Middle East

Both the spring maintenance period in the US (creating a 'glut' of WTI), Seaway pipeline, and tensions in the Middle East are exaggerating the Brent-WTI spread which traded back to two-month highs. In the last week or so the differential has surged from around $16 to over $22 as WTI fell and Brent prices surged. There is a great degree of seasonality in this shift (and typically the Spring maintenance period has ended within the next week) but Iranian sanctions remain at the forefront (as does the belief that Germany's growth will be the engine of European demand - especially if EUR drops). This year was 'different' in so much as WTI outperformed for the first few weeks - potentially on the back of the global rise in risk-assets thanks to global central bank largesse. It appears the oil market is hinting at some slowdown.

The oil industry is full of bad analysts.

Just as markets can stay irrational longer than traders can stay solvent, so Byron Wien warns all the market-watching self-confirming bulls that "markets slough off bad news until they don't." Blackstone's top-man fears the "oblivious markets" are missing the point that nothing has been solved and that a "big battle between entitlement cuts and raising the debt ceiling" is coming. Shrugging off the anchor's insistence that earnings have been 'pretty good', Wien states reality as expectations are rolling over and performance following. With people complacent and investors euphoric (ignoring European risk re-emergence and depression and Middle East tensions), Wien's brief clip concludes with his expectation of a 200 point correction in the S&P 500 in H1 2013.

The last time prices reached only $95 a barrel WTI the Whitehouse started talking up the SPR release only six months ago.  Now that gas prices are higher than ever for this time of year and set to go higher, and we haven`t heard a single mention of the SPRs? 

• Obama to meet with Goldman's Blankfein, other CEOs Tuesday (Reuters)
• Chinese Firms Shrug at Rising Debt (WSJ)
• McGraw-Hill, S&P Sued by U.S. Over Mortgage-Bond Ratings (BBG)... but not Moody's or Fitch
• Dime a Dozen: Dollar Stores Pinched by Rapid Expansion (WSJ)
• Dell Board Said to Vote Monday Night on $24 Billion LBO (BBG)
• BOJ Governor Shirakawa to step down on March 19 (Reuters)
• Alberta may offer more to smooth way for Keystone (Reuters)
• Facebook Is Said to Create Mobile Location-Tracking App (BBG)
• Barclays takes another $1.6 billion hit for mis-selling (Reuters)
• Apple App Advantage Eroded as Google Narrows IPhone Lead (BBG)
• Texas School-Finance System Unconstitutional, Judge Rules (BBG)
• World Risks ‘Perfect Storm’ on Capital Flows, Carstens Says (BBG)

Despite the Pretense that the U.S. and Israel Are Not Intervening In Syria’s Civil War, They Are Both At War With Syria

Gold fell $11.70 or 0.7% in New York yesterday and closed at $1,664.80/oz. Silver slipped to a low of $31.09 and finished with a loss of 1.66%.

Gold Spot $/oz, 60 Days, 30 Minutes – (Bloomberg)

• 'London Whale' Sounded an Alarm on Risky Bets (WSJ)
• Deadly Blast Strikes U.S. Embassy in Turkey (WSJ)
• Abe Shortens List for BOJ Chief as Japan Faces Monetary Overhaul (BBG)
• Endowment Returns Fail to Keep Pace with College Spending (BBG) - More student loans
• Mexico rescue workers search for survivors after Pemex blast kills 25 (Reuters)
• Lingering Bad Debts Stifle Europe Recovery (WSJ)
• Peregrine Founder Hit With 50 Years (WSJ) - there is hope Corzine will get pardoned yet
• Deutsche Bank to Limit Immediate Bonuses to 300,000 Euros
• France's Hollande to visit Mali Saturday (Reuters)
• France, Africa face tough Sahara phase of Mali war (Reuters)
• Barclays CEO refuses bonus (Barclays)
• Edward Koch, Brash New York Mayor During 1980s Boom, Dies at 88 (BBG)
• Samsung Doubles Tablet PC Market Share Amid Apple’s Lead (BBG)

The globalists have stretched the whole of the world thin.  They have removed almost every pillar of support from the edifice around us, and like a giant game of Jenga, are waiting for the final piece to be removed, causing the teetering structure to crumble.  Once this calamity occurs, they will call it a random act of fate, or a mathematical inevitability of an overly complex system.  They will say that they are not to blame.  That we were in the midst of “recovery”.  That they could not have seen it coming. Their solution will be predictable.  They will state that in order to avoid such future destruction, the global framework must be “simplified”, and what better way to simplify the world than to end national sovereignty, dissolve all borders, and centralize nation states under a single economic and political ideal?

In what was the first clear instance of aggression by Israel toward Syria, overnight Israeli jets conducted a bombing run over a military site in Syria, targeting what according to Israel was a military convoy heading to Lebanon. As Al Arabiya reports: "Israeli jets bombed a convoy on Syria's border with Lebanon on Wednesday, sources told Reuters, apparently targeting weapons destined for Hezbollah in what some called a warning to Damascus not to arm Israel's Lebanese enemy. "The target was a truck loaded with weapons, heading from Syria to Lebanon," said one Western diplomat, adding that the consignment may well have included anti-aircraft missiles. The overnight attack, which several sources placed on the Syrian side of the border, followed warnings from Israel that it was ready to act to prevent the revolt against President Bashar al-Assad leading to Syria's chemical weapons and modern rockets reaching either his Hezbollah allies or his Islamist enemies."

An overview of the fundamental determinants of the foreign exchange market in the week ahead. I look beyond the official rhetoric at what is pushing the yen lower. I also discuss the tightening of European monetary condition. In addition, there is a brief discussion of the key US events this week: the FOMC, Q4 GDP estimate, and US jobs report.

Israeli PM Benjamin Netanyahu says his nation must prepare for the threat of a chemical attack from Syria, amid concern at enemy efforts to test a post-election coalition Israel, and has deployed its new Iron Dome anti-missile system near the border with its northern neighbor. Along with this concern, as many have perhaps suspected, the Israeli Defense Minister confirmed yesterday that the US has prepared plans for a 'surgical' military operation to delay Iran's nuclear program. As The Jerusalem Post reports, Ehud Barak, added that in the past the US has been heavy-handed but that under Barack Obama, the United States has "prepared quite sophisticated, fine, extremely fine, scalpels," if the worse comes to the worst - even though the Israeli preference would be to end the nuclear threat diplomatically, calling for tougher sanctions (though he expressed doubt that diplomacy would lead to success). Just another geopolitical hotspot that the world's markets choose to ignore in deference to the one true leader - central bankers.

Just because there is a superficially-pacifist, yet supraficially genocidal, dictatorially-inclined egomaniac in every one of us, the moment the Maisto Fresh Metal Tailwinds 1:97 Scale Die Cast United States Military Aircraft - US Air Force Medium Altitude, Long Endurance, Unmanned Aerial Vehicle (UAV) RQ-1 Predator went on loss at Amazon (we would say sale, but that would imply some probability of profit, which as even the hotdog guy, knows is never going to happen at AMZN), everyone scrambled to buy one.  However, only those first in line got one: everyone else was greeted by a "Currently unavailable. We don't know when or if this item will be back in stock" sign. So what does one do: what one should have done in the first place before going for the one impulse purchase that can murder innocent children half way around the world courtesy of the latest iPad app "iKiller": read the customer reviews of course. Below is a broad sample of the rather bipolar main street America response when faced with the opportunity of having the same great power, if not so great - or any - responsibility, as is  given, by some 25% of the population (factoring for the 55% or so who don't vote) to the president of the USA, even if on a 1:97 scale.

Starting tomorrow and every Friday for the next few years, the ECB will report the number of banks and the amount of funds they will repay of the 3-year repo operations conducted in late 2011 and early 2012. For those who do not have the luxury of following these developments closely, I have put together a 10 point cheat sheet.

After digesting the opinions of the shills, shysters and scam artists, I am ready to predict that I have no clue what will happen during 2013. The fog of uncertainty is engulfing the nation, making consumers hesitant to spend and businesses reluctant to hire or invest. Virtually all of the mainstream media, Wall Street banks and paid shill economists are in agreement that 2013 will see improvement in employment, housing, retail spending and, of course the only thing that matters to the ruling class, the stock market. Even among the alternative media, there seems to be a consensus that we will continue to muddle through and the day of reckoning is still a few years off. Those who are predicting improvements are either ignorant of history or are being paid to predict improvement, despite the overwhelming evidence of a worsening economic climate. The mainstream media pundits, fulfilling their assigned task of purveying feel good propaganda, use the 10% stock market gain in 2012 as proof of economic recovery. The facts prove otherwise... Every day more people are realizing the con-job being perpetuated by the owners of this country. Will the tipping point be reached in 2013? I don’t know. But the era of decisiveness and confrontation has arrived. The existing social order will be swept away. Are you prepared?