Israel

• Risky Student Debt Is Starting to Sour (WSJ)
• Political scandal in Spain as PP secret accounts revealed (El Pais)
• New York Times claims Chinese hackers hijacked its systems (NYT)
• Spain's Rajoy, ruling party deny secret payment scheme (Reuters)
• Iran crude oil exports rise to highest since EU sanctions (Reuters)
• BlackBerry 10’s Debut Fizzles as U.S. Buyers Left Waiting (BBG)
• Costs drag Deutsche Bank to €2.2bn loss  (FT)
• And the gaming of RWA continues - Deutsche Bank Beats Capital Goal as Jain Shrugs Off Loss (BBG)
• More fun out of London - Barclays, RBS May Pay Billions Over Improper Derivatives Sales (BBG)
• Hagel to face grilling by Senate panel on Mideast, budget (Reuters)

In what was the first clear instance of aggression by Israel toward Syria, overnight Israeli jets conducted a bombing run over a military site in Syria, targeting what according to Israel was a military convoy heading to Lebanon. As Al Arabiya reports: "Israeli jets bombed a convoy on Syria's border with Lebanon on Wednesday, sources told Reuters, apparently targeting weapons destined for Hezbollah in what some called a warning to Damascus not to arm Israel's Lebanese enemy. "The target was a truck loaded with weapons, heading from Syria to Lebanon," said one Western diplomat, adding that the consignment may well have included anti-aircraft missiles. The overnight attack, which several sources placed on the Syrian side of the border, followed warnings from Israel that it was ready to act to prevent the revolt against President Bashar al-Assad leading to Syria's chemical weapons and modern rockets reaching either his Hezbollah allies or his Islamist enemies."

In a shocking development, one which comes out of central planning left field, after eight years in his role as safe-guarder of the Shekel, the head of the Bank of Israel Stanley Fischer - Ben Bernanke's personal mentor, and famous underwater investor in AAPL - has announced his intention to step down. This resignation comes 10 months (and $100 less in AAPL) after the central bank's announcement to begin buying foreign stocks. Is this a harbinger of the change in the old brigade, and does it make Bernanke's departure one year from today virtually assured - we hope to find out, unless, of course, the most aggressive and ambitious central banking experiment in history to keep the global house of cards afloat fails in the meantime.

It's going to be a week of being bombarded with data and earnings from all angles. This week will see the first reading of US Q4 GDP as well as the first FOMC statement, Payrolls and ISM print of the year. In Europe we will get a handful of confidence indicators in the earlier part of the week but the main highlight will be the Spanish and Italian manufacturing PMIs on Friday.  The coming week could see further sizeable moves in FX, mainly because investors – and policymakers – have become a lot more focused on currency markets. Finally, a few potentially interesting policy speeches are scheduled in the upcoming week. In Japan, Prime Minister Abe will likely talk in parliament about his economic policy, which could contain more comments on the BoJ and the Yen. In Germany, Buba President Weidmann will talk at the car manufacturers association and the recent sharp move in EUR/JPY may well be a subject given the competition between German and Japanese brands. Interestingly, Mr. Weidmann already mentioned the BoJ in a recent speech about global pressures on central bank independence.

An overview of the fundamental determinants of the foreign exchange market in the week ahead. I look beyond the official rhetoric at what is pushing the yen lower. I also discuss the tightening of European monetary condition. In addition, there is a brief discussion of the key US events this week: the FOMC, Q4 GDP estimate, and US jobs report.

Israeli PM Benjamin Netanyahu says his nation must prepare for the threat of a chemical attack from Syria, amid concern at enemy efforts to test a post-election coalition Israel, and has deployed its new Iron Dome anti-missile system near the border with its northern neighbor. Along with this concern, as many have perhaps suspected, the Israeli Defense Minister confirmed yesterday that the US has prepared plans for a 'surgical' military operation to delay Iran's nuclear program. As The Jerusalem Post reports, Ehud Barak, added that in the past the US has been heavy-handed but that under Barack Obama, the United States has "prepared quite sophisticated, fine, extremely fine, scalpels," if the worse comes to the worst - even though the Israeli preference would be to end the nuclear threat diplomatically, calling for tougher sanctions (though he expressed doubt that diplomacy would lead to success). Just another geopolitical hotspot that the world's markets choose to ignore in deference to the one true leader - central bankers.

Just because there is a superficially-pacifist, yet supraficially genocidal, dictatorially-inclined egomaniac in every one of us, the moment the Maisto Fresh Metal Tailwinds 1:97 Scale Die Cast United States Military Aircraft - US Air Force Medium Altitude, Long Endurance, Unmanned Aerial Vehicle (UAV) RQ-1 Predator went on loss at Amazon (we would say sale, but that would imply some probability of profit, which as even the hotdog guy, knows is never going to happen at AMZN), everyone scrambled to buy one.  However, only those first in line got one: everyone else was greeted by a "Currently unavailable. We don't know when or if this item will be back in stock" sign. So what does one do: what one should have done in the first place before going for the one impulse purchase that can murder innocent children half way around the world courtesy of the latest iPad app "iKiller": read the customer reviews of course. Below is a broad sample of the rather bipolar main street America response when faced with the opportunity of having the same great power, if not so great - or any - responsibility, as is  given, by some 25% of the population (factoring for the 55% or so who don't vote) to the president of the USA, even if on a 1:97 scale.

After digesting the opinions of the shills, shysters and scam artists, I am ready to predict that I have no clue what will happen during 2013. The fog of uncertainty is engulfing the nation, making consumers hesitant to spend and businesses reluctant to hire or invest. Virtually all of the mainstream media, Wall Street banks and paid shill economists are in agreement that 2013 will see improvement in employment, housing, retail spending and, of course the only thing that matters to the ruling class, the stock market. Even among the alternative media, there seems to be a consensus that we will continue to muddle through and the day of reckoning is still a few years off. Those who are predicting improvements are either ignorant of history or are being paid to predict improvement, despite the overwhelming evidence of a worsening economic climate. The mainstream media pundits, fulfilling their assigned task of purveying feel good propaganda, use the 10% stock market gain in 2012 as proof of economic recovery. The facts prove otherwise... Every day more people are realizing the con-job being perpetuated by the owners of this country. Will the tipping point be reached in 2013? I don’t know. But the era of decisiveness and confrontation has arrived. The existing social order will be swept away. Are you prepared?

With the market basking in glow of good earnings results yesterday, mostly out of IBM, and to a lesser extent GOOG, which missed on the top line but beat on EPS squeezing some recent inbound shorts, S&P500 futures have yet to post a solid move to the upside. Perhaps a big reason for this is the recent recoupling of risk based on not one but two carry signals: the first is the well-known EURUSD pair, while the second is the recent entrant, the USDJPY, and it is the latter that continues to see a cover of the massive short interest accumulated over the recent 1000 pip move higher on what upon ongoing reflection has been a disappointing announcement out of the BOJ. Needless to say, the Nikkei whose recent surge higher was all due to currency weakness has tumbled overnight despite corporate fundamentals, if not economic data, which continues to post substantially subpar prints.

• Geithner allegations beg Fed reform (Reuters)
• BOJ Adopts Abe’s 2% Target in Commitment to End Deflation (BBG)
• Bundesbank Head Cautions Japan (WSJ)
• In speech, Obama pushes activist government and takes on far right (Reuters)
• Atari’s U.S. Operations File for Chapter 11 Bankruptcy (BBG)
• Israel goes to polls, set to re-elect Netanyahu (Reuters)
• Apple May Face First Profit Drop in Decade as IPhone Slows (BBG)
• EU states get blessing for financial trading tax (Reuters)
• Indian Jeweler Becomes Billionaire as Gold Price Surges (BBG)
• Europe Stocks Fall; Deutsche Bank Drops on Bafin Request (BBG)
• Algeria vows to fight Qaeda after 38 workers killed (Reuters)
• GS Yuasa Searched After Boeing 787s Are Grounded (BBG)
• Slumping pigment demand eats into DuPont's profit (Reuters)

An overview of the key factors and events that are shaping the investment climate in the week ahead.  It looks at some emerging market developments as well.  These are the main talking points and considerations that ought to be on your radar screen as investors or pundits.  

Today, Jeff Currie, Goldman Sachs chief commodity strategist said he wouldn’t be surprised if we woke up in summer with $150 oil. Well, I would, and here is why.

Just because the endless Israel vs Iran foreplay seems to no longer be exciting the world as much as it did all throughout 2010, 2011 and 2012 when military action seemed imminent over and over, it appears the world has a new geopolitical tension point: the recent incursion into Mali by French (and soon many other) forces, to protect "European interests" against "extremists" operating in the North, and as a corollary - the retaliation by the locals against Western Democratic powers. At least such is the simplistic plot line. Sure enough moments ago Reuters reported that islamist militants attacked a gas field in Algeria on Wednesday, claiming to have kidnapped up to 41 foreigners including seven Americans in a dawn raid in retaliation for France's intervention in Mali, according to regional media reports. The raiders were also reported to have killed three people, including a Briton and a French national. Subsequent reports indicate that the Algerian captives have been let go, and that this is purely an escalation against the invaders, an act which the US state department will harshly condemn at a 1pm press conference, and likely use as a catalyst to unleash US forces in the air or on the ground, to support the French campaign which at last check was going horribly.

How effective have the sanctions been in moderating Iran’s behavior up to now? Current indications are not much, despite the damage inflicted on the country’s economy. On 9 January Iranian President Mahmoud Ahmadinejad said that Iran should establish more processing industries in the oil and gas sectors to reduce dependency on exports of crude oil and that the budget plan for the next Iranian year of 1392 (to start on 21 March) envisaged less dependence on crude oil revenues as the government intends to replace crude oil exports with oil derivatives to allow the nation’s economy to participate in the oil sector’s lucrative downstream industry.... A regime that has weathered more than three decades of tumult in its efforts to construct an Islamic society seems unlikely in an energy-starved world to ameliorate its behavior solely to please the dictates of Washington, Brussels, the UN and Canberra. And oh, on 14 September 2012 the United States exempted Belgium, Britain, the Czech Republic, France, Germany, Greece, Italy, the Netherlands, Poland, Spain, and Japan from complying with the sanctions for another 180 days, a list that was expanded on 8 December to include China, India, South Korea, Malaysia, Singapore, South Africa, Sri Lanka, Turkey, and Taiwan.

While the furious defense of $500 the second AAPL crossed under the psychological barrier - the first time it did so in regular trading since February 15, 2012 - was promptly launched as otherwise the hedge fund community, which as we reported two weeks ago, and as Bloomberg caught on today, is more levered and long than at any moment in the past 9 years and is mostly invested in AAPL, we expect this intervention to eventually succumb to the inevitable French military campaign conclusion, as not even every HFT algo programmed to lift every offer under $500 can delay the inevitable arrival of a very sad cashflow reality. As for the Bank of Israel which is now about 5% underwater on its AAPL cost basis: don't worry - Ben will bail you out too.