Syria, Egypt Implode; Fiscal Cliff Talks at Precipice

As we begin this morning, the Middle East North Africa (MENA) is becoming unglued. Several deaths and hundreds of injuries have been reported, and protestors have become more agitated with President Morsi’s leap to grab power. There are now tanks that ring the Presidential Palace. Three of Morsi’s top aides have left the government and seek asylum. This is nothing more than rats leaving a sinking ship. They are always more rats and they will be pressured to do the same. Just as when Mubarak was overthrown, it was not until world opinion turned that the situation was rectified. So too will this situation fester and inflame. It will not end well. It never does.

But far more seriously is the Assad’s last stand. The Syrian military has begun to load the precursor chemicals for Sarin gas into aerial bombs. Germany has gone as far as sending troops to Turkey.

Lebanon too is seeing violence in its streets. Rival groups are clashing. These are not street gangs per se, but different sects of Islam. There is suddenly becoming readily apparent that a sectarian war is possible and that will engulf the entire Middle East.

We await word from Europe as the ECB reports its intentions today. While a change in interest rate policy is not expected, attention will be paid for any hints of monetary policy. Spain is also prepared to ask the ECB for bailout money if the cost can be determined beforehand.

While the majority of the news above would be bullish in other economic times, the threat of the fiscal cliff and uncertain tax policies have staid investors from building large positions. Treasury Secretary Tim Geithner said Thursday that the administration was prepared to dive off the fiscal cliff, if necessary. There are even some political analysts who say he will purposely ride over the cliff and pin the blame on Republicans.

Jobless Claims
Released On 12/6/2012 8:30:00 AM For wk12/1, 2012
Prior Consensus Consensus Range
New Claims – Level 393 K 380 K 360 K to 395 K

Market Consensus before announcement
Initial jobless claims fell 23,000 in the November 24 week to 393,000. However, according to comments from the Labor Department, there is no indication that states are carrying extra claims from Hurricane Sandy. If this level does not include extra claims related to the storm, then a comparison against the month-ago total may be a fair one for judging the recent direction of unemployment claims. Readings in late October, before the storm hit, showed claims at 363,000 with the four-week average at 367,250. The current four-week average is worse and over 400,000 at 405,250.

Bloomberg Consumer Comfort Index Definition
The Bloomberg Consumer Comfort Index is a weekly, random-sample survey tracking Americans’ views on the condition of the U.S. economy, their personal finances and the buying climate. The survey was formerly sponsored by ABC News since 1985.

EIA Natural Gas Report
Exp:-67 BCF

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