Posts Tagged ‘Syria’

Syria: US and Russia

Posted: September 9, 2013 in Uncategorized
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The market are rising on the hope of a done deal.

I am investigating more on the issue, but I am  skeptical.

1. The example of Iran tells me that often these are just delaying tactics, usually

2. Russia will want to get something of the negotiation and it has to be seen if the US agrees to it

3. Even if they do agree – the Syrian gas stockpile are secret and not really known (nor where they are, nor how much). So how anyone can broke such a deal is unknown to me.

But as usual there will be something else going on under the fog of war.

Meanwhile enjoy the rally, but treat it as a trap.

Update

After further studies I can confirm it is a trap to weaken the already weak position of Obama by Putin in real KGB style, The Russian proposal is un-achievable for various motives

1. Syria just said that it welcomed the proposal (not accepted)

2. The stockpiles are unknown – presumed more than 1,000 ton in more than 50 sites

3. The best Chemical Disposal units can dispose a max of 25 tons a day…so u would look into an operation of many months with chemical specialist teams and strong UN defense complement (given by whom)  per site in the middle of a civil war.

A great move in the warm war against the US – President Putin was Lieutenant Colonel of the KGB in Dresden, East Germany. Once KGB, always KGB. And President Obama is in a tight corner indeed.

Wag a dog was a beautiful movie about how a Government can fake a crisis in order to distract people and achieve other objectives. That is what I think of Syria and why, in the end, it will just another buying opportunity in the market – unless there is a serious miscalculation somewhere.

A gas attack is a terrible thing. But in the 1980s thousands of Iranian and Kurdish died of gas attack (from the US supported Saddam) and nobody said anything….because there was the greater issue of the Cold War and a nice terrible 8 years war was distracting two large Arab country.

Now we have the US which has to answer because a red line has been crossed (nothing to do with the gas poising…less of a 1,000 people on a 110,000 death war). But it does not want Assad to collapse as the projection give Al Qaeda as a clear winner of an Assad fall. That is the real motivation before the delay in action and the call for limited strikes.

Moreover it has the side benefit to distract everyone from the US Fed tapering…..but more important solve the looming Debt Ceiling debate in October.

It also opens a realpolitik alliance with Iran (apparently Oman’s leadership went to Iran with nice US messages and openings). If you noticed Iran has been much more restrained than usual in their threat.

Israel actually likes the situation of a weakened but not out Assad (apparently the Occupied Golan Heights have a lot of oil underneath and if no-one is there to contest it is all theirs….or better the contract of oil  extraction has been already assigned to Genie Energy (owned by…guess (and cry) by Jacob Rothschild and Rupert Murdoch)  – Please note in international law is illegal to use resource of an occupied country (Singapore vs Japan, International Court of Justice sentence 1945)

The party that really wants the fall of Assad are actually the Saudi as they fight for the Middle East supremacy against Iran (there is even a theory that if it was not the Government to use gas – it could be some Saudi sponsored element).

In effect all brings to a “show war” more than a real war. Also Russia show is more to get credits in other negotiation than anything else.

Yes there will be some real consequences as some Hezbollah actions against Israel (nothing new there….it just usually does not make the news).

As usual with any war, there could be unintended consequences: Hezbollah and Assad’s brother are the one to watch. And the master puppeteer – the Saudis

September highlight

This month there are a number of dangers in the market which we are not comfortable with,

as one of the main objectives of our strategy is capital preservation.

– Australian election: at the moment the polls indicate a Liberal win and that would be a positive for the market

– Syria: a potential war could lead to volatility both because of potential oil price spikes or, even worse, potential spillover of the conflict in Israel, Lebanon, Iran and Turkey (member of NATO).

– End of Quantitative Easing. This could lead to a sudden outflow of capital from the share market, in particular from emerging markets. Emerging markets, in particular India and Indonesia, are already starting to suffer a liquidity crisis .

– Reach of the US Debt Ceiling by 15 October. In 2011 the ensuing battle between Democrats and Republican has been what provoked a 10% fall in the global markets.

-Nomination of the new US Federal Reserve Chairman: Bernanke, current chairman, will resign in January 2013. Within the next month President Obama will announce his successor.

The two main candidates are Mr. Summer and Mrs. Yellen. Mr. Summer is currently seen as the winning candidate and the his ideas are against Quantitative Easing and so his election would spur a market retreat. Mrs. Yellen would be viewed as a positive for the stock market.

-German election (21 September): at this moment the polls indicate that Mrs Merkel will be re elected and this should be a positive for the market

– Soon after the outcome of a challenge of the German Supreme Court to the European Stability Market (ESM) system powers will be notified to the public. This could be a mildly negative for the market as the ESM is the mechanism that allowed to contain the European Crisis.

As you can see there are too many random events to predict with any kind of certainty what the market could do – even if the odds are clearly on the negative side.

In Depth

Australian Election

As of now it seems PM Tony Abbott will win. I am not going to delve into the various policies as there are already plenty of analysis in the various newspapers. A Liberal Party strong win will be seen as a confidence booster for the Australian share market as the Liberal party is seen as favorable to business condition.

Syria

 

The Syrian battlefield is, in reality, a proxy war between the two emerging Middle Eastern powers: Iran (Muslim Shia) and Saudi Arabia (Muslim Sunni).

In August 2011, US President Obama clearly stated that the usage of chemical weapon against the population was a clear red line that would warrant intervention. With every probability he thought nobody would have dared to cross that line.

 

Even if the US clearly does not want to enter another Middle Eastern war, a non intervention would send a clear message to Iran, North Korea, Russia and China that the US is not anymore a world superpower, but more a “first between equals”. This could even be seen as the start of the US decline by its enemies.

On the other side an attack could lead to help Al Qaeda seize power in Syria or, at worst, a Middle East war that involves Syria, Iran, Saudi Arabia, Israel, Turkey (and consequently NATO) and the flaring up of a Second Arab Spring and cyberwarfare – this option, although threatened – is pretty minor as it would escalate a conflict that Assad cannot win. More likely we would see some cyberwarfare increase and an increase of Hezbollah terrorist activities against Western and Israeli targets. This is why Obama is seeking Congress approval and a broader alliance.

 

US Federal Reserve New Chairman

 

The two main candidates (quite often there is a last minute candidate) are both academics, but very different from each other.

 

Mrs Yellen is seen as an astute negotiator and is seen as a continuation of Bernanke’s pro-market policies. She is currently Vice -Chairman of the US Federal Reserve System. Per converse she has very few political alliances and she is seen with hostility by the Republican for the “dovish inflationary views”.

Mr. Summers, instead, is a pretty controversial figure that openly declared that the Quantitative Easing (money printing) does not have any effect and he will terminate it as soon as possible. He is one of the fathers of the financial deregulation in the US and, moreover, when he was Harvard University President he lost almost all of the entire endowment fund of the University (USD2 Billions). He is a very keen politician with a lot of political alliances and personal friend of President Obama.

 

All this negativity will have just a temporary effect on the market as the Syrian war, if it happens, will be most likely soon over and the US Fed Chairman has to act within a board and build consensus as in any democratic institution.

 

So, at all effect, this September will be a “buy the dip opportunity” than a second 2008 Global Financial Crisis. But we are prepared for every eventuality

Obama bluff has been called and there will be war. And there will be death. Americans will be again seen as heroes and ruthless killers at the same time.

Obama last year declared that a gas attack would be a clear red line because he thought Assad was not so stupid to conduct one.

What really happened, nobody will know. has it really been staged by rebels to provoke an attack (smartest move from rebels on a verge of defeat- but they do not seem to have the weapon delivery systems to conduct such an attack – US “Mission Impossible” kind of spies? Difficult – Saudis spies….that could have a chance). Was it Assad? He is not stupid…I do not think so. What I think (and it is of no consequences) is that some rogue part of the Syrian Army (Assad’s bloodthirsty brother or  some Iranian proxy) did it.

As a famous Italian comedian, Pirandello,  says ” It is so (if you think so)”.

The reality is that the Obama’s bluff has been called and war will be. Otherwise Iran and North Korea and anyone else (Russia, China) will know that their own red line do not exist.

Obama clearly does not want “boot on the ground” and has delivery weapon systems to proceed with “stand off attacks” (attacks carried from outside the Syrian airspace). 4 US Navy Destroyers are already in place. Strategic bomber can attack from bases in the UK and Saudi Arabia and the US 5th Fleet with two supercarriers are less than 48 hours away. There is at least one nuclear sub around there.

Thursday the UK Parliament has been urgently recalled.

What Syria (and its allies) can do. Syria has a good air defense system, but very limited offensive capacity (specially considering that they cannot risk to “disturb” also Israel. Iran can be a nasty surprise probably asking Hezbollah to attack/kidnap Westerners in Lebanon. Russia has already played its card with Snowden.

So it should be limited. But war is war. And oil and gold will start running again (well they already started) and the market will have its own (overdue) correction.

Countdown to Syria

Posted: August 26, 2013 in Uncategorized
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An attache’ to President Obama just released notes that indicate that the US will not wait for the full UN investigation into the nerve gas attack.

-It is pretty clear it is a gas attack, confirmed by Medicine Sans Frontier

-the rebel do not have delivery systems to mount a chemical attack.

The easiest way for the US to attack is using cruise missiles (4 warships have been moved in the area, plus there will be some subs around there) aiming at crippling the Syrian Air Force.

Naturally the first consequence for the markets will be a spike in oil and a sell-off in shares. Then we will have to see what happens and hopefully the war will not escalate (already Lebanon is on a verge of a crisis).