Last weekend we called Obama's latest failed attempt to replace Syria's president for what it is: "this is shaping up to be the most spectacular US foreign policy debacle since Vietnam." Today, less than a week later, we have confirmation that this was correct after first Bloomberg reported that "some top White House advisers and National Security Council staffers are trying to persuade President Barack Obama to scale back U.S. engagement" in Syria, and then a report from the NYT that "the Obama administration has ended the Pentagon’s $500 million program to train and equip Syrian rebels." And just like that Obama folds, again.
News That Matters
The Saudis Hate Iran Because It’s NOT a Monarchy
Last month, when King Salman arrived in Washington to a fleet of Mercedes S-Classes, we asked if, considering the current circumstances, cutting back on spending might be in order. Indeed, in the wake of Saudi Arabia's move to tap debt markets, rumors have been circulating for months that the kingdom has enlisted the help of "advisers" to help rein in the ballooning deficit. Now, Riyadh has effectively declared a spending moratorium in the face of self-inflicted crude carnage.
Just a day after no lesser world-renowned newsletter writer than Dennis Gartman went full bull-tard of crude oil (in $29.95 terms), Goldman Sachs has come out with a "lower for longer" warning about the crude complex noting that the gains have been exacerbated by still large short positioning and the break of key technical levels. Despite the magnitude of this rally, Goldman does not believe that data releases over the past week suggest a change in oil fundamentals. In fact, high frequency data continue to point to an oversupplied market despite a gradual decline in US production.
The question today is merely one of timing. How long before a negative trigger is introduced? How long before Israeli planes come into contact with Russian or Iranian fighters? How long before U.S. troops come into contact with Russian troops? How long before Israel or Saudi Arabia strike Iran? And if the U.S. backs out completely, how long before the entire dynamic of the Middle East is flipped and America loses petro-status for the dollar? With the speed of events forming a fiscal-political riptide, it is hard to imagine we will be waiting very long to find out.
"The Saudi Population Are Growing Restless": A Deep Look Inside The "Black Box" That Is Saudi ArabiaSubmitted by Tyler Durden on 10/07/2015 15:27 -0400
"The Saudi population, especially the younger people, are growing restless because they see what is happening in the world through social media of which they are among the highest users - that’s the only means they have to communicate. So the situation inside the country is also very fragile and the foreign policy conducted by the current regime is very perilous. It is only a matter of time because the Gulf States are ruled by oligarchies who maintain control through bribery and the sword. So this is a challenging time for the Gulf States despite all the public commentary suggesting they are immune to the uprisings."
Saudi Arabia’s competitors from the Gulf cut their prices last month, forcing the largest OPEC producer to follow suit. Although there was little expectation of a shift in strategy, the price cut highlights Saudi Arabia’s determination to continue to pursue market share by keeping production volumes elevated. On top of that, October could be a crucial month for struggling drillers. With drillers undergoing credit redeterminations, October could see a wave of debt restructuring and cuts to credit lines, potentially forcing deeper cuts in the shale patch.
Russia can be seen as maneuvering to split OPEC into two blocs, with Russia, although not a member, persuading the “Russian bloc” to isolate Saudi Arabia and the Gulf Arab OPEC members within OPEC. This might persuade the Saudis to seek a compromise with the have nots.
The Kremlin has thus far observed some semblance (and we do emphasize the word “some”) of decorum in criticizing the West’s approach to Syria. The nicetites just went out the window...
According to several trading desks, the pre-war jitters in (and above) Syria are finally catching up to some, and there has been a distinct geopolitical-risk oil bid in the past two hours, on concerns the proxy war involving the US, Russia and, increasingly, Saudi Arabia and Iran, will finally spill over leading to forced supply cuts by middle-east nations, and a sharp, if transitory, spike in crude oil prices,
As was previewed last week in the advance release of international trade data which showed a big drop in the US deficit, moments ago the BEA confirms as much, when it reported that in August the US trade deficit blew out from $41.8 billion to a whopping $48.3 billion, an increase of 15.6%, as a result of a $3.7 billion drop in exports, offset by a $2.8 billion increase in imports. The August deficit, driven in major part by the surge in the US deficit with China which shot out to a whopping $32.9 billion, was the worst monthly print since March, and the second worst trade data read going back to early 2012.
Saudi Oil Minister Puts On Brave Face Amid Severe Headwinds: "Eventually, Economic Producers Will Prevail"Submitted by Tyler Durden on 10/05/2015 19:01 -0400
"The world needs a reliable, sustainable supply. Best way to do it is to make sure that demand and supply should be equal, so there will not be fluctuation of price. The biggest problem for everybody, producer and consumer today, is fluctuation — the ups and downs."
Here are some State Department talking points on Syria for cable news anchors... If you do all this, you will demonstrate your loyalty to the State Department, the bipartisan foreign policy consensus, the military-industrial complex, the One Percent, your advertisers, your producers and editors, and the unsung heroes behind the scenes who arrange your teleprompter scripts. You too could be an Andrea Mitchell, or Christiane Amanpour, posturing as an “expert” while trotting out our talking points. And even after they’re exposed as bullshit, you won’t have to say you’re sorry. People will soon forget anyway.
Maybe we just ought to step aside for a while and see what happens...