Saudi Arabia

Once upon a time there was a conflict that was based upon ethnic origins in Darfur.

In a tragic development, the unidentified man who set himself on fire on the National Mall at about 4:30 p.m. on Friday in between the Air and Space Museum and the National Gallery, and who sustained burns to 80% of his body, has died. AP reports: "A District of Columbia police spokesman says a man who set himself on fire on the National Mall has died his injuries. Officer Araz Alali says the man died Friday night at a hospital where he had been airlifted. He says the man was so badly burned that he will need to be through DNA and dental records. The man poured a can of gasoline on himself in the center portion of the mall Friday afternoon. He then set himself on fire, with passing joggers taking off their shirts to help douse the flames." As AP adds, Police are investigating the man's possible motives for doing so. They will hardly find any, as the last thing the Obama administration needs right now is to start explaining why D.C. has become ground zero for America's own Arab Spring. Especially, if in a country in which fomenting class and social hatred once again boils down to racial characteristics.

The US government is shut down, which means only essential spending is permitted. So what does the US government, or rather its Central Intelligence Agency decide to spend precious, mission-critical taxpayer money on? Why arming the Qatari-supported Al-Qaeda "rebels" in Syria of course. WaPo reports that the CIA is expanding a clandestine effort to train opposition fighters in Syria amid concern that moderate, U.S.-backed militias are rapidly losing ground in the country’s civil war, U.S. officials said.... “It’s basic infantry training,” the former U.S. intelligence official said. “How to have some discipline hitting a target, how to reload a magazine, how to clear a room. They’re not marching. They’re learning basic infantry procedures." So let's get this straight: 800,000 non-essential workers are furloughed, but the CIA, in its infinite wisdom, is now, when the government is shut down, doubling down on spending to make sure Al-Qaeda insurgents have even more lethal training (for that inevitable moment when they turn on their sponsor as they tend to do), and even better weapons?

Back in August, just after the false flag chemical weapon attack in Syria, we showed that despite all the posturing by the Obama administration (and, of course, France's belligerent, socialist leader Francois Hollande), the nation behind the entire Syrian campaign was not one of the "democratic", Western nations but none other than close neighbor Saudi Arabia, and the brain orchestrating every move of the western puppets was one Bandar bin Sultan, the nation's influential intelligence chief. We also explained the plethora of geopolitical and mostly energy-related issues that Saudi and Qatar had at stake, which they were eager to launch a regional war over, just to promote their particular set of selfish interests. A month later, in clear confirmation that this was precisely the case, the WSJ reported that the recent overtures by Obama, brilliantly checkmated by Putin, to push for a peaceful resolution with not only Syria, but suddenly Iran as well, has managed to infuriate Saudi Arabia: traditionally one of the US' closest allies in the region and the key source of crude oil to the western world.

Being bullish on the market in the short term is fine... The expansion of the Fed's balance sheet will continue to push stocks higher as long as no other crisis presents itself. However, the problem is that a crisis, which is 'always' unexpected, inevitably will trigger a reversion back to the fundamentals. The market will eventually correct as it always does - it is part of the market cycle. The reality is that the stock market is extremely vulnerable to a sharp correction. Currently, complacency is near record levels and no one sees a severe market retracement as a possibility. The common belief is that there is 'no bubble' in assets and the Federal Reserve has everything under control.

The last time the State Department issued a comparable worldwide terror alert, the majority of US embassies in the Muslim world were promptly evacuated and a few weeks later the Syrian false flag affair was unleashed upon the world. One wonders just what provocation John Kerry has in mind this time.

STATE DEPT ISSUES NEW WORLWIDE CAUTION ON TERRORIST THREATS; STATE DEPT DETAILS POSSIBLE THREATS IN EUROPE, ASIA, AFRICA

At least the evil terrorizers have not infiltrated the Arctic circle yet. As for the always convenient scapegoat:

STATE DEPT SAYS AL-QAEDA PLOTTING IN MULTIPLE REGIONS

They sure are: mostly in Syria, but luckily they are now armed with US weapons.

The day when the Fed will begin the unwind of its latest QE program (for the fourth time) has finally arrived (as has the day when an impeachment committee will vote whether to ban Berlusconi from public office, but understandably that is getting far less press). In a few short hours the answer to all those questions of whether and how much of the taper was priced in, will be revealed. But while the Taper discussions will dominate the airwaves, as they have for the past five months, there actually were some news in the world that had nothing to do with the US Politburo in charge of capital markets and the US economy, located in the Marriner Eccles building. Here is a brief summary.

Saudi Arabia is pumping out more crude that at any time since the 1970s and in Kuwait and The UAE, oil production levels have hit record highs. As The FT reports, the US might be 'drowning' in oil, but the world is still dependent on Saudi Arabia for the marginal barrel. This is crucial since, "whatever is happening in the US, the Gulf states remain critical to the global oil trade,” says Credit Suisse's Jan Stuart, "the fact they are producing so much shows that the global oil balance is far more stretched than consensus would have you believe." The trigger for the jump in Gulf production has been huge disruption to supplies from Libya; and with the three large Gulf producers meeting 17.1% of global demand (it has never topped 18%), the dependence on the Gulf appears to be growing. The concern remains, despite apparent nonchalance, that consuming nations like the US, China, and India will be stifled should production disruptions last.

Overnight trading started with Asian markets continuing where yesterday's S&P 500 fizzle ended, wishing Summers could withdraw from Fed running again, as both the Nikkei and SHCOMP were well lower by the close. Perhaps all the easy multiple-expanding, headline-driven money is made, or perhaps economic fundamentals will finally start having to justify a 17x multiple on the S&P (a good is good regime for those who may be too young, or old, to remember), but overnight US futures were dull, and no doubt anticipating today's start of the "Most important FOMC meeting ever", which concludes tomorrow with an announcement by the Fed of what and how much (if any) tapering it will commence with an eye toward halting QE next summer, although more realistically what will happen is an Untaper being announced before then. While the start of the FOMC meeting is the main event, today we get CPI, TIC flows and the NAHB housing market index. Today's POMO is another modest $1.25-$1.75 billion in the long-end sector.

Why Are We Supporting Guys Who Want to Blow Us Up?

Following Barroso's State of the EU speech, we thought it useful to reflect on the true state of the EU. Nigel Farage's recent tirade slamming "Communist" Barroso's pro-bureaucrat policies are poignant as he exclaims the "disaster" that the EU has become for the poor and unemployed. To further color this rant we note Charles Gavekal's recent note on why Europe's still broken as worthless IOUs are 'transferred' around the union and "no one really knows who is going to take the final loss." Perhaps it is The Hamiltonian's summary of the structural problem (an interlocking set of European political, bureaucratic, media, academic and financial elites) and the sad fact that history suggests a crisis deferred is a crisis magnified.

It was only a matter of time before Syria's Assad, emboldened by Obama's recent backtracking and confident he has all the leverage and momentum, started laying down his own conditions. And here they are, as per RIA and Interfax citing an interview with Assad to air in its entirety later today on Rossia 24 TV:

• ASSAD CALLS FOR ISRAEL TO DISPOSE OF WMD (!)
• ASSAD: 'REBELS MAY USE CHEMICAL WEAPONS AGAINST ISRAEL AS PROVOCATION'
• ASSAD SAYS CHEMCIAL ARMS DEAL DEPENDS ON US STOPPING AID TO TERRORISTS
• ASSAD ACCUSES TURKEY, SAUDI ARABIA, QATAR OF SUPPORTING TERRORISTS IN SYRIA
• ASSAD: 'REBELS MAY USE CHEMICAL WEAPONS AGAINST ISRAEL AS PROVOCATION - ASSAD'
• ASSAD SAYS WILL COMPLETE DEAL ONLY IF US STOPS "POLICY OF THREATS"
• ASSAD SAYS IMPLEMENTATION OF DEAL MAY TAKE A MONTH OR MORE

If at all. And now, his bluff called, we go back to Barack Obama penning his Pravda Op-Ed.

The definition of what makes an “enemy” may vary from person to person. But we would say that, generally, an enemy is one who has an active ability to do irreparable harm to you or your essential values. He is motivated by destruction, the destruction of all that you hold dear. He is capable and unrelenting. He is a legitimate threat. He will not compromise. He will not waver. He will do anything to wound you. He will not stop. He is possessed. Americans have spent the better part of a century being told who their enemies are with very little explanation or substantiation. We have blindly rallied around our patriotic prerogative without knowing the root cause of the conflict or the nature of the target we are told to annihilate. We have been suckered into war after war, conjured by international interests in order to lure us into accepting greater centralization and concentrated globalism. As a culture, we're sorry to say, we have been used. We are a tool of unmitigated doom. We are the loaded gun in the hand of the devil. When one applies the above definition of “the enemy” to Syria, one comes away with very little satisfaction. So, the question arises: If Syria is not the real enemy, who is?

What is offsetting the drop in crude prices following Obama's latest embarrassing backtracking from his "blow things up first, ask Congress later" peace track? According to some, it is this note from Goldman which suggests oil price pressure from an improving geopolitical picture will be offset by rising backwardation.

Weapons, weapons....everywhere