With so much going on around the world, the recent shooting exchange between the troops of India and Pakistan forces in the disputed Kashmir region may have gone unnoticed. According to reports, two people from both sides died in the latest round of trouble.

These outbursts have occurred after both countries agreed to a bilateral ceasefire in November 2003. However, there will be a day of reckoning that could shake the entire planet.

(Photo: The Wagah border closing ceremony held daily is an amazing display with India Border Security Forces and Pakistan Rangers simultaneously lowering their nations’ flags as they close the border. The spectacle has gone on since 1959 on Grand Trunk Road; for years, this has been the only road that connects the two nations. See video:   https://www.youtube.com/watch?v=LZ0ue-XGl9c

All eyes are on the Middle East, and its never-ending turmoil. However, one day, events further east will capture the world's imagination, not because of the kind of savagery displayed by ISIS or the civil conflicts and coups that only lead to more civil conflicts and coups, but for the sheer magnitude of the power and destructive capabilities. It is hard to fathom a time when sides will be drawn and war unleashed. There will be strange bedfellows.

The Japanese will partner with the nations they annihilated and humiliated in World War II, while China will be the big dog attracting a bevy of would-be partners and possibly Russia. You see, for all the pomp and circumstances off the Wagah border, ritual India is not bulking up for an eventual conflict with Pakistan... it’s preparing for an eventual war with China.

In the past week, India has commissioned its largest indigenous ship… a world-class destroyer, the INS Kolkata (below) and a stealth anti-submarine warship, the INS Kamorta. The goal is to deter China enough to avoid war.

Ninety percent of the world's oil delivered by sea must cross the Indian waters, and China has been very aggressive as of late. It has been reminding everyone that it intends to control these ocean-lanes. Of course, China has no problem using intimidation tactics with any nation, including the United States. On Friday, Chinese warplanes came within several feet of American military planes, using rolling techniques to make visible its weaponry and perhaps its intent.

There is no doubt that we are dealing with savages who behead journalists, rape women, and slaughter Christians, but the greatest conflict over oil and power will not happen in the Middle East. The animosity, power, and determination of countries involved will draw America into hard choices. Our fear of combat will embolden some and force allies to take matters into their own hands. Moreover, this is just another reason we need to deal with ISIS with an iron fist and swift resolve that sends a message to the world now and ten years from now.

Today’s Session

As earning season nears its end, we have fewer companies reporting each week. Though this mornings’ companies did relatively well, they will not be enough to move the market (chart below). However, we have a few sources of economic data that sure will move the market. This morning, we await the Chicago Fed National Activity Index, the Flash Purchasing Managers’ Index (PMI) Service report, and new home sales. The major indices are indicating higher, so far, and hopefully, they will be able to continue the rally this week, especially as individual investors are extremely bullish.

 Big news of the session includes Intermune (ITMN) being acquired by Roche for $8.3 billion (we are long on the swing service) and Burger King (BKW) buying Tim Horton’s (THI), in part, for lower taxes. It is true that Canada has a lower corporate tax rate than the United States, but this deal allows Burger King the opportunity to earn money around the world and bring it “home” without penalties. US based companies must pay taxes around the world in places where money is earned and then, if they want to bring profits home, pay another 35%.

America Hostile Environment

Considering how in the last four years, comparable store sales at Burger King have only been higher once, the downward trend continues, coupled with the company closing stores. There have been a couple near death experiences for the company over the years from 2002 to 2006 as the franchisees closed 1,196 stores.