Saudi Arabia

"We expect the Kingdom of Saudi Arabia's general government fiscal deficit will increase to 16% of GDP in 2015, from 1.5% in 2014, primarily reflecting the sharp drop in oil prices. Hydrocarbons account for about 80% of Saudi Arabia's fiscal revenues."

According to multiple reports, the Obama administration is set to send dozens of "military advisers" to Syria. They will serve in an "advise and assist" role in the effort to rout ISIS. Cutting through the obfuscation: Washington needs to figure out how to salvage its strategy in Syria - and fast. Make no mistake, this will be a disaster...

• World stocks on course for best month in four years (Reuters)
• Global Stocks Up Amid Stimulus Hopes (WSJ)
• BOJ Refrains From Adding Stimulus Even as Inflation, Growth Wane (BBG)
• U.S. Avoids Debt Default as Congress Passes Fiscal Plan (BBG)
• China naval chief says minor incident could spark war in South China Sea (Reuters)
• Exclusive Club: No High-Frequency Traders Allowed at Luminex (WSJ)

Venezuela has two immediate bond payments due this and next week amounting to $3.5 billion. Where did the near-insolvent country obtain the funds needed to make these debt payments? The answer: it has been dumping its gold, which its former ruler Chavez worked hard in 2011 to repatriate from London, and which its current president Maduro, just four short years later, is busy sending back to its creditors.

It is possible that we might witness the formation of two blocks within OPEC during the next December 4 meet in Vienna. One, led by Venezuela, Ecuador, Libya and Algeria that would want to reduce production levels and the other led by Saudi Arabia, UAE and Kuwait that would stick to the current strategy of defending market shar. In the end, it will come down to survival of the fittest. Players who have higher breakeven costs will be the ones who will blink first and thereby reduce their production levels.

Norway's $860 billion sovereign wealth fund (tasked with managing the country's vast oil wealth) just had its worst quarter in 4 years and its first back-to-back quarterly loss since 2009 after an array of EM bets went awry. Meanwhile, the government is set to start making withdraws from the fund as slumping crude prices have effectively reduced inflows to zero. 

Something very unexpected happened: the world quietly hit a tipping point when, according to Reuters, China ran out of space to store oil. According to a senior trader familiar with Sinochem's oil trading and cited by Reuters, the tankers "are both for SPR (strategic petroleum reserve), but no tank space is available to take that oil in."

The head of the UN Human Rights Council is at it again, although this time it appears Saudi warplanes spared the Yemeni wedding parties in favor of a Medecins Sans Frontieres hospital that was completely destroyed along with all of the equipment and supplies inside around 11:30 PM local time. This is latest in a string of "mistakes" and the second tragedy to strike an MSF facility in the last 30 days.

OPEC altered the course of the oil markets last year when it decided to cast aside its traditional role of maintaining balance through production cuts. Instead it pursued a strategy of fighting for market share, contributing to an immediate rout in oil prices. WTI and Brent then went on to dive below $50 in the weeks following OPEC’s decision. OPEC is widely expected to continue its current strategy at its next meeting, and as such, no rebound in oil prices is expected, at least not because of the results of the group’s meeting in Vienna. But that raises a question about what the world of oil expects from OPEC: Why is it that the responsibility for balancing the market falls on OPEC? Why should OPEC be the one to fix the imbalances in the global crude oil trade?

Defying the international call for an arms embargo over war crimes concerns, the U.S. Department of Defense (DoD) announced Tuesday it has approved an $11.25 billion deal to sell combat ships to Saudi Arabia, which has been waging a military assault against Yemen for more than six months. “The selling of arms in the middle of a war will obviously send the message that the Saudis can do whatever they want and get away with it,” said Farea Al-Muslimi, Beirut-based Yemeni writer and visiting scholar with Carnegie Middle East Center.

Watch out for a snowball-effect in the Treasury market...

You have to hand it to Washington. When it comes to foreign policy blunders, the US certainly isn’t afraid to double and triple down. With the West and its regional allies in full panic mode as the effort to bring about regime change in Syria continues to crumble under pressure from Russian airstrikes and Iranian ground forces, the US and Saudi Arabia have agreed to step up their support for the various proxy armies battling to oust Bashar al-Assad.

If you are seeking more freedom and prosperity, ask yourself if that is what you will get by voting for any of the current candidates. If you are seeking to reclaim the moral high ground the United States may have once had, ask yourself if these policies will do just that. Remember, not everyone is an idiot, a Republican, or an apathetic sheeple. Some of us simply disagree with Bernie’s economics and solutions.