Middle East

... And the Shias - Not the Sunnis - Are Sitting On Most of the Oil

To the degree that the current crisis has anything to do with religion, it’s much less about whether Abu Bakr or Ali was Muhammad’s rightful successor and much more about who’s going to control something more concrete right now: oil.

The mainspring of Islamic extremism and militancy isn’t the moderate and democratic political Islam, because why would people turn to violence when they can exercise their right to choose their rulers? The mainspring of Islamic militancy is the despotic and militant political Islam of the Gulf variety. The Western powers are fully aware of this fact, then why do they choose to support the same forces that have nurtured jihadism and terroris?

• U.S. jobs market seen fairly healthy despite slowing economy (Reuters)
• China State Funds Said to Buy More Shares After Market Rout (BBG)
• Global Stocks Gain Some Respite (WSJ)
• U.S. Jobs Data Take on Added Importance With Markets in Turmoil (BBG)
• GOP Health Plans Are Works in Progress (WSJ)
• For economy czar of crisis-hit Venezuela, inflation 'does not exist' (Reuters)

• Weakness in the Canadian Economy driving its currency lower
• Inverse relationship between commodity prices and USDCAD exchange rate
• Why there could be a reversal in trend

How did the Canadian currency reach a twelve year low?

The US Dollar reached a recent high against CAD at 1.41081 on January 6^th a level not seen since August 2003. The general bull trend the green back has been in picked up momentum since talk begun by the Fed of a return to higher interest rates.

Once China set the Yuan fixing some 0.5% lower, the biggest drop since the August devaluation, all hell broke loose and unleashed a global selling panic after China's stock market was promptly shut down less than 30 minutes into trading, then European shares dropped the most in more than 4 months as Asian equities plunges, as did US stock futures, the dollar weakened against the euro and the yen; crude plunged to fresh 12 year lows. Gold rose.

For more than four decades Washington’s middle eastern policy has been dead wrong and increasingly counter-productive and destructive. Washington’s Mideast policy is predicated on the assumption that the answer to high oil prices and energy security is deployment of the Fifth Fleet to the Persian Gulf. And that an associated alliance with one of the most corrupt, despotic, avaricious and benighted tyrannies in the modern world is the lynch pin to regional stability and US national security. Nothing could be further from the truth. The House of Saud is a scourge on mankind that would have been eliminated decades ago, save for Imperial Washington’s deplorable coddling and massive transfer of arms and political support.

Sure Oil can go a dollar below this low, but for all intents and purposes this is the bottom in the oil selloff that was predicted for the start of the year.

On December 3rd, a month before Saudi Arabia carried out it largest mass execution since 1980 - subsequently setting the region on fire - Arjun Sethi wrote an article for Al-Jazeera titled: Saudi Arabia Uses Terrorism As An Excuse for Human Rights Abuses. According to Cora Currier at the Intercept: Al Jazeera’s headquarters in Qatar appear to have blocked the article outside of the United States because it is critical of an ally of Qatar.

Gold has has been one of the best months for gold in terms of monthly performance in the last 10 years. Bloomberg confirms that today.

Now that the subprime-funded "growth dynamo" that kept the US economy chugging along over the past year has finally choked, as we saw yesterday when auto sales posted the weakest print in half a year, there is just one industry that is keeping US factory orders, which have already declined for 13 consecutive months, from an all out implosion. War.

Before we go into details of the overnight carnage, this is where we stand currently: S&P futures now down 33 points or 1.63% while 2Y Treasury rallies pushing its yield back below 1% as EU stocks extend their drop after China weakened its currency, North Korea says it tested a hydrogen bomb; Brent crude falls to lowest level since 2004.

About 90 women have reported being robbed, threatened or sexually molested at the New Year's celebrations outside Cologne's cathedral by young, mostly drunk, men, police said on Tuesday.  The scale of the attacks has shocked Germany. About 1,000 drunk and aggressive young men were involved. City police chief Wolfgang Albers called it "a completely new dimension of crime" adding that "the men were of Arab or North African appearance." Cologne mayor Henriette Reker said the attacks were "monstrous" adding that "we cannot allow this to become a lawless area."