CIA Has Finger In Sudanese Pie

Charts: The S&P 500 closed at, 1197, up .07%. The index dropped in early going, hit support at 1190, and bounced up, good chart action. Resistance is at 1200. Yield on the ten-year note keeps going down (bullish for both stocks and bonds). Today is day 2 for the Dow trading above 11,000. Equity volume is horrible, but it must be horrible to support the bond market. Ultimately, geopolitics is supporting the US bond market.

Fundamentals: In 8 months the Bush tax cuts expire, the equivalent of a tax hike. And taxes will steadily rise every year after 2011 as far as the eye can see, choking the private sector. Businesses and individuals are bringing purchases, income, and activity forward into 2010 to beat the gathering tax tsunami, making hay while the sun shines. This will artificially juice the economy for the next few months. Someday there will be a hangover of epic proportion but for now the party continues.

Geopolitics: VP Joe Biden has a big mouth, lucky for us. Biden says that Iraqi Intelligence has not cooperated closely with the CIA in the past but is changing gears and reaching out to its American sister agency. Last week Iraqi counterterrorism operations increased fourfold. After the big election, Al-Qaeda in Iraq launched several big terror strikes against both Sunni and Shiite targets, an attempt to reignite sectarian war. It didn’t work and only forced the good guys to get serious about hunting down the bad guys.
The loser of the election, Maliki, tried several anti-democratic moves to cling to power such as a rigged vote recount and disqualifying candidates he doesn’t like by claiming they are former Baathists. Grand Ayatollah Sistani says he won’t put up with this nonsense and that effectively ends it since defying the Grand Ayatollah would be suicide for Maliki.
It’s almost as if the CIA has handpicked Allawi as the next leader of Iraq. There is evidence that the same thing is happening in the impending elections in Sudan. Jimmy Carter is in Sudan monitoring these elections. The former President says the election is shaping up to be reasonably honest and the current Islamist dictator (a good bad guy), al-Bashir, is likely to win. Al-Bashir is supposedly willing to allow a referendum in a few months that will see southern Sudan split off and form a separate country, which should end the nearly century-long Sudanese civil war. Al-Bashir’s enemies uniformly call him a “CIA stooge,” that plus the fact he is pursuing a host of pro-American policies is strong evidence that the Agency has a finger in the pie.
And the CIA is doing a good job along the Afpak border region where one of its drones killed 5 Taliban leaders yesterday. While the Hellfire missiles were flying, the Pak Army was busy killing several dozen bad guys up and down the length of the border region, a daily occurrence.

Specific Stocks: Private equity firm Cerberus bought small defense company DynCorp yesterday, paying a 50% premium. DynCorp is levered to the Long War. Cerberus is saying that the Long War will last a long time. ITT and CUB are similar to DynCorp. And don’t forget RTN (my favorite).
I am building a position in LTD, maker of Victoria’s Secret lingerie and Body Works. For years LTD wouldn’t make plus size woman’s apparel. It does so now but with the illusion that it does not. Lulu Lemon (LULU, maker of high end women’s athletic apparel) is also pursuing this strategy, to great success. LTD has strong value metrics such as cash flow.