebels have to start policing themselves and purge Al-Qaeda militants from their ranks for the ceasefire to keep holding. I'm not going to guess whether that is possible or not. Al-Qaeda attacks within Syria seem to be going down. The ceasefire is holding by the skin of its teeth.
The new rebel government in Mali is not tackling the Kingdom of Al-Qaeda that has sprung up in its backyard, despite promising the Western alliance that it would do so. It is intolerable for Al-Qaeda to build sovereign nation-states and not face withering attacks. A CIA drone campaign will someday have to be launched in Mali.
All these major Long War issues are CIA problems, in other words there is nothing the Pentagon can do about them. I keep thinking there isn't enough CIA to go around. And then I remember how CIA Director Petraeus launched the Sunni Awakening Movement in Iraq, the most brilliant military campaign in the Long War so far. So there is a sort of race between Petraeus' brilliance and the lack of resources he has been given.
Wednesday, April 18, 2012
Al-Qaeda in Syria
Long War: It is always bad news when a key Long War turning point receives attention from voters in Europe and America. Al-Qaeda is always better at manipulating public opinion than the leaders of NATO countries. The western press is rabidly covering the ceasefire violations on the part of the Syrian Army but not giving context and analysis. In media accounts civilian and rebel Free Syrian Army deaths are being trumpeted but not the terror strikes that are being inflicted on Assad's Syrian Army and are triggering the violence.
There are bad guys intermingled with good guys in the Syrian rebel movement and it seems like Al-Qaeda is trying to break the ceasefire by sending individual bombers into Assad's ranks. Al-Qaeda is goading Assad's soldiers into firing into rebel strongholds.
NATO leaders are apparently aware of this dynamic and are pushing forward with a full UN monitoring mission, saying that the ceasefire is holding although fighting is slowly ramping back up. Also, we see that Russia is saying it will hold back weapons sales to Syria. Russia supplies Assad with 90% of his weapons. China too is putting pressure on Assad. All UN Security Council members therefore are putting their weight behind the ceasefire. This is further proof that Al-Qaeda is the main international power trying to scuttle the ceasefire because it is the only common enemy that can unite Russia and China to a US position.
Israel is certainly not involved in any militant activity in Syria, but it is interesting to note that it would like to see the Iranian peace talks collapse and by extension the Syrian ceasefire breaking as well. So Al-Qaeda and Israel would like to see the same thing. The extreme left and the extreme right always end up looking like each other.
There are bad guys intermingled with good guys in the Syrian rebel movement and it seems like Al-Qaeda is trying to break the ceasefire by sending individual bombers into Assad's ranks. Al-Qaeda is goading Assad's soldiers into firing into rebel strongholds.
NATO leaders are apparently aware of this dynamic and are pushing forward with a full UN monitoring mission, saying that the ceasefire is holding although fighting is slowly ramping back up. Also, we see that Russia is saying it will hold back weapons sales to Syria. Russia supplies Assad with 90% of his weapons. China too is putting pressure on Assad. All UN Security Council members therefore are putting their weight behind the ceasefire. This is further proof that Al-Qaeda is the main international power trying to scuttle the ceasefire because it is the only common enemy that can unite Russia and China to a US position.
Israel is certainly not involved in any militant activity in Syria, but it is interesting to note that it would like to see the Iranian peace talks collapse and by extension the Syrian ceasefire breaking as well. So Al-Qaeda and Israel would like to see the same thing. The extreme left and the extreme right always end up looking like each other.
Tuesday, April 17, 2012
Israel Has Big Problems
Long War: Israel is opening up private Palestinian land for settlement in the West Bank, probably scuttling the latest round of Israeli/Palestinian peace talks. Then Israel says it still might bomb Iran even though peace talks with the American led 5 plus 1 group of big powers are ongoing. The market is taking some notice of Israel's bellicosity and we aren't seeing as big a drop in oil prices as we should after Iran caved in day one of the big talks.
By kicking Obama so hard in the gut, Israel is taking an enormous gamble that not only will Romney win the election, but that he will switch over from Obama's anti-Israeli policies to mindless pro-Israeli policies. Romney would have to fire CIA Director Petraeus to make that switch.
We have to understand what Israel (under its current leadership) wants out of the current Iranian crisis. Israel does not want a peace treaty between 5 plus 1 and Iran to materialize. What Israel wants is for America to destroy Iran in a large conventional war. The Israeli Air Force, by itself, can do very little harm to the Iranian nuclear development program. All the Israeli Air Force is good for is starting a war that the American Air Force would then have to win.
Netanyahu may be underestimating Obama, or overestimating himself. Either way, he is pretty whacked out right now. The reason? A UN general resolution is gathering steam that will recognize an independent Palestinian state. When it passes the UN General Assembly, Israel is going to have to decide once and for all if it wants a two state solution or another war.
By kicking Obama so hard in the gut, Israel is taking an enormous gamble that not only will Romney win the election, but that he will switch over from Obama's anti-Israeli policies to mindless pro-Israeli policies. Romney would have to fire CIA Director Petraeus to make that switch.
We have to understand what Israel (under its current leadership) wants out of the current Iranian crisis. Israel does not want a peace treaty between 5 plus 1 and Iran to materialize. What Israel wants is for America to destroy Iran in a large conventional war. The Israeli Air Force, by itself, can do very little harm to the Iranian nuclear development program. All the Israeli Air Force is good for is starting a war that the American Air Force would then have to win.
Netanyahu may be underestimating Obama, or overestimating himself. Either way, he is pretty whacked out right now. The reason? A UN general resolution is gathering steam that will recognize an independent Palestinian state. When it passes the UN General Assembly, Israel is going to have to decide once and for all if it wants a two state solution or another war.
Monday, April 16, 2012
Syria is Everything
Charts: The S&P 500 is still mired in a correction and the 50-day line continues to throw up resistance. Apple dropped 4% today, reflecting overall weak leadership.
Fundamentals: The earning season is off to a good start, 76% of S&P 500 companies have beat analysts estimates so far.
Long War: The Walter Cronkite effect is in full swing. This is when the media portrays Long War victories as defeats, hearkening back to the Vietnam era of spin distortion. The Afghan Taliban and its allies mounted the largest attack on the capital city of Kabul in years. Yes, they paralyzed the city for a while but the bad guys were totally routed. 35 dead bad guys vs. 10 dead good guys. Almost no civilian casualties. When the Parliament building was attacked the politicians inside grabbed AK47s, got on the rooftop, and started killing Taliban and Haqqani fighters (studly). Afghan Special Forces easily outflanked the bad guys in an 18 hour long battle with very little NATO help.
A few days ago I said the good guys were losing in Yemen, but that battle has turned around and now Al-Qaeda is losing. America seems to have successfully isolated the bad part of the Yemeni Army and the good Yemeni Army is in full combat mode.
Sudan and South Sudan are inching toward a total war but Egypt is throwing a full court press on the diplomatic front and seems to be making headway. It seems to me heavy CIA activity nowadays comes in the guise of pro-US Arab powers taking action. Something is holding the two armies back, but this is a dangerous LW flashpoint.
The ceasefire in Syria is holding even though western media reports say that it is not (Walter Cronkite effect). Al jeezera reports that there are two confirmed deaths in the last day of fighting in Syria. Before the ceasefire there were 100 deaths a day, not two. UN monitors are currently taking up positions. This is what a successful ceasefire in the Mideast looks like. Syria is the epicenter of the Long War right now. The ceasefire holding is good news.
Fundamentals: The earning season is off to a good start, 76% of S&P 500 companies have beat analysts estimates so far.
Long War: The Walter Cronkite effect is in full swing. This is when the media portrays Long War victories as defeats, hearkening back to the Vietnam era of spin distortion. The Afghan Taliban and its allies mounted the largest attack on the capital city of Kabul in years. Yes, they paralyzed the city for a while but the bad guys were totally routed. 35 dead bad guys vs. 10 dead good guys. Almost no civilian casualties. When the Parliament building was attacked the politicians inside grabbed AK47s, got on the rooftop, and started killing Taliban and Haqqani fighters (studly). Afghan Special Forces easily outflanked the bad guys in an 18 hour long battle with very little NATO help.
A few days ago I said the good guys were losing in Yemen, but that battle has turned around and now Al-Qaeda is losing. America seems to have successfully isolated the bad part of the Yemeni Army and the good Yemeni Army is in full combat mode.
Sudan and South Sudan are inching toward a total war but Egypt is throwing a full court press on the diplomatic front and seems to be making headway. It seems to me heavy CIA activity nowadays comes in the guise of pro-US Arab powers taking action. Something is holding the two armies back, but this is a dangerous LW flashpoint.
The ceasefire in Syria is holding even though western media reports say that it is not (Walter Cronkite effect). Al jeezera reports that there are two confirmed deaths in the last day of fighting in Syria. Before the ceasefire there were 100 deaths a day, not two. UN monitors are currently taking up positions. This is what a successful ceasefire in the Mideast looks like. Syria is the epicenter of the Long War right now. The ceasefire holding is good news.
Sunday, April 15, 2012
Iran Caves. Everything Depends on Syria
Long War: Iran buckled at the anti-nuclear talks over the weekend. The media is portraying the talks as mildly positive to horrible. Israel is saying the talks are a disaster. The Republicans will throw their weight behind Israel and play obstructionist. The market may react negatively because of media spin. The truth is Iran caved.
The lead Iranian negotiator quoted Ayatollah Khamenei's fatwa against nuclear weapons during the talks. A version of the fatwa was turned into a flag and hung over the one-day talks. Iran was willing to bring up the subject of restrictions on uranium enrichment at 20%. So Iran is starting this massive diplomatic process by saying it is a sin to make nuclear weapons. And it also says it will at least keep talking about restrictions on enrichment. Without unrestricted enrichment Iran cannot make nuclear weapons. Those are big concessions for day one.
The media will say that this round of talks is over and another round will begin in one month in Iraq. That isn't true, the talks will be ongoing from now until the formal and public meeting in Baghdad in four weeks. Everything could fall apart by then and maybe nothing will come of the weekend's positive news, but it is encouraging.
If Iran were to truly cave and agree to stop uranium enrichment at 5%, then the oil sanctions against Iran would come down. There are tankers full of Iranian oil sitting in the Gulf. Iranian oil production is still running at high capacity. Oil prices would then crash and the global economy would get a shot in the arm.
Obviously this is a pretty rosy scenario. It looks good right now but Iran would probably turn hard line overnight if the ceasefire in Syria doesn't hold. Therefore that is the forward looking indicator for the Iran crisis: The ceasefire holding in Syria.
The lead Iranian negotiator quoted Ayatollah Khamenei's fatwa against nuclear weapons during the talks. A version of the fatwa was turned into a flag and hung over the one-day talks. Iran was willing to bring up the subject of restrictions on uranium enrichment at 20%. So Iran is starting this massive diplomatic process by saying it is a sin to make nuclear weapons. And it also says it will at least keep talking about restrictions on enrichment. Without unrestricted enrichment Iran cannot make nuclear weapons. Those are big concessions for day one.
The media will say that this round of talks is over and another round will begin in one month in Iraq. That isn't true, the talks will be ongoing from now until the formal and public meeting in Baghdad in four weeks. Everything could fall apart by then and maybe nothing will come of the weekend's positive news, but it is encouraging.
If Iran were to truly cave and agree to stop uranium enrichment at 5%, then the oil sanctions against Iran would come down. There are tankers full of Iranian oil sitting in the Gulf. Iranian oil production is still running at high capacity. Oil prices would then crash and the global economy would get a shot in the arm.
Obviously this is a pretty rosy scenario. It looks good right now but Iran would probably turn hard line overnight if the ceasefire in Syria doesn't hold. Therefore that is the forward looking indicator for the Iran crisis: The ceasefire holding in Syria.
Friday, April 13, 2012
Correction Continues
Charts: The S&P 500 plunged back down through its 50-day moving average today. This means the correction is ongoing. Volatility is back to record highs, which is bearish. The huge rally that began in the fall first saw coiling behavior from the index, or we could call this a wedge pattern. Generally speaking whichever way a wedge breaks to after it has narrowed to a sharp point is the direction the market will go in the medium term (some months). Right now copper has formed a lengthy wedge pattern and seems to be breaking to the downside. Copper is more than just a metal, it is an important technical indicator. So it is bad that it has broken down out of its wedge.
Fundamentals: China's GDP growth, while still high at about 8%, has slowed sharply. This is why the market sold off today. However the Chinese GDP report also showed that Chinese loans grew sharply, setting up the Great Dragon for economic growth later in the year when the result of all those loans will be felt on the street. What this means is that we are back to the price of oil being the key factor for the global economy. If oil comes down, then that sharp uptick in Chinese loans will spell further growth for the world economy. And the price of oil is contingent on the anti-nuclear talks with Iran and 5 plus 1 that just started in Turkey.
Long War: Stay tuned over the weekend for my analysis of the Iranian talks.
Fundamentals: China's GDP growth, while still high at about 8%, has slowed sharply. This is why the market sold off today. However the Chinese GDP report also showed that Chinese loans grew sharply, setting up the Great Dragon for economic growth later in the year when the result of all those loans will be felt on the street. What this means is that we are back to the price of oil being the key factor for the global economy. If oil comes down, then that sharp uptick in Chinese loans will spell further growth for the world economy. And the price of oil is contingent on the anti-nuclear talks with Iran and 5 plus 1 that just started in Turkey.
Long War: Stay tuned over the weekend for my analysis of the Iranian talks.
Thursday, April 12, 2012
Bad News is Good
Charts: The S&P 500 smashed upward through its 50-day moving average. The 50-day line was the battleground technical indicator for this correction. If the index finds support there and/or trades above that line, then the correction is over.
Fundamentals: You, me and all equity investors hunger for QE like a wino craves alcohol. Yesterday the ECB hinted it was ready for QE2 and the Fed hinted it was ready for QE3. Today economic data came in weak, among other weak data points jobless claims ticked up. If the data is bad, then the winos (you and me) get a big fat bottle of Mad Dog 20/20. Yippee!
Long War: There is a good Yemeni Army (anti-jihadist) and a bad Yemeni Army (pro-jihadist). The two are somewhat separate but to a degree still intermingled. When the good Yemeni Army goes to battle with Al-Qaeda it finds military planes have been sabotaged by soldiers from within its own ranks. America and the CIA have been working heroically to hive off the bad from the good within the Yemeni Army. It seems to be working. Yemeni war planes are flying again and are taking out tanks that the bad Yemeni Army gave to Al-Qaeda. The weight of the renewed aerial assault is now taking its toil on the jihadis. CIA drones are active and working in concert with the good Yemenis.
The new leader of Mali says he will begin a war soon against AQIM and try to destroy the Kingdom of Al-Qaeda that has sprung up in his back yard. The rebel groups that worked with AQIM to seize half the country (an area bigger than France) have disavowed their jihadist partner and promised various levels of support or neutrality in the coming war. CIA fingerprints in all this are glaringly obvious. Why would rebel leaders sell out their partner AQIM? Clearly they are being threatened in a convincing manner.
The Syrian Army is honoring a UN ceasefire accord as talks begin with Iran and the US led group called 5 plus 1, so Iran is reining Assad in, at least for now. Ahmadinejad wants to play ball with 5 plus 1 and the Ayatollah does not. The Ayatollah is not necessarily more powerful than Ahmadinejad within Iran. The best way to gauge Ahmadinejad's strength is to listen to what he says when he is hauled in front of the Iranian Parliament. Last time this happened he mocked the members of Parliament for having fake college degrees (which I guess many of them have). Licking its wounds after this tongue lashing, Parliament passed a new law supposedly giving it the power to easily impeach the PM Ahmadinejad. If it tries and fails to impeach him, the Ayatollah is in big trouble. Have you noticed how assassination attempts from Mossad and CIA have stopped? The good guys are trying to help the PM.
Fundamentals: You, me and all equity investors hunger for QE like a wino craves alcohol. Yesterday the ECB hinted it was ready for QE2 and the Fed hinted it was ready for QE3. Today economic data came in weak, among other weak data points jobless claims ticked up. If the data is bad, then the winos (you and me) get a big fat bottle of Mad Dog 20/20. Yippee!
Long War: There is a good Yemeni Army (anti-jihadist) and a bad Yemeni Army (pro-jihadist). The two are somewhat separate but to a degree still intermingled. When the good Yemeni Army goes to battle with Al-Qaeda it finds military planes have been sabotaged by soldiers from within its own ranks. America and the CIA have been working heroically to hive off the bad from the good within the Yemeni Army. It seems to be working. Yemeni war planes are flying again and are taking out tanks that the bad Yemeni Army gave to Al-Qaeda. The weight of the renewed aerial assault is now taking its toil on the jihadis. CIA drones are active and working in concert with the good Yemenis.
The new leader of Mali says he will begin a war soon against AQIM and try to destroy the Kingdom of Al-Qaeda that has sprung up in his back yard. The rebel groups that worked with AQIM to seize half the country (an area bigger than France) have disavowed their jihadist partner and promised various levels of support or neutrality in the coming war. CIA fingerprints in all this are glaringly obvious. Why would rebel leaders sell out their partner AQIM? Clearly they are being threatened in a convincing manner.
The Syrian Army is honoring a UN ceasefire accord as talks begin with Iran and the US led group called 5 plus 1, so Iran is reining Assad in, at least for now. Ahmadinejad wants to play ball with 5 plus 1 and the Ayatollah does not. The Ayatollah is not necessarily more powerful than Ahmadinejad within Iran. The best way to gauge Ahmadinejad's strength is to listen to what he says when he is hauled in front of the Iranian Parliament. Last time this happened he mocked the members of Parliament for having fake college degrees (which I guess many of them have). Licking its wounds after this tongue lashing, Parliament passed a new law supposedly giving it the power to easily impeach the PM Ahmadinejad. If it tries and fails to impeach him, the Ayatollah is in big trouble. Have you noticed how assassination attempts from Mossad and CIA have stopped? The good guys are trying to help the PM.
Tuesday, April 10, 2012
A Perfect Storm
Charts: The S&P 500 smashed downward through its 50-day moving today. Selling accelerated once this key technical level was breached. Volatility has skyrocketed. Yields on Spanish and Italian debt are screaming upward, threatening the Euro-zone.
Fundamentals: The Euro-debt problem was smoothed over in recent months when the ECB injected $1.3 trillion into European banks. That was the Euro-zone's QE1. The market is now demanding a Euro-zone QE2. Of course this is solving a debt problem with more debt. The only way this will work is if the extra debt buys time for free market reforms to be implemented. Right now the Euro-zone has austerity fatigue and free market reforms are linked to austerity. Amazingly, America also has austerity fatigue, even though the US has not implemented any austerity measures.
Long War: The situation in Mali has gotten worse. AQIM (Al-Qaeda North Africa) has carved out a kingdom for itself in the strife torn African nation. The AU army will have to start and win a new war to eliminate this new jihadist nation-state. The AU depends on American funding to wage war. This is a problem. Under the best scenario it will take years to win this new war if it ever occurs. Give peace a chance is not an option, not when you are dealing with Al-Qaeda.
AQAP (Al-Qaeda Arabian Peninsula) continues to defeat the Yemeni Army in open warfare and continues to sport high kill ratios. The Yemeni Army is split into two camps: pro-Al-Qaeda and anti-Al-Qaeda. Probably for this reason we are seeing tanks and other heavy weapons move from the Yemeni Army arsenal to Al-Qaeda. Thus we should not call AQAP's military force a militia, but a true army. There is massive American involvement in Yemen.
A lot of effort was put into defeating Al-Shabab in Somalia last year. This created a strategic buffer separating AQAP and AQIM. We are seeing AQIM move into Nigeria to strengthen its affiliate Boko Haram. And indeed Boko Haram is tearing apart its host country. Probably AQIM will try to move into Somalia once it has firmed up its gains in the other parts of North Africa. If Al-Shabab were to re-emerge it would be very bad.
The Long War has two halves: Iran and Al-Qaeda. The Syrian War is part of the Iranian conflict. And that part of the LW is not going very well.
We are in a period where the good guys are losing the LW. This is a century long conflict, so the tides of war will ebb and flow.
Fundamentals: The Euro-debt problem was smoothed over in recent months when the ECB injected $1.3 trillion into European banks. That was the Euro-zone's QE1. The market is now demanding a Euro-zone QE2. Of course this is solving a debt problem with more debt. The only way this will work is if the extra debt buys time for free market reforms to be implemented. Right now the Euro-zone has austerity fatigue and free market reforms are linked to austerity. Amazingly, America also has austerity fatigue, even though the US has not implemented any austerity measures.
Long War: The situation in Mali has gotten worse. AQIM (Al-Qaeda North Africa) has carved out a kingdom for itself in the strife torn African nation. The AU army will have to start and win a new war to eliminate this new jihadist nation-state. The AU depends on American funding to wage war. This is a problem. Under the best scenario it will take years to win this new war if it ever occurs. Give peace a chance is not an option, not when you are dealing with Al-Qaeda.
AQAP (Al-Qaeda Arabian Peninsula) continues to defeat the Yemeni Army in open warfare and continues to sport high kill ratios. The Yemeni Army is split into two camps: pro-Al-Qaeda and anti-Al-Qaeda. Probably for this reason we are seeing tanks and other heavy weapons move from the Yemeni Army arsenal to Al-Qaeda. Thus we should not call AQAP's military force a militia, but a true army. There is massive American involvement in Yemen.
A lot of effort was put into defeating Al-Shabab in Somalia last year. This created a strategic buffer separating AQAP and AQIM. We are seeing AQIM move into Nigeria to strengthen its affiliate Boko Haram. And indeed Boko Haram is tearing apart its host country. Probably AQIM will try to move into Somalia once it has firmed up its gains in the other parts of North Africa. If Al-Shabab were to re-emerge it would be very bad.
The Long War has two halves: Iran and Al-Qaeda. The Syrian War is part of the Iranian conflict. And that part of the LW is not going very well.
We are in a period where the good guys are losing the LW. This is a century long conflict, so the tides of war will ebb and flow.
Friday, April 6, 2012
Correction
Charts: The market has gone from rally to correction. This is the first correction of 2012. There is no way to know if this correction will force the market down a mere 3-5% or if it will morph into a full-fledged bear.
In previous blogs I have said a brand new bull market was born in October 2011. For a while the charts were saying a new bull market had emerged. A few weeks ago the charts started signaling a different message. The downturn in 2011 was a correction, not a bear market. The current bull market is 3 years old. It is prone to 17-20%corrections. There have been two that big so far.
It is also prone to powerful rallies in paper thin volume. The most recent rally was like that. And this is one of the technical indicators that tells us we are in the same old bull market. Others include large caps outperforming small caps and identical leadership before and after the 2011 downturn. Example: Apple and Priceline.
The most important technical indicator right now is Spanish bond yields.
Fundamentals: Bond vigilantes are tearing into Spain, recreating the same problems we faced with Greece. America's latest jobs report was horrible. Economic data from China is mixed. The root of all these problems is high oil prices. We could see central banks here and everywhere loosening monetary policy to juice the world economy. This might jolt stocks upward but it would also put upward pressure on oil prices if there isn't a Long War breakthrough with Iran. This might not lead to generalized inflation. It might not even be that great for oil companies if consumption goes down.
Long War: Al Qaeda is winning in Yemen. The Yemeni Army is by and large losing when it enters battle with Al Qaeda. America is stepping up its efforts there and seems to be making brutal leadership changes inside the Yemeni government. Despite the bad news the fact that the US is apparently able to sack Yemeni leaders is encouraging. Drone strikes are increasing and will eventually start hurting the bad guys. Still, I get the Willies when the bad guys have higher kill ratios than the good guys.
The government of Mali was overthrown recently. AQIM (Al Qaeda North Africa) is a major player in the new Mali and has already grabbed several villages for itself and its affiliates. France is sending Special Forces there. The African Union is in the early stages of mobilizing against the new Mali. Bear in mind the AU Army has pretty much defeated Al-Shabab in Somalia and Al-Shabab was very tough, equal to AQIM. It is possible the new Mali won't want to screw with the AU and will break ranks with AQIM.
Sudan and South Sudan are on the verge of full-fledged war, although peace talks are ongoing and total war has not yet broken out. At one point Sudan leader Bashir worked with the CIA and it probably has some hooks in him.
The big LW battlefield is Syria. If Assad is overthrown it would mean Iran's overseas military empire is doomed, this would break Iran's power to jack oil prices, which is everything to us. There is supposed to be a UN mandated ceasefire in a few days. The US says the rebels will be armed if Assad breaks the ceasefire. This would mark the start of a whole new war and obviously the good guys have to win.
I'm sure you've noticed that every one of these hotspots has no chance of ever seeing USMC boots on the ground. They are all owned 100% by the CIA. Is Langley overstretched?
In a previous blog I mentioned that the CIA and NSA are obligated by the Camp David Accord to monitor and react to all militant activity in Egypt's Sinai peninsula. Entrenched jihadist militias are now routinely launching rockets from Sinai into Israel. Oil pipelines leading from Egypt into Israel have been bombed 48 times. So Langley has abandoned an old (but very important) outpost. Obviously then it is overstretched.
But then CIA Director Petraeus is the greatest military mind since George Patton.
In previous blogs I have said a brand new bull market was born in October 2011. For a while the charts were saying a new bull market had emerged. A few weeks ago the charts started signaling a different message. The downturn in 2011 was a correction, not a bear market. The current bull market is 3 years old. It is prone to 17-20%corrections. There have been two that big so far.
It is also prone to powerful rallies in paper thin volume. The most recent rally was like that. And this is one of the technical indicators that tells us we are in the same old bull market. Others include large caps outperforming small caps and identical leadership before and after the 2011 downturn. Example: Apple and Priceline.
The most important technical indicator right now is Spanish bond yields.
Fundamentals: Bond vigilantes are tearing into Spain, recreating the same problems we faced with Greece. America's latest jobs report was horrible. Economic data from China is mixed. The root of all these problems is high oil prices. We could see central banks here and everywhere loosening monetary policy to juice the world economy. This might jolt stocks upward but it would also put upward pressure on oil prices if there isn't a Long War breakthrough with Iran. This might not lead to generalized inflation. It might not even be that great for oil companies if consumption goes down.
Long War: Al Qaeda is winning in Yemen. The Yemeni Army is by and large losing when it enters battle with Al Qaeda. America is stepping up its efforts there and seems to be making brutal leadership changes inside the Yemeni government. Despite the bad news the fact that the US is apparently able to sack Yemeni leaders is encouraging. Drone strikes are increasing and will eventually start hurting the bad guys. Still, I get the Willies when the bad guys have higher kill ratios than the good guys.
The government of Mali was overthrown recently. AQIM (Al Qaeda North Africa) is a major player in the new Mali and has already grabbed several villages for itself and its affiliates. France is sending Special Forces there. The African Union is in the early stages of mobilizing against the new Mali. Bear in mind the AU Army has pretty much defeated Al-Shabab in Somalia and Al-Shabab was very tough, equal to AQIM. It is possible the new Mali won't want to screw with the AU and will break ranks with AQIM.
Sudan and South Sudan are on the verge of full-fledged war, although peace talks are ongoing and total war has not yet broken out. At one point Sudan leader Bashir worked with the CIA and it probably has some hooks in him.
The big LW battlefield is Syria. If Assad is overthrown it would mean Iran's overseas military empire is doomed, this would break Iran's power to jack oil prices, which is everything to us. There is supposed to be a UN mandated ceasefire in a few days. The US says the rebels will be armed if Assad breaks the ceasefire. This would mark the start of a whole new war and obviously the good guys have to win.
I'm sure you've noticed that every one of these hotspots has no chance of ever seeing USMC boots on the ground. They are all owned 100% by the CIA. Is Langley overstretched?
In a previous blog I mentioned that the CIA and NSA are obligated by the Camp David Accord to monitor and react to all militant activity in Egypt's Sinai peninsula. Entrenched jihadist militias are now routinely launching rockets from Sinai into Israel. Oil pipelines leading from Egypt into Israel have been bombed 48 times. So Langley has abandoned an old (but very important) outpost. Obviously then it is overstretched.
But then CIA Director Petraeus is the greatest military mind since George Patton.
Wednesday, April 4, 2012
All Eyes on Iran
Charts: The price action for the S&P 500 isn't that bad despite the current sell-off but the volume pattern is not good. Over the past couple weeks we have seen big volume on down days and weaker volume on up days, a sign that hedge funds are bailing out. Most chartists then would say we have either entered a correction or the rally is under significant pressure. At the beginning of a correction all we can ever say is that it could turn into a bear market or it could be mild and represent a buying opportunity.
Fundamentals: The Euro-zone crisis is flaring up and the price of oil is elevated. We can point to other problems too, like the slow down in China, but all economic sins come from the original sin: the threat of Israel bombing Iran and the subsequent increase in energy costs. This is the source of all global economic weakness. So, oh joy, we need to focus on the Long War.
Long War: In Yemen, Al-Qaeda at last has an army, not a militia. When the American backed Yemeni Army attacks the Kingdom of Al-Qaeda in southern Yemen it is routinely defeated by the Al-Qaeda army and kill ratios are about 2-1 favoring the bad guys. This has never happened before in the Long War. The CIA now has a very robust drone campaign in Yemen that is as big as the campaign in the Pak tribal lands. Getting very little attention is the fact that Iran has carved out a puppet state in northern Yemen.
The US says Saudi Arabia and Qatar will start arming the Free Syrian Army if Assad doesn't roll over and surrender at once. Assad will not roll over. What the US is actually saying is it will soon unleash the CIA in Syria. First of all, it is disconcerting that the CIA is currently leashed in this, the most important, LW battlefield. What's up with that? Syria is of course the primary puppet government of Iran and if the good guys can't take out Assad, we're screwed.
In Iran itself, Ahmadinejad is locked in a political struggle with the Ayatollah. If the US and its allies are able to keep making the sanctions against Iran bite and if they can start dismantling Iran's puppets, then Ahmadinejad will allow UN weapons inspectors into his country and essentially capitulate to Western demands on nuclear weapons development. The Ayatollah will see his country go up in flames rather than play ball with the West. So Ahmadinejad is now a good bad guy. And winning the war in Syria is key to everything: undermining the Ayatollah, putting Ahmadinejad in charge of Iran, starting peace talks which makes it impossible for Israel to attack Iran, which will knock down the price of oil, which will take pressure off the Euro-zone, which will cause Italian and Spansih bond yields to go down, which will cause the stock market rally to resume.
So guess what? This all is dependent on the White House taking the leash off the CIA, a leash that should never be there in the first place. The leash will remain tight if Obama thinks he can coast to election day without doing anything bold; this is his natural inclination. The leash will come off if Obama thinks he can't wait until after the election. As always, Obama knows what the he should do, he is not stupid like Jimmy Carter. Obama is smart, but is he courageous? Time will tell.
Fundamentals: The Euro-zone crisis is flaring up and the price of oil is elevated. We can point to other problems too, like the slow down in China, but all economic sins come from the original sin: the threat of Israel bombing Iran and the subsequent increase in energy costs. This is the source of all global economic weakness. So, oh joy, we need to focus on the Long War.
Long War: In Yemen, Al-Qaeda at last has an army, not a militia. When the American backed Yemeni Army attacks the Kingdom of Al-Qaeda in southern Yemen it is routinely defeated by the Al-Qaeda army and kill ratios are about 2-1 favoring the bad guys. This has never happened before in the Long War. The CIA now has a very robust drone campaign in Yemen that is as big as the campaign in the Pak tribal lands. Getting very little attention is the fact that Iran has carved out a puppet state in northern Yemen.
The US says Saudi Arabia and Qatar will start arming the Free Syrian Army if Assad doesn't roll over and surrender at once. Assad will not roll over. What the US is actually saying is it will soon unleash the CIA in Syria. First of all, it is disconcerting that the CIA is currently leashed in this, the most important, LW battlefield. What's up with that? Syria is of course the primary puppet government of Iran and if the good guys can't take out Assad, we're screwed.
In Iran itself, Ahmadinejad is locked in a political struggle with the Ayatollah. If the US and its allies are able to keep making the sanctions against Iran bite and if they can start dismantling Iran's puppets, then Ahmadinejad will allow UN weapons inspectors into his country and essentially capitulate to Western demands on nuclear weapons development. The Ayatollah will see his country go up in flames rather than play ball with the West. So Ahmadinejad is now a good bad guy. And winning the war in Syria is key to everything: undermining the Ayatollah, putting Ahmadinejad in charge of Iran, starting peace talks which makes it impossible for Israel to attack Iran, which will knock down the price of oil, which will take pressure off the Euro-zone, which will cause Italian and Spansih bond yields to go down, which will cause the stock market rally to resume.
So guess what? This all is dependent on the White House taking the leash off the CIA, a leash that should never be there in the first place. The leash will remain tight if Obama thinks he can coast to election day without doing anything bold; this is his natural inclination. The leash will come off if Obama thinks he can't wait until after the election. As always, Obama knows what the he should do, he is not stupid like Jimmy Carter. Obama is smart, but is he courageous? Time will tell.
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