Saudi Arabia

Ahead of US spec ops deployment in Syria, the US is sending F-15C Eagle twin-engine fighters to Turkey, suggesting The Pentagon is preparing for aerial combat with the Russian air force. 

In the latest example of Washington playing catch up in the global "war" on terror PR battle, “officials familiar with the matter” have told WSJ about a concerted effort to cut off the flow of dollars to ISIS. Allegedly, the US became concerned about the amount of hard currency being shipped to Iraq over the summer. The problem: the requested amounts didn’t seem to be consistent with the country’s economic fundamentals and so, the US cut off Iraq’s access to dollar funding, nearly plunging the country into crisis.

The Fed is weighing the negative consequences of a strong dollar on corporate profits vs. unleashing inflation on the electorate, pressuring long term interest rates. We will soon see which negative scenario they favor and why.

There are a multitude of fuses affixed to dozens of powderkegs and little kids with matches are on the loose.

This weekend we saw an important action in the downgrade of Saudi Arabia, highlighting just how far the EM crisis has carried. As Ice Farm Capital's Michael Green notes, in response, Saudi CDS continues to climb, reaching its highest since 2009 (amid both default risk and devaluation concerns). The rising risks in Saudi Arabia are a reminder that growth weakness has its own feedback mechanism – if oil prices stay at these levels for an extended period of time, it appears unlikely that Saudi Arabia will remain the reliable source that the world is currently counting on.

"There's no point in other countries getting together and deciding about a system of government and the head of that state. This is a dangerous innovation which no government in the world would accept being imposed on itself. The solution to Syria's problem is elections."

The Pentagon just won another small skirmish in its long war with Social Security and Medicare. That is the unstated message of the budget deal just announced gleefully by congressional leaders and the President.  To understand why, let’s take a quick trip down memory lane.

"So again, I repeat, we're not considering any open-ended commitment. We're not considering any boots-on-the-ground approach."

"Russia and Iran have very similar objectives in that they both want to eject U.S. influence from Iraq. Any success that the militias have bolsters that goal."

ISLAMIC STATE CLAIMS RESPONSIBILITY FOR RUSSIAN PLANE CRASH IN EGYPT

In other words, a proxy organization of US "shadow government destabilizing operations", trained in U.S. ally Turkey, and openly funded by both U.S. allies Saudi Arabia and Qatar, just took down a Russian plane.

"We expect the Kingdom of Saudi Arabia's general government fiscal deficit will increase to 16% of GDP in 2015, from 1.5% in 2014, primarily reflecting the sharp drop in oil prices. Hydrocarbons account for about 80% of Saudi Arabia's fiscal revenues."

According to multiple reports, the Obama administration is set to send dozens of "military advisers" to Syria. They will serve in an "advise and assist" role in the effort to rout ISIS. Cutting through the obfuscation: Washington needs to figure out how to salvage its strategy in Syria - and fast. Make no mistake, this will be a disaster...

• World stocks on course for best month in four years (Reuters)
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• BOJ Refrains From Adding Stimulus Even as Inflation, Growth Wane (BBG)
• U.S. Avoids Debt Default as Congress Passes Fiscal Plan (BBG)
• China naval chief says minor incident could spark war in South China Sea (Reuters)
• Exclusive Club: No High-Frequency Traders Allowed at Luminex (WSJ)

Venezuela has two immediate bond payments due this and next week amounting to $3.5 billion. Where did the near-insolvent country obtain the funds needed to make these debt payments? The answer: it has been dumping its gold, which its former ruler Chavez worked hard in 2011 to repatriate from London, and which its current president Maduro, just four short years later, is busy sending back to its creditors.