Abu Dhabi

Late last month, tens of thousands of Malaysians donning banned yellow attire took to the streets in Kuala Lumpur to call for the ouster of Prime Minister Najib Razak whose government has been accused of obstructing an investigation into how some $700 million from a Goldman-backed development bank mysteriously ended up in Najib’s personal bank account. As it turns out, the story goes well beyond Goldman and Najib. As WSJ reports, the 1MDB debacle takes us deep into the shadowy world of sovereign wealth funds where it appears as though someone told a $1.4 billion lie...

Filed under 'what the f##k?', French President Francois Hollande is preparing for air strikes in Syria in a somewhat mind-numbing approach to to stem a flood of refugees from the Middle East into Europe. Using the always-ready excuse of "grappling with the threat of terrorism," Bloomberg reports Hollande's response to Europe’s biggest refugee crisis since World War II by increasing the bombing of the very place from which the refugees are fleeing...

"Regional buyers need a lot of conviction to step in front of this speeding train [especially] in context of a rapidly changing economic environment."

Following the end of a horrible week for petroleum importers (not to mention shale producers) despite WTI briefly dipping under $40 (wasn't this supposed to be great news for the US economy?) we have the start of a just as ugly week for the Persian Gulf oil exporters, whose Sunday market open can be described as a continuation of last week's broad risk carnage, and where Saudi Arabia, until recently the region's best performing market, is now down 10% for the year and down 30% compared to 12 months ago.

OPEC next gathers December 4 in Vienna, just over a year since Saudi Oil Minister Ali Al-Naimi announced at the previous OPEC winter meeting the Saudi decision to let the oil market determine oil prices rather than to continue Saudi Arabia’s role of guarantor of $100+/bbl oil. Despite the intense financial and economic pain this decision has inflicted on Saudi Arabia, its fellow OPEC members, and other oil producers, the Saudis have given no indication they plan to alter course. Given the Saudi decision’s positive impact on their and their Gulf Arab allies’ relative position within OPEC and its negative impact on OPEC outsiders, it is possible, perhaps even likely, the Saudis will face an OPEC outsider revolt at the December 4 OPEC meeting.. with three possible outcomes - Reconociliation, Separation, or Divorce.

On Monday, Saudi Arabia celebrated the beheading of its 100th prisoner this year. The story was nowhere to be seen on Arab media despite the story's circulation on wire services. Even international media was relatively mute about this milestone compared to what it might have been if it had concerned a different country. How does a story like this go unnoticed? Today's release of the WikiLeaks "Saudi Cables" from the Saudi Ministry of Foreign Affairs show how it's done.

• Greece, creditors exchanging documents to reach deal - Commission (Reuters)
• Greece’s Creditors Reach Consensus on Proposal to Athensa (WSJ)
• Greece calls on lenders to accept 'realistic' plan sent on Monday (Reuters)
• Hundreds missing, many elderly tourists, after ship capsizes on China's Yangtze (Reuters)
• Oil up ahead of OPEC meeting as dollar slips (Reuters)
• U.S. Met Secretly With Yemen Rebels (WSJ)
• Euro zone back to inflation as May prices beat forecast (Reuters)
• Patients Get Extreme to Obtain Hepatitis Drug That's 1% the Cost Outside U.S. (BBG)

History has been so fascinated with oil and its price movements that it is indeed hard to imagine our future without oil. The world is still myopic when it comes to energy. Yes, it wants to embrace renewables but not at the cost of oil. Whatever happens to oil prices in the coming years, one thing is certain: that the age of oil isn’t ending anytime soon, at least not in the next 30 years.

When it comes to our current pre-war, pre-revolutionary world (in Paul Tudor Jones' words) there are two social classes which are jockeying for the post positioning when it all comes crashing down: the Ultra High Net Worth, i.e., the 0.01%, those 211,275 individuals (and their families) who have a net worth over $30 million and who collectively control $30 trillion in wealth, and everyone else, with the countdown to extinction for the global middle class now getting louder by the day, leaving a world of a handful of uber-wealthy oligarchs and billions of, well, others. And nowhere is this distinction more vivid than when looking at their residential real estate holdings. But while the real estate of the 99.99% is boring (and increasingly in the form of rentals), when it comes to the dwellings of the 0.01% things get exciting, and are the topic of the latest joint report between Wealth-X and Sotheby's whose findings we summarize below.

• Hilsenrath: Fed Ushering in New Era of Uncertainty on Rates (WSJ)
• Is Supreme Court's chief justice ready to take down ObamaCare? (The Hill)
• Netanyahu arrives in U.S., signs of easing of tensions over Iran speech (Reuters)
• Nemtsov Murder Fuels Suspicion, Fails to Spur Russia Selloff (BBG)
• ECB uncomfortable with leading role in Greek funding drama (Reuters)
• Video shows Los Angeles police shooting homeless man dead (Reuters)
• Iraq Military Begins Campaign to Reclaim Tikrit (WSJ)
• How Billionaires in London Use Secret Luxury Homes to Hide Assets (BBG)

We don't get it, and we definitely don’t get why nobody is asking any questions. The IMF and EU make a lot of noise – through the Eurogroup – about all the conditions Greece has to address to get even a mild extension of support, while the same IMF and EU keep on handing out cash to Ukraine without as much as a whisper – at least publicly...

It took a while, but three months after we wrote "How The Petrodollar Quietly Died, And Nobody Noticed", someone finally noticed.

Following the disgusting images of a Jordanian pilot being burned (allegedly) burned alive by ISIS yesterday, the US coalition against the terrorists appears to be faltering. As The NY Times reports, The United Arab Emirates, a crucial Arab ally in the American-led coalition against the Islamic State, suspended airstrikes against the Sunni extremist group in December, citing fears for its pilots’ safety. The UAE made it clear its pilots will not return to the fight until the Pentagon improve its search-and-rescue efforts, shifting the base of support from Kuwait to Iraq, after foreign minister, Sheikh Abdullah bin Zayed bin Sultan Al Nahyan, "let [Barabara Leaf] have it over this," the new American ambassador, why Central Command, in his country’s view, had not put proper assets in northern Iraq for rescuing downed pilots.

Moments ago, following our chart showing the devastation in Q1 earning forecasts, Exxon Mobil came out with its Q4 earnings, and - as tends to happen when analysts take a butcher knife to estimates - beat EPS handily, when it reported $1.56 in EPS, above the $1.34 expected, if still 18% below the $1.91 Q4 EPS print from a year earlier. A primary contributing factor to this beat was surely the $3 billion in Q4 stock buybacks, with another $2.9 billion distributed to shareholders mostly in the form of dividends.  However, while XOM did the best with margins and accounting gimmickry it could under the circumstances, there was little it could do to halt the collapse in revenues, which printed at $87.3 billion, well below the $92.7 billion expected, and down a whopping 21% from a year ago. And this is just in Q4 - the Q1 slaughter has yet to be unveiled!

Because nothing says "recovery" like the record-breaking surges in sales of Rolls-Royce luxury vehicles juxtaposed by the highest level of auto loan delinquency since the 2008 crisis peak...