Turkey

When it comes to NATO and the West you can always find a contradiction or two (or five) when it comes to foreign policy rhetoric which is why we weren’t at all surprised (although we were amused) with what we found when we decided to take a look back at what Erdogan said in 2012 after Assad’s air force shot down a Turkish F-4 phantom jet when it crossed into Syrian airspace.

"There were no warnings. Not via the radio, not visually. There was no contact whatsoever. That's why we were keeping our combat course as usual. You have to understand what the cruising speed of a bomber is compared to an F-16. If they wanted to warn us, they could have shown themselves by heading on a parallel course. But there was nothing. And the rocket hit our tail completely unexpectedly. We didn't even see it in time to take evasive maneuvres."

The US is on its own and monetary expansion seems the only Holy Grail left...

Following yesterday's dramatic geopolitical shock, U.S. equity index futures rise as Russia has not escalated the confrontation with Turkey as some had feared, while Asian shares fall, reversing earlier gains. European stocks are rallying and the euro is falling on the back of a Reuters report that the ECB is mulling new measures to prop up lending, although it’s not clear at this point what the real impact from these measures would be.

Despite demands from France's Hollande, America's Obama, and NATO's Stoltenberg that this situation not esclate, it appears Putin is not taking the shooting down of a fighter jet lying down. The seemingly cagey confirmation by NATO and Obama of Turkey's claims that Russia invaded its airspace has been rebuked by Russia which claims the Hmeimim airbase radar shows the attacking Turkish plane violating Syrian airspace. In response, Russia is moving a Cruiser 'Moskva' off the coast to strengthen air-defenses - just as French and US carriers are on their way.

WWIII, Anyone?

“Disregarding these warnings, both planes, at an altitude of 19,000 feet, violated Turkish national airspace to a depth of 1.36 miles and 1.15 miles in length for 17 seconds from 9:24:05 local time."

"Why are Western leaders expressing their determination to “destroy” ISIS using all means necessary, while avoiding the most significant factor of all: the material infrastructure of ISIS’ emergence in the context of ongoing Gulf and Turkish state support for Islamist militancy in the region."

If Putin was angry when Turkey shot down a Russian plane, which may or may not have crossed Turkish territory - reports on both sides are conflicting - he will be absolutely livid to learn that, according to Turkey's Dogan News, the Russian pilots who had parachuted in an attempt to save their lives after the plane was shot down, had been executed while parachuting down by local rebels, which considering the video released earlier belonged to the Free Syrian Army, are same "rebels" who are funded directly by the CIA.

November has been a banner month for black swans. From Leftist political coups in Portugal to terror attacks in Paris to downed Russian fighter jets in Syria, the market is gradually learning to expect the unexpected. In its latest Quarterly Economic Outlook, SocGen outlines five political and economic black swans that could land in 2016.

Following the meeting of the North Atlantic Council requested by Turkey - to explain its actions - NATO Secretary General Jens Stoltenberg gave a statement to the press, urging, just as Obama and Hollande just did, no escalation between the two nations and backing Turkey's version of events - that Russia did indeed violate Turkish airspace.

It appears the "hostile act" in Turkey was not enough to keep the dip-buyers from bidding The Dow back into the green for the day. Nasdaq and the S&P are still lagging... as is the credit market.

With 11 days passed since the horrific actions in Paris, French President Francois Hollande arrived at the White House to discuss the conflict with President Barack Obama, likely asking for greater cooperation (with Russia - who Hollande will meet Thursday) in the battle against ISIS. Obama and Hollande made no statements as they began their meeting in the Oval Office but we can only imagine Turkey’s downing of a Russian fighter jet over its border with Syria produced fresh complications for the international campaign against Islamic State.