Rice Speaks Out

U.S. Secretary of State Condoleezza Rice has taken note of Islamic militant activity along Pakistan's border with Afghanistan.Dr.Rice said there's an uptick of terrorism against both people and troops.Militants cannot be allowed to do this.More needs to be done to stop them.Admiral Michael Mullen,Chairman of the Joint Chiefs of Staff,has visited Pakistan four times recently.He says we need Pakistan to put more pressure on that border.The admiral has been trying to forge a common border security strategy by NATO,Pakistan and Afghanistan.NATO forces cannot cross into Pakistan without its permission,although they have responded to militant activity with air strikes and artillery on numerous occasions.Militant incursions into Afghanistan will likely go on until winter closes the Hindu Kush mountains and foothills.

Stack Stocks

James Stack of Stack Financial Management likes the following stocks:Johnson and Johnson(JNJ),Pepsico(PEP),Microsoft(MSFT),Charles Schwab(SCHW) and Stryker(SYK).

From Kashmir to Kabul:The Struggle for South Asia

The conflict in South Asia is central to the history of our time.That is why I am following it so closely.The U.S. Navy and U.S. Marine Corps are intimately involved in this conflict with militant Islam,from ground to air to support at sea.If I have any news from that region,I feel I have to report it,rather than profile weapons or ships.The weapons and ships are,after all,only tools in the service of those who make history.

NATO Strikes Taliban Militants

On 20 July in Helmand Province,Afghanistan,NATO troops killed an important Taliban commander,Mullah Sheikh,and two of his followers,near Musa Qala.On the same day,NATO airstrikes killed about 20 Taliban militants in Khost Province.Admiral Michael Mullen,Chairman of the Joint Chiefs of Staff,analyzed the situation along the Pakistani frontier with Afghanistan.He sees a joining,a syndication of various terrorist groups,both within Pakistan,and in the ability to flow troops across that porous border.This intensifies the threat.As for an arbitrary timetable for withdrawing from Iraq,Admiral Mullen said the consequences of that could be very dangerous.Conditions on the ground are an extremely important consideration,the Chairman noted.

Upgrades

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Border Region Flares Up

According to the government of Helmand Province,Afghanistan,there has been a spike in mortar fire from Islamic militants in Pakistan.NATO troops have returned fire,resulting in more than 400 militants being killed since late April.Admiral Mike Mullen,Chairman of the Joint Chiefs of Staff,says the Pakistani frontier is a safe haven that's got to be eliminated.U.S. commanders in Afghanistan want 1,000 more Mine Resistant Armor Protected Vehicles and 10,000 more troops.There are 36,000 U.S. troops in Afghanistan now.British,Canadian and Dutch troops have also seen combat.More than 400 American soldiers and more than 80 Canadian soldiers have been killed in the war.U.S. outposts are being set up near the Pakistani border to counter the flow of militants.Afghan troops serve alongside the NATO forces.

The Three Nots

David Darst of Morgan Stanley(MS) advises investors:1.It's not over. 2.It's not time to increase risk. 3.It's not the end of the world.

Pakistani Frontier

Chaos reigns along the Pakistani frontier with Afghanistan.The Islamic militants have not been countered in an effective way.Indeed,they are threatening to seize control of the region.There seems to be a lot of confusion among the Pakistani authorities.It is hard to say what their policy is.Sometimes they respond with force;sometimes they negotiate.This is very harmful to the fragile government in Afghanistan.The militants have an extensive base for their activities for as long as the indecisiveness goes on.

Honors

Marine Pfc.Dawid Pietrek,24,of Bensenville,Illinois,was one of four U.S. Marines killed in action in Farah Province,Afghanistan on 14 June.A Polish immigrant,he was granted posthumous U.S. citizenship and interred in Arlington National Cemetery.He was a member of I Marine Expeditionary Force,based in Twentynine Palms,California.

Coverage Initiated

Morgan Stanley(MS) has initiated coverage of Lehman Brothers(LEH) with an overweight rating.Friedman,Billings and Ramsey(FBR) has initiated coverage of Adobe Systems(ADBE) with an outperform rating.

Charges Sworn

Charges are being sworn against Abd al-Rahim al-Nashiri,a Saudi of Yemeni descent,for his alleged role in the 12 October,2000 attack on the USS Cole(DDG67).Among the charges are conspiracy to violate the laws of war,murder,treachery,terrorism,destruction of property and intentionally causing serious bodily injury.The attack killed 17 U.S. sailors.Mr.al-Nashiri was al-Qaida's operations chief in the Arabian Peninsula until he was captured in 2002.The charges against him must be approved by a Department of Defense official who oversees military tribunals.Although Mr.al-Nashiri is a prisoner in the U.S. detention camp at Guantanamo Bay,Cuba,many others detained in Yemen in connection with the attack have escaped or been released.The USS Cole was repaired and remains in service.

Upgrades

Friedman,Billings andRamsey(FBR) has added Marvell Technology(MRVL) to its top picks list.Deutsche Bank(DB) has upgraded J.C. Penney(JCP) to buy from hold.