AN ENCORE PRESENTATION
On this day in 1836, the government of the United States granted a patent on a
device that would become the prototypical American weapon. And, by accident, its
development would become a prototypical story of American invention.
The patent, of course, was awarded to Samuel Colt for his "single barrel pistol with a
six chamber revolving breech." You and I (as well as Hoppy, Roy and Gene) knew it
as a "six shooter."
Colt's idea was not entirely unique. Several patents for revolvers had been granted
earlier (one of the earliest was for a "12 shooter" but it, like the others, didn't work
well). But Colt, who was 22 when he got the patent, showed his gun was practical
(and at the time....it was the only way a man on horseback could get several shots off
successfully). Therefore, it seemed like a good idea and Colt found backers who
helped him open "The Patent Arms Company" in Paterson, N.J. But despite rave
notices for the weapon, sales were slow and the factory closed in 1842. Colt slipped
closer to bankruptcy.
Then in 1846, fate took another weird turn. The U.S. was going to war with Mexico.
And the Texans they were fighting for, suggested to the American Secretary of War
that many of them were very happy with Mr. Colt's six shooter. So the Secretary of
War ordered lots of them.
That left Mr. Colt with several problems. 1) He had no factory. 2) He didn't have a
six-shooter left to his name.
He attacked the second one first. He advertised for samples of his own gun. Gun
owners thought the ads meant the revolver was now a collector's item…..so they
refused to sell. Colt was reduced to hiring a gunsmith to work from Colt's own
original diagrams (with suggestions from the famous Texas Ranger - Sam Walker).
Finally.....when they had developed a prototype…..Colt needed to hurry things up. So
he hired…..who else.....the son of Eli Whitney to implement the concepts of mass
production and interchangeable parts. Within a decade the Colt .44 was the gun that
was winning the West.
To celebrate go to some place with a swinging door and order six shots of red eye.
And tell the surly looking guy with a facial tic and a mustache (down at the end of the
bar), the immortal words of Hopalong Cassidy. "No matter how loud or how fierce
the guy behind a rock sounds, if you count the bullets, when he's out of ammunition
he's out of luck." Thanks Hoppy!
Traders tried to figure out whether the bears had run out of ammunition Wednesday,
or were they just pausing to reload.
Influence Of Dollar/Euro Mutates Somewhat. Is It Real Or Temporary? – Stocks
rose in light volume regaining nearly all of Tuesday’s losses. Crude oil also regained its
losses from the prior day. Gold, however, opted out of the traditional troika.
Some of the stock gain was attributed to assurances in the Bernanke testimony that
rates would remain low for a very long time. Certainly, the timing of the morning
rally lent credibility to the Bernanke influence. Stock rose almost vertically around
10:20 as his testimony began.
The dollar’s movements showed some muted influence on both stocks and oil. Shortly after stock trading had begun, the
dollar weakened from pre-dawn levels.
There was an Alice in Wonderland type thesis around the mid-morning softening of the dollar. It occurred as TV screens
showed the demonstrations in Greece turning rather ugly. The thinking was that European partners might be more
motivated to help, lest the violence worsen and spread to other challenged sovereigns. As the images left the screens, the
dollar began to tick back up.
The dollar rebound failed to return to the day’s highs and stayed well below the highs that followed the Discount Rate
move. That muted move did not appear to influence either stocks or oil. The failure of gold to correlate with stocks and
oil (as it has for weeks and weeks) was not readily explained. Traders will watch over the next few sessions to see if they
reconnect.
Traders were a little disappointed with the internal technicals of Wednesday’s rebound. In Tuesday’s selloff, the breadth
was negative on a 10 to 1 basis. Yesterday’s bounce saw breadth turn positive but by less than 3 to 1. Also, volume
dropped on the up move.
What’s Next – A Crossword Puzzle? – Stratfor examines a story about hidden bomb strategies that was published in an
al Qaeda on-line magazine (wow!). Here’s the opening:
The 12th edition of al Qaeda in the Arabian Peninsula (AQAP)’s online magazine, Sada al-Malahim (Arabic for
“Echo of Battle”) released Feb. 15 contained an interesting article discussing the group’s innovative, imaginative
designs for improvised explosive devices (IEDs). The article, titled “The Secrets of the Innovative Bomb,” discussed
the methods used to hide the IEDs employed in the group’s failed attacks against Prince Mohammed bin Nayef,
the Saudi deputy interior minister, and Northwest Airlines Flight 253 on Christmas Day 2009.
The article, bylined “The Military Committee,” noted that there are secrets to AQAP’s ability to smuggle IEDs
past security. The first secret listed is the divine nature of the attacks. The author notes the attackers completely
believe in God and act for God, and claims their inspiration and faith allow them to maintain a high degree of
self-control in the face of scrutiny by security personnel.
The second secret is that the AQAP operational planners carefully study security measures and then plan the type
of IED to employ in an attack based upon those measures. This is a process STRATFOR has previously discussed
many times when describing the adaptive and imaginative nature of jihadist planners like those with
AQAP. The article notes that AQAP pays attention to X-ray machines, metal detectors and detection equipment
intended to pick up explosive residue and odors — like sniffer machines and dogs — and then seeks
vulnerabilities in the system.
The final secret listed is that AQAP planners carefully study how security and intelligence services operate and
seek ways to avoid them. They study how to travel without raising suspicion and note that the success of Umar
Farouk Abdulmutallab in passing through multiple countries and airports in his effort to bomb Flight 253 despite his father’s warnings to authorities resulted from these efforts.
The author claims that the device used in the Prince Mohammed bin Nayef attack was different from the
underwear device used by Abdulmutallab, and seeks to refute media reports that the devices were the same.
First, the author claims there is no way that Abdullah Hassan Taleh al-Asiri, who attacked Prince Mohammed Nayef, could have carried a syringe anywhere near the prince. Second, the author maintains that al-Asiri was strip-searched, and that Saudi security even inspected his underwear. Because of this, the author asserts that the device was remotely detonated and that the detonator had been implanted in al-Asiri’s abdomen.
The idea that bombs may be implanted internally will likely raise more calls for intense scanning. All from an al Qaeda online magazine. The world grows more bizarre each day.
Cocktail Napkin Charting – In Wednesday’s Comments, we wrote that the napkins saw resistance at 1102/1106 in the S&P. Yesterday’s high was 1106. For today the napkins suggest resistance at 1104/1108 and then 1113/1118. Support looks like 1088/1092 with critical backup at 1080/1083.
A Busy Day – There’s a ton of “stuff” today. Initial Claims will be very important. We’ll also see Durable Goods and some home price data. Bernanke returns to the Hill and there are a couple of other Fed speakers
Consensus – The dollar is pressuring the troika this morning. Some sharp language out of Athens may be behind the move. Stay very nimble.
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