The Professional Traders Opinion
Who’s on First? (Abbot & Costello, circa 1952)
Oddly enough, an ascribed Arabic proverb, dating to the 4th century BC, suggests “the enemy of my enemy is my friend.”
There is now a 21st century edited version of that proverb; once again emanating from the land of Arabia but this time will need Aristotle to discern the logic; it goes something like this: “the enemy of my enemy is only my friend until my enemy is overthrown by America, a new government is transitioned and then my enemy of my previous enemy becomes my new enemy along with the new government of my former enemy.”
Got it?
You guessed it, America, under the beguiled leadership of the Obama administration, has tossed aside Dale Carnegie’s “How to Win Friends and Influence People” with his own version of “How to Lose Friends and Inhibit People.” Fear not comrades of the Arabia as this administration’s demagoguery is thrust upon the American homeland with equal portions of oblique bombastic rhetoric and ill-conceived strategies. Let’s have a closer look into America’s role in the Middle East; their friends, their foes and “Who’s on First.”
ISIS: Not long ago, Obama named this “team” the JV’s; now they are in the World Series of our opponents. They have gone from al-Qaeda wanna-be’s to a group that even al-Qaeda fears as barbarians at the gates (of hell on earth).
First we wanted to slow their ascension down whilst they were growing by lethal acquisition the oil regions of Iraq; but not enough to interrupt vacation time. Then we were appalled by their barbaric murderous execution of an American journalist; but not enough to keep the foursome waiting at the first tee. Then we were simply outraged at the sublime arrogance of these jihadists religious radicals upon their presentation of the second American journalist’s murder by a choreographed beheading; but not enough to have a strategy or yet a reason to defeat them. Then the poles turned sour, America became polarized and the Democrats pole vaulted away from the Obama administration’s offer of support for their upcoming mid-term election campaigns. Next, just a couple days later, the head coach came out for a prime-time televised statement proclaiming that ISIS, the Islamic State of Iraq and Syria, is indeed not religiously motivated, that the Qur’an is all holy and the Christians, the Muslims, Islam, Buddhists and all religions cited under the sphere of moral and civilized decency, would compel the acts of turpitude by ISIS to the guillotine of justice severing this monster once and for all from the good and humanity of all mankind. Except the coach, either by omission or commission, failed to identify one prominent player and religion … Israel and Judaism. Maybe Netanyahu should be insulted or maybe he should be forewarned. Obama promised change; another of America’s most exalted allies and friends stand in the hallway in front of the door marked “Exit.” Who’s on First?
Syria: This is the line in the sand where matters get tossed sideways in a circular motion like a dog chasing his tail. As the name suggests, ISIS is a caliphate of Iraq and Syria. ISIS is headquartered in Syria and determined to replace the present regime under their black flag. Not long ago, the President of Syria, Bashar al-Assad, crossed one of Obama’s disappearing or movable “red lines in the sand” by murdering Syrian citizens with chemical weapons (probably obtained from the remnants of Saddam Hussein’s Iraq which were manufactured in the United States).
Theoretically, Syria is one of our (the US) arch enemies, or as George Bush might have determined, an exclusive member of the “Axis of Evil.” They were of course until Russia, our beloved Bear of the North Country, came to our rescue with a plan of kicking the can down the road, or more geographically modulated, shifting the sand toward the dunes. So, if we aim our bombers against ISIS in Syria, are we aiding our enemy al-Assad by keeping him in power? Incidentally, are we friend or foe with Russia as it relates to the bear being the arbiter finessing the shifting sands of our contempt of al-Assad? Might Russia equip al-Assad with WMD alternatives to either thwart further sanctions from the West or neutralize them with actions of their own through an allied State and then refuse the role of arbiter next time? What’s on second?
Iran: Are they, or are they not, close to their nuclear ambitions? Iran, now arming the Kurds, an ally of the United States in the fight against ISIS, is/was an enemy that is our coalition ally? Have we, by consequence, taken our eye off the nuclear ball as Iran becomes more emboldened due to the media hype of the crisis with the new and glorified version of Al Qaeda? Could Iran be secretly behind the scenes with ISIS collaborating on the beheading videos in an effort to distract the U.N.’s attention long enough to develop nuclear weapon capabilities? Doesn’t ISIS and Iran really have the same objective in their equally shared dominion to destroy Israel? I don’t know is on third.
Hamas: They just lost the war in Gaza to Israel. Hamas then began maiming and executing its own people, some who were affiliated with Fatah, the ruling coterie of the Palestine Authority. Mahmoud Abbas, the president of the Palestine state, remained neutral while pleading for calm during Hamas’ war with Israel. Hamas is the arch rival of Abbas for the control of Palestine. By remaining neutral in the war, did Abbas secretly want Israel to destroy Hamas or did he want Hamas to inflict damage to his archenemy Israel? Or more cleverly, by neutrality, wish to harm both? I don’t give a darn is the shortstop.
Gulf Sheiks: Here lies a virtual centrifuge of polarized tribal factions which fall into seismic Muslim fault lines. At the end of this quagmire, it’s a centuries old civil war between the Shiites and the Sunni’s. The Gulf States are a long playing version of the Hatfield’s vs. the McCoy’s; the Montagues and the Capulets. Cut from the same cloth, they are sewn into the fabric of deathly different facades. Outwardly they appear the same; inwardly they are fervidly enraged to insure that fire-and-brimstone is the fate of the other. As Iran gets closer to the holy grail of nuclear arsenals, the Gulf Sheiks form a de facto alliance with their execrated adversary, Israel.
The Sunni monarchies of the Gulf Cooperation Council (GCC) and the Jewish state of Israel are nearly in lockstep opposition toward the radical schism of Iran/Syria/Hezbollah/Muslim Brotherhood/Hamas axis. But which is which? The Iranians and Hezbollah are Shiites; the Saudis are Sunnis as are the Muslim Brotherhood and Hamas; the Syrians are neither being Alawite. Yet they all claim to be against the Sunni extremist ISIS.
This begs the question if they are enemies of the Sunni monarchies and enemies of the Islamic State, is the Islamic State a friend or foe of the Gulf Sheikdoms? If your answer is “I don’t know”, then consider the baffled monarchy of Qatar which is apparently at odds with all the other neighboring Sunni monarchies. Qatar is commercial with Iran, the Muslim Brotherhood, Hezbollah and Hamas; which are all adversaries of the United States. Then you may ponder why Qatar hosts the largest American military base (Al Udeid Air Base) and Centcom (Central Command)? Why is in left field.
Egypt: Is the Ukraine reminiscent of Egypt or was Egypt a template for the overthrow of a democratically elected pro-Russian Ukrainian president? Hosni Mubarak, a longtime ally of the United States, was eased out of power with the polite assistance of the Obama administration in the metaphoric season known as the Arab Spring. The Obama White House then supported the democratic elections which brought the Muslim Brotherhood to power. Soon afterwards, before the Arab Spring had blossomed flowers, the Egyptian military deposed then President Morsi and his radical Muslim Brotherhood terrorist regime in a junta. So, was America against military strongmen before it was for them and for Islamists before they were against them? May be we will know tomorrow. Tomorrow is the pitcher.
Turkey: Under the stewardship of Recep Tayyip Erdogan, President Obama had recently declared to a fawning Fareed Zakaria, that Erdogan was someone that he had become friends and forged a “bond of trust.” While Zakaria’s eyes glittered in awe, Texas governor Rick Perry cast disparaging looks upon Obama’s assessment of Erdogan claiming Turkey was run by “Islamic terrorists.”
Although not quite the equivalent of Hezbollah or Hamas, Turkey certainly has become a sponsor and enabler of terrorism and a fan of Iran. Perry, as do many other nation states, questions the continuing presence of Turkey in NATO which has been underscored by Turkey’s refusal to allow US rescue teams to stage a rescue mission of American hostages utilizing Turkish territory; sadly, two of the hostages were eventually beheaded … in Syria.
Under the tutelage of Obama’s buddy, Erdogan has censored journalists; he has jailed opponents of the ruling party; they have abandoned its long standing alliance with fellow American friend Israel; and have become the leading supporter of the Hamas terrorist group on an international stage. So, how does Obama list Erdogan as his buddy while displaying outright contempt and dislike for Israeli Prime Minister Benjamin Netanyahu? Are you confused trying to understand why relations with Israel have become tenuous while the White house proclaims an Islamic quasi-authoritarian supporter of Hamas our president’s pal and the prime minister of Israel his bête noire? This mess is all happening today … Today is the catcher.
What Does This Mean For The Markets?
Okay, so now you are wondering what has all this to do with the markets.
A chaos of bewilderment swirled into a rime where events are moving so fast in different directions that they appear to be motionless and calm.
According to Bernard Mandelbrot, a chaotic system develops in a way that appears very smooth and ordered. Adding to the geopolitical confusion portrayed within the neurotically explosive Middle East is the radical Keynesian experiment of the world’s central bankers.
This toxic mix has the potential to explode politically and implode economically. There are storms of discontent brewing in the relative calm; the heat is turning up and the pressures are building. Kinetically for markets, the resultant thrust of this mixture could be a radical burst in implied volatilities. Beware the sellers of out of the money put options; there may not be enough assets to cover the risk of exploding portfolio gamma … a flash crash without a resulting rebound.
For further clarification, feel free to interrogate our source information at this link.
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The Professional Traders Opinion
Ronald M. George
William J. Taylor
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