Another Tsunami

December 14, 2011

Now I’m back to the mundane complexities of the battle.

The European Summit last week was a B+ but not the transforming event some hoped for and the markets at this point are giving it a B–. The Chinese CPI slowed to 4.2% and pork prices continued to decline suggesting further CPI weakness opening the door to rate cuts. However, the Shanghai Composite continues to act very poorly and is on the verge of a breakdown. In New York, a high Chinese government official told a small group that China had an income disparity problem just as the U.S. did except that it was 2% vs. 98% instead of 1% vs. 99%.

To me the most frightening recent revelation was that the Iranians have the technology expertise that they were able to discover and successfully break into the command and control the guidance system of one of our drones flying 50,000 feet over Iran, divert it, and land it without a scratch. It is a treasure trove for the Iranians and anyone they decide to share it with. This particular drone was highly sophisticated and had supposedly infallible stealth plus a camera system that could see through clouds. It also had automatic firewalls that immediately return it to base if an electronic threat occurs, and a failsafe to blow it up if it doesn’t respond. It probably carried Sparrow drones. Obviously nothing worked as advertised. The Israelis must also be very concerned.

Anyway, I remain agnostic about markets. I can make a plausible case for 20% up or 20% ...

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