A peace petition circled the globe calling on the Turkish government to end fighting against Kurdish militants in the country’s southeast, which has reportedly led to thousands of civilian deaths. By January 15th, 2,000 Turkish academics had signed the petition, which was too much for authoritarian president (and US ally) Recep Tayyip Erdo?an to handle. He not only publicly denounced the entire affair, he went ahead and started arresting people.
“They need Iran to avoid overreliance on Saudi Arabia, and they need Saudi Arabia to avoid overreliance on Iran. It’s all about diversifying risk. It’s less about picking winners and more about modern portfolio theory."
"While Iran claims its top foreign policy priority is friendship, its behavior shows the opposite is true. Iran is the single-most-belligerent-actor in the region, and its actions display both a commitment to regional hegemony and a deeply held view that conciliatory gestures signal weakness either on Iran’s part or on the part of its adversaries. Saudi Arabia will not allow Iran to undermine our security or the security of our allies. We will push back against attempts to do so."
S&P's Downgrade (By A German Analyst) Is A "Politically-Motivated" Decision Aimed At Polish AuthoritiesSubmitted by Tyler Durden on 01/19/2016 12:50 -0500
The Standard and Poor’s rating agency, notorious for its controversial assessments, has this time bashed Poland in the wake of the anti-Polish frenzy whipped up by the European media. To be more precise, Poland was assailed by a German S&P analyst who lowered Poland’s rating from A- to BBB+, despite the economic data that by no means warrant such an evaluation.
"The Fed has painted itself into a corner... [the current situation's severity] is very similar to what you get before you slip into a crisis....The bumpy ride is probably not over yet... stay on guard."
Central banks have lost their aura of omnipotence.
There are roughly 80 U.S. companies that had $100mm in LTM revenue and that had negative EBITDA less CapEx.
The combined market cap of these 80 companies is just shy of half a trillion dollars.
The combined Total Enterprise Value of these 80 companies is $775 billion.
The combined debt of these 80 companies is $325 billion.
With the US closed today for Martin Luther King Holiday, global risk tone has once again been set entirely by oil, which opened sharply lower at fresh 12 year lows on fears of an Iran oil glut, but has steadily rebounded on the latest OPEC comments, and at last check both WTI and Brent were unchanged trading in the low $29's on muted volume. With Asian markets mixed, European shares swung between gains and losses, while the yen weakened as China stepped up efforts to curb foreign speculation against its currency. Crude oil rose from a 12-year low after the Organization of Petroleum Exporting Countries forecast a decline in supplies from rival producers.
Anyone who thinks the adversarial relationship between Washington and Tehran has turned into “détente” due to the nuclear deal is living in Never-Never Land. Your bullshit-ometer should be making an awful racket in response to the shifting explanations given for the twenty-four-hour Iranian hostage scare involving two US Navy boats intercepted in the Gulf. The signing of the Iran deal means that we are in for a long series of provocations in the Gulf, and this is only the beginning. In order to keep all this in perspective, just remember that the long dance between Washington and Tehran involves at least four partners, including their hard-liners and ours.
The Saudis are explicitly conserving their own resources at home, while exploiting land and water supplies here in America. “We’re letting them come over here and use up our resources. It’s very frustrating for me, especially when I have residents telling me that their wells are going dry and they have to dig a lot deeper for water. It’s costly for them to drill new wells."
Foreign Central Banks Furiously Dump US Treasuries: Record $47 Billion Sold In First Two Weeks Of 2016Submitted by Tyler Durden on 01/17/2016 18:58 -0500
According to the latest Fed data, after a drop of $12 billion in the first week of the year, another $34.5 billion in Treasurys held in custody was sold in the week ended January 13, bringing the total to just $2.962 trillion, below the previous recent low recorded in early November, and at levels not seen since April 2015. Adding up the flows from the first two weeks of the year reveals the worst and most custody holdings "outflowing" start to the year in history.
“As chair of the G7, I need to seek solutions regarding the stability of the region as well as the whole world. I believe appropriate dialogue with Russia, appropriate dialogue with president Putin is very important.”
Broad middle-east and african stock markets crashed over 5%, erasing any gains back to November 2008 as the carnage from last week continues. From Kuwait (-4.3%) to Qatar (-8%) it was a bloodbath as Saudi Arabia Tadawul Index plunged 5.4% - the most since Black Monday (now down over 50% from their 2014 highs). These losses are far in excess of US 'catch-up' moves and suggest a dark cloud over Asia this evening.
The consequences of all this will be felt all over the world, and for a long time to come. All of our economic systems run on oil, so many jobs are related to it, so many ‘fields’ in the economy, and no, things won’t get easier when oil is at $20 or $10, it’ll be a disaster of biblical proportions, like a swarm of locusts that leaves precious little behind. Squeeze oil and you squeeze the entire economic system. That’s what all the ‘low oil prices are great for the economy’ analysts missed (many still do). Entire nations will undergo drastic changes in leadership and prosperity.
There’s more than a whiff of 2008 in the air. The sources of systemic financial sector risk are different this time (they always are), but China and the global industrial/commodity complex are even larger tectonic plates than the US housing market, and their shifts are no less destructive. There’s also more than a whiff of 1938 in the air, as we have a Fed that is apparently hell-bent on raising rates even as a Category 5 deflationary hurricane heads our way, even as the yield curve continues to flatten.