What Happened To Jamal Khashoggi?
Last week Saudi dissenter Jamal Khashoggi went into the Saudi consulate in Turkey to get his marriage license. He has not been seen or heard of since. Turkish officials said that Mr. Khashoggi was beaten, tortured and dismembered in the embassy by agents of Saudi Ariba. His body was then removed from the premise in a couple of plastic bags. Saudi officials claim that they have no idea what happened, and they are trying to sort out the facts. Mr. Khashoggi was a naturalized U. S. Citizen so that put Mr. Trump in a tough place.
Turkish officials do not want to be blamed so they have produced a tape that supposedly has the recoding of Mr. Khashoggi’s gruesome death. They also claim that the crime was carried out by hit men from Saudi Arabi and was sanctioned by the government. Saudi Araba claims that they knew nothing about the possible murder of a naturalized U.S. citizen at their consulate. Mr. Trump is taking the attitude that you can’t take a position until you know the facts of the case.
It seems that no one really cares about Mr. Khashoggi’s family or the stress that it is putting them under, and that part is disheartening. However, when you are critical of a powerful dictatorship in the tough world of international politics you have to know that your life is subject to a sudden end.
No matter what happens Mr. Trump has made it clear that this tragedy will not affect permanent relations with the Kingdom. The reasons are pretty obvious. The U.S. does billions of dollars’ worth of arms and oil business with the Saudis each year. In addition, they are a vital ally with the U.S. in the Mid-East, and I am sure that this supersedes any moral issue of the fate of Mr. Khashoggi. So how does this sort out?
I think that it will end up on comprised ground. The Saudis will admit that rogue agents were probably involved with his death but that the leaders were not involved in any way with the crime. They will insist that the rogue agents be dealt with internally. Turkey will then be free of any role in the murder. Mr. Trump will disavow the act but will hold the Crown Price harmless, and after a few protests the issue will be passed by time. Not a great ending, but one that everyone involved can live with, and in this day and age it will be business back to normal.
Ask Mr. Seifert
I am constantly asked questions about trading and how important execution is to insure success. Each week, we will answer those questions with a short paragraph on a variety of trading subjects.
How can great news turn the equity markets lower?
Earnings season is a great example of the phenomena known as market expectation. Wall Street is always looking to the future. They know what has happened in the past, but they can only make calculated guesses as to what the future will hold. So, the street has algorithms that show them where potential problems will probably be created. This week we get a ton of earnings and that news will be carefully examined by Wall Street and no matter what the numbers are, they will trigger a market expectation. If the numbers are good and they meet Wall Street’s expectation the current market could reverse and go back to the old highs. If the numbers are bad and the Street was expecting higher corporate earnings the current downtrend will probably continue. If the numbers are bad but not as bad as expected you can expect a rally, and of course if they outperform the streets expectation you will see a large rally. No matter what the numbers are, if you have trades on that do not have unlimited risk you will be around for the next round when everything can go in your favor.
The Wise Guy Report: The View from The Electronic Floor
Each week I talk about how the Wise Guys (floor traders) find the soft spots in the market and take advantage of price dislocation in three major commodity markets: Gold (GC), Crude Oil (CL) and Long-Term Interest Rates (ZB). On the equity side, I cover MSS which is the Mister Seifert Sez Composite Index. This is a proprietary index that I created which measures the dollar flow of the four major indexes (S&P 500, Nasdaq 100, Russell 2000 and the Dow Jones Industrials) on an unweighted basis. Let’s look at how the U.S. Equity market is faring.
US Equity Market (Possible Top)
The U.S. equity market had a mixed week as we await the bulk of corporate earnings starting on Monday. After the selloff last week, you had to feel that there would be a bounce this week and the market did react as such. Early in the week, stocks came off last week’s decline with a nice bounce before giving back most of the gain later in the week. We have several factors at work here. One will be how the street sees earnings which is always important. The second is the reality of the current political situation. I think that most observers believe if the political climate shifts on November 6th, that the market will lose confidence in the current administration and that this could have a negative effect on prices. It is hard to say if the market bottomed out last week or that stocks were in line for a “dead cat” bounce. In either case it is hard to be a seller here until we get more information.
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Mr. Seifert