Turkey

Although the probability of any one of the predictions coming true is low, they are deduced strategically by Saxo Bank analysts based on a feasible - if unlikely - series of market and political events. As Saxo's chief economist notes, "This isn't meant to be a pessimistic outlook. This is about critical events that could lead to change - hopefully for the better. After all, looking back through history, all changes, good or bad, are made after moments of crisis after a comprehensive failure of the old way of doing things. As things are now, global wealth and income distribution remain hugely lopsided which also has to mean that significant change is more likely than ever due to unsustainable imbalances. 2014 could and should be the year in which a mandate for change not only becomes necessary, but is also implemented."

US equity markets were the first to move yesterday on the news of the tapering which is a loosening and not a tightening move by the Fed. Overnight and today has seen stocks stabilize as the rest of the world wakes up to what this slowing of flow actually means... From EM FX to precious metals to colossal flattening in the US Treasury term structure, things are making major moves...

As equity markets around the world try valiantly to hold on to yesterday's manufactured gains that 'proved' the Taper is a good thing, few have commented on the consequences that are already being felt. Emerging Market currencies were broadly pummeled overnight with Indonesia's Rupiah tumbling to 5 years lows and the Turkish Lira collapsing 1.9% in the last 2 days (its biggest drop in 4 months) to an all-time low.

*LIRA AT LOWEST VS USD ON CLOSING BASIS SINCE AT LEAST 1981
*TURKEY CENTRAL BANK TO SELL MINIMUM $50M FOR LIRAS TOMORROW

The Istanbul stock exchange is down 7.3% in the last 3 days (biggest drop in 6 months).

It’s like a futuristic film with hoards of evil masses of people, poverty-stricken, living off the land, while the rich and wealthy continue to lord it, served to their hearts content and just raking it in, while the others hardly get enough to eat and drink.

As was reported several days ago, the latest embarrassment for US foreign policy in Syria took place when the US-backed commander of the Free Syrian Army was forced to flee the country to Qatar after "Islamist fighters ran the top Western-backed rebel commander out of his headquarters." In other words, the Islamic Front, which is a more palatable name for the six major groups among Syria's religious extremist rebels, or as some call them, Al Qaeda, is now the only entity "fighting" the regime of Assad (funded with Qatari and Saudi financial generosity), which as recently as September was a very theatrically sworn enemy of John Kerry. So what is an isolated America to do in a country in which ambitions for Qatari nat gas pipelines will almost certainly rear their heads as soon as the spring of 2014? Why engage directly with Al Qaeda, pardon, the Islamic Front of course. Because the enemy of my enemy, who obstinately refuses to throw Putin under the bus or allow a Qatari gas pipeline under their territory, is my friend.

Key events in the week ahead with implications for early 2014.

With home prices in the UK driving people to live in boxes and Bob Shiller worried about the US, Bloomberg's Niraj Shah notes that the Knight Frank global house price index has risen to a record. The index, now 4% above the previous high in Q3 2008 is led by China and Emerging Nations (with Europe weakest) as investor speculation amid central bank liquidity fuels yet another bubble (that no one could see coming again).

Syria may be old news as any escalation has been put on hold at least until next summer, but the hilarity resulting from the bungled US foreign policy intervention in the country lingers. The latest chapter in John Kerry's book of "Diplomacy for Idiots" is the case of General Salim Adris, a so-called moderate the top Western-backed commander of the Free Syrian Army, who was literally run out of the country by the more extremist, Al Qaeda based factions among the Syrian CIA armed and Qatar funded "rebel" forces. As the WSJ eloquently puts it, "Islamist fighters ran the top Western-backed rebel commander in Syria out of his headquarters, and he fled the country, U.S. officials said Wednesday." Any references to brave Sir Robin are purely accidental. It got better when the same Al Qaeda fighters "took over key warehouses holding U.S. military gear for moderate fighters in northern Syria over the weekend." In other words, as we repeatedly forecast over the summer, the US is now once again arming Al Qaeda fighters with weapons that sooner or later will be used against the US, at a time of the CIA's choosing.

The US data flow is relatively light which is typical of a post-payrolls week but it’s worth noting wholesale inventories on Tuesday and retail sales on Thursday. Importantly US House and senate negotiators are supposed to come to an agreement on a budget before the December 13th deadline. A lot of optimism has been expressed thus far from members of congress, and there are reports that a budget deal will be unveiled this week.

Western central banks have tried to shake off the constraints of gold for a long time, which have created enormous difficulties for them. They have generally succeeded in managing opinion in the developed nations but been demonstrably unsuccessful in the lesser-developed world, particularly in Asia. It is the growing wealth earned by these nations that has fuelled demand for gold since the late 1960s. There is precious little bullion left in the West today to supply rapidly increasing Asian demand, and it is important to understand how little there is and the dangers this poses for financial stability.

The world has changed immensely and there were once things that were sacrilegiously respected. But, that’s no longer the case.

Previewing the rest of this week’s events, we have a bumper week of US data over the next five days, in part making up for two days of blackout last week for Thanksgiving. Aside from Friday’s nonfarm payroll report, the key releases to look for are manufacturing ISM and construction spending (today), unit motor vehicle sales (tomorrow), non-manufacturing ISM (Wednesday), preliminary Q3 real GDP and initial jobless claims (Thursday), as well as personal income/consumption and consumer sentiment (Friday). Wednesday’s ADP employment report will, as usual, provide a preamble for Friday’s payrolls.

That greatest of all American traditions - the Black Friday Thursday stampede, this year accompanied with a stabbing and a shooting, is back. A quick review of all readers may have missed by not lining up in droves outside of stores that were selling products at just above cost instead of the usual massive pre-Thanksgiving markup. So what did it all look like? The answer: like this...

While moderate recovery in growth and inflation is BofAML's rates team's base case, there are numerous risks to that forecast. The risk of tapering is already quite well known and they suspect it may not result in the significant market-moving event many expect when it actually happens; however, the following downside and upside risks threaten BofAML's central scenarios for 2014 as well.

With Thanksgiving comes Black Friday and Cyber Monday, two of the biggest days for retail stocks each year. Thanksgiving isn't just an opportunity to gorge on turkey; it's also one of the most important weekends of the year for the retail sector. As much as 40% of American shopping occurs on the now infamous Black Friday and Cyber Monday – the first two business days that fall after Thanksgiving. But to complicate the matter, meteorologists are tracking an epic super-storm that is slowly working its way east, threatening to bring even more chaos to the holiday season. So who will win?