Charts: The S&P 500 closed at 1166, down a fraction. The market is digesting its torrid gains. Oil continued retreating from technical resistance after it hit $83 a barrel.
Fundamentals: Retail inflation came in tame today. Employment data was slightly soft but roughly inline. Obama-Care is gaining momentum but still up in the air (scary). European countries are trimming their deficits while the US Congress is busy shoveling pork with both hands. So there is a shift of sovereign debt away from virtually every country on Earth to America. These are the questions for the 21st century: Is buying US debt becoming a sort of global tax? Who pays for the bread and circuses of the United States of Rome?
Geopolitics: CIA drones last week killed a Yemeni linked Al-Qaeda leader who organized the December massacre of 7 CIA officers. The recent drone strike was in Pakistan and the Dec. massacre was in Afghanistan but it is interesting that the bad guy was linked to AQAP. Evidently Al-Qaeda must reach out to its outer provinces to find quality leadership. In a recent interview CIA Director Panetta said Afpak Al-Qaeda/Taliban leadership has been seriously degraded. As we’ve seen, there has probably been old-fashioned assassination alongside high tech drone attacks. The lack of bad guy leadership is evident in Marja. Taliban fighters are coming out at night and brutalizing the local citizenry with tactics that include beheading. One tribal elder told the New York Times, “After dark the city is like the kingdom of the Taliban.” In the long run such brutality will hurt the bad guys. In the short run it will slow down the advance on Kandahar because conquered territory is not yet pacified.
Hillary is off to Russia to hammer out the final details in a nuclear weapons reduction treaty. Pres. Obama is directly involved in the negotiations. When and if the treaty is finalized, US-Russian relations will take a big jump forward. India is already backing off from its recent craziness at the prospect of the Russian bear and American eagle making nice.
And Israel is also inching away from its anti-US craziness, allowing Palestinians more freedom of movement, backing away from its recent crackdown.
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