France

“I worry greatly that the rhetoric coming from the Republicans, particularly Donald Trump, is sending a message to Muslims here ... and ... around the world, that there is a ‘clash of civilizations.'” So said Hillary Clinton in Saturday night’s New Hampshire debate. Yet, that phrase was not popularized by Donald Trump, but by Harvard’s famed Samuel Huntington. That Clinton is unaware of the thesis, or dismisses it, does not speak well of the depth of her understanding of our world.

It has been a seesaw session with U.S. stock index futures following their dramatic buying burst in the last half hour of market trading yesterday by first rising, then falling, then rising again alongside European equities both driven almost tick for tick with even the smallest move in the carry trade of choice, the USDJPY, even as Asian shares trade near intraday highs after China’s leaders signaled they will take further steps to support growth.

In a weekend of very little macro newsflow facilitated by the release of the latest Star Wars sequel, the biggest political and economic event was the Spanish general election which confirmed the end of the PP-PSOE political duopoly at national level.  As a result, there was some early underperformance in SPGBs and initial equity weakness across European stocks, which however was promptly offset and at last check the Stoxx 600 was up 0.4% to 363, with US equity futures up nearly 1% after Friday's oversold drubbing. In other key news, the commodity slide continues with Brent Oil dropping to a fresh 11-year low as futures fell as much as 2.2% in London after a 2.8% drop last week.

“To the intelligent man or woman, life appears infinitely mysterious, but the stupid have an answer for everything.” ~Edward Abbey

In the wake of a Security Council resolution on Syria that failed to consider the fate of Bashar al-Assad, a belligerent Turkey is fuming mad. In comments made from Istanbul on Saturday, PM Ahmet Davutoglu said the UN's stance "lacks realistic perspective." He also said Turkish troops will remain in Iraq until Mosul is "freed" from ISIS. Translation: Turkish boots will be on Iraqi ground for the foreseeable future.

"Turkey and Qatar face common problems and we are both very concerned about developments in the region and uncertain policies of other countries. We confront common enemies. At this critical time for the Middle East cooperation between us is vital."

On Friday we get still more evidence that the West is begrudgingly coming to terms with the fact that Assad will be sticking around for the foreseeable future in Syria, as Bild (citing anonymous sources) says German spies have been "cooperating" with Assad for "some time" and are set to establish an intelligence cell in Damascus.

Following the latest BOJ statement, the market found itself wrongfooted assuming the BOJ was actually launching another episode of easing, sending the USDJPY soaring, until suddenly the realization swept the market that not only was the incremental action not really material, but even Kuroda spoke shortly after the announcement, confirming that "today's decision wasn't additional easing." The result was one of the biggest FX headfakes in recent days, perhaps on par with that from December 4 when EUR shorts were crushed, as the biggest carry pair first soared then tumbled and since the Yen correlation drives so many risk assets, also pulled down not only Japanese stocks but US equity futures.

The day has come when the boxed-in Fed has no choice: with the vast majority of the market expecting a rate hike, Yellen has to deliver or suffer a crushing confidence blow like no other. And deliver she will, with expectations that said hike will be "as dovish as possible." For now however, the market is desperate to convince itself that just as more easing and more QE were bullish for the market, so rate hikes are just as bullish. Recall from late 2013: "tapering is not tightening," then the 2015 version of this refrain is "tightening is not tightening."

“Strengthening Frontex, creating a kind of border guard would by all means be needed, beneficial,” he said on his way into a meeting of EU foreign ministers in Brussels. “But the way the commission proposed it—for it to be a structure independent from nation states—is astounding.” He added: “There’d be an undemocratic structure reporting to no one knows who.”

"The U.S. troops are about to see for themselves what they're up against, and if America is serious about defeating ISIS, it will need to contribute more than guns and bullets; America's new allies will need artillery, armored vehicles and antitank weapons to match ISIS' firepower."

News that billionaire Marc Lasry's Avenue Credit Strategies Fund open-ended mutual fund has been slammed with redemptions in recent weeks will hardly ease fears about a capital outflow from the junk bond which has sent junk ETFs down 12% for the year and has become the main topic of discussion over the past week following a flurry of reports about panic among holders of below-investment grade bonds.

Judging by his prime-time speech last week, the final year of Barack Obama’s presidency will be marked by increased militarism abroad and authoritarianism at home. The centerpiece of the president’s speech was his demand for a new law forbidding anyone on the federal government’s terrorist watch list from purchasing a firearm. There has never been a mass shooter who was on the terrorist watch list, so this proposal will not increase security. However, it will decrease liberty.

Many people are cheering now that yesterday Marine Le Pen and her Front National (FN) party didn’t get to take over government in any regions in the France regional elections. They should think again. FN did get a lot more votes than the last time around, and, though she will be a little disappointed after last weekend’s results, it’s exactly as Le Pen herself said: “Nothing can stop us”.

While this may well be the most important week for capital markets in the past 9 years, when the Fed is widely expected to hike rates on Wednesday, precisely 7 years to the day since it cut rates to zero, here are the other key events to watch out for.