Now that is a rattling sabre. While markets for now are seemingly shrugging off this ‘fly-by’, we suspect the people of Okinawa were more than a little surprised:

• NORTH KOREA LAUNCHED ROCKET AT 9:51 AM LOCAL TIME: YONHAP
• N. KOREA ROCKET LAUNCHED IN SOUTHERLY DIRECTION,JAPAN GOVT SAYS
• N. KOREA ROCKET PASSES OVER JAPAN’S OKINAWA, NHK SAYS
• JAPAN GOVT: NO ORDER GIVEN TO SHOOT DOWN N.KOREA ROCKET
• N. KOREA ROCKET EXPECTED TO FALL IN SEA EAST OF PHILIPPINES:NHK

What is most surprising is not the rocket launch: it was largely expected and overdue after the humiliation from the last one; it is that Korea has brazenly defied US warnings and the threat of sanctions just to make a rather meaningless political point. The imminent escalation in sanctions and N.Korea’s response is what is the true variable here, confirmed by the markets who have not even blinked as a result of the rocket launch. >> Read More

-The battle is on for delivery and verification for official gold accounts
-Evidence grows that much of it is gone, and when demanded, replaced with urgency
-It is soon to transform into a global gold war
-The German Govt gold demand to the London and NY City bankers represents a big escalation in the gold war
-The central bank coordinated QE to Infinity has brought questions of gold account location and integrity
-The Allocated Gold Account scandal is a natural event to follow the LIBOR banker scandal
-QE3 will assure a gold rise past the $2000 mark, but the new scandal will take the gold price to $5000
-The powerful gold factors are aligned and in place, led by permanent ZIRP and unlimited QE

Iran has test-fired four missiles in the Persian Gulf, according to an Iranian news agency.

 The report quoted General Ali Fadavi of the Revolutionary Guard as saying the missiles were fired simultaneously at a sea target as large as a warship and sank it within 50 seconds.

Fadavi “stressed Iran’s missile capability, and noted that Iran’s missile systems can reach the entire Persian Gulf coastline and beyond where the US bases are,” according to Fars.

This is an escalation of Iran’s counter drills in the Gulf, held at the same time as international naval exercises.

Escalation. The inevitable collapse of the Prisoner’s Dilemma that kept the LIBOR contributors together is occurring rapidly. After Barclays’ forced admission and initial fine, the ‘he-who-defects-first-wins’ strategy has been trumped by Deutsche Bank as they turn all ‘Donnie Brasco’ on their oligopolistic peers. As Reuters reports this morning “The bank last year obtained the status of being a witness for the prosecution in the EU and in Switzerland,” and “as a result of that, the bank could get a lighter penalty if a punishment is imposed,” though of course this does not mean they are admitting guilt (sigh). Under the leniency programs of the EU, companies may get total immunity from fines or a reduction of fines which the anti-trust authorities would have otherwise imposed on them if they hand over evidence on anti-competitive agreements or those involved in a concerted practice. How quickly the worm turns when trust leaves the system – the warning the rest of the Liebor contributors – be afraid, be very afraid.

The European Central Bank may cut interest rates again soon as the eurozone debt crisis deepens, but it will continue to insist that it is up to governments to find a lasting solution, analysts say.

ECB watchers predict the central bank — which will hold its regular policy-setting meeting next week on Wednesday instead of Thursday owing to a public holiday — will not alter borrowing costs just yet this month.

But it could act in July as deepening fears about Greece and possible contagion to other countries push the 17 countries that share the euro back into recession, the analysts predicted.

“The further escalation of the eurozone crisis has intensified the pressure on the ECB to take further remedial action,” said Capital Economics’ chief European economist Jonathan Loynes.

“But while president (Mario) Draghi may hold open the prospect of further support of the region’s banks after the meeting on June 6, he is likely to insist again that it is up to national policymakers to address their broader economic and fiscal problems,” Loynes said.

The ECB has never hesitated to act from the very beginning of the crisis. >> Read More

A few days ago, before the latest breakout in crude sent Brent to all time highs in GBP and EUR (and Asian Tapis in USD just shy of all time highs), we said that “we hope our readers stocked up on gasoline. Because things are about to get uglier. And by that we mean more expensive. But courtesy of hedonic adjustments, more expensive means cheaper, at least to the US government.” This was due to recent news out of Iran “where on one hand we learn that IAEA just pronounced Iran nuclear talks a failure (this is bad), and on the other Press TV reports that the Iran army just started a 4 day air defense exercise in a 190,000 square kilometer area in southern Iran (this is just as bad). The escalation “ball” is now in the Western court.” We were not surprised to learn that the “Western court” has responded in precisely the way we had expected. The WSJ reports: “The Pentagon is beefing up U.S. sea- and land-based defenses in the Persian Gulf to counter any attempt by Iran to close the Strait of Hormuz. The U.S. military has notified Congress of plans to preposition new mine-detection and clearing equipment and expand surveillance capabilities in and around the strait… The military also wants to quickly modify weapons systems on ships so they could be used against Iranian fast-attack boats, as well as shore-launched cruise missiles” Which means the escalation slider was just shifted up by one more level, as Iran will next do just what every actor caught in an Always Defect regime as part of an iterated prisoners’ dilemma always does – step up the rhetoric even more, as backing off at this point is impossible. Which means that crude will go that much more higher in the coming days, as now even the MSM is starting to grasp the obvious - from the Guardian: “The drumbeat of war with Iran grows steadily more intense. Each day brings more defiant rhetoric from Tehran, another failed UN nuclear inspection, reports of western military preparations, an assassination, a missile test, or a dire warning that, once again, the world is sliding towards catastrophe. If this all feels familiar, that’s because it is. For Iran, read Iraq in the countdown to the 2003 invasion.” And the most ironic thing is that the biggest loser out of all this, at least in the short-term is…. Greece.

As a reminder, here is an update of US naval assets, courtesy of a recently up and running Stratfor:

More on the latest very much anticipated defection from the US in what is setting up to be either the biggest dud of geopolitical foreplay in history, or potentially the start of a new World War (because the Muslim cresent will not take too lightly to any joint or standalone US/Israeli aggression). >> Read More

UPDATE: Oil Sub $100.

And so the escalation ends, if only for the time being, as Iran chalks a (Pyrrhic?) victory.

• EU IRAN OIL EMBARGO SAID TO BE LIKELY DELAYED BY SIX MONTHS

Why? Because the world slowly realized that the potential surge in oil prices would tip a world already on the verge of a recession even deeper into economic contraction. Not rocket science, but certainly something the US president apparently has been unable to comprehend, especially if hoping that he would merely transfer exports from Iran to his close ally Saudi Arabia which would cement its European market monopoly even further. Or, perhaps, someone just explained to Obama that Embargo in January + QE3 in March = No Reelection…

In other news, crude is now dumping.

 Made low of $98.95

Support at 98.2-97.52 !

Will Update more to our Subscribers.

Was Telling from Last 4 Days……………..Short Term Honeymoon over for CRUDE ,Sell MCX CRUDE…………..Yes will see RAPE Today morning at MCX.

Told to Buy REFINERY Stocks for Future Traders ,Jokers-Fools-Idiots and Blind never earn money from Trading.

Technically Yours/ASR TEAM

Updated at 1:33/13th Jan/Baroda

The folks at Religare Capital Markets have put together one of the better cheat sheets on a region that most of the big banks largely ignore: the Middle East, where day after day we get new and more troubling headlines of escalation, usually involving Iran and Israel. And since at the end of the day, in a resource-strapped world, the bottom line is always about energy, and oil, what happens in the MENA region is arguably far more important at the end of the day than who prints how much electronic paper/linen. But most important is probably the following analysis charting the probability of an attack of Iran by either Israel or the US. We were quite surprised to find that in Religare’s opinion the probability of an Israeli-sourced attack on Iran hits a high of 50% sometime in early February, with the US contributing about 20% with a peak in May and just before the presidential elections. This is how they explain it: “The probability of an attack on Iran is now higher than ever. The only solution to the current crisis, diplomacy, is off the table due to politics and the focus is now shifting to regime change. We see the probability dropping mid-year, although US elections could increase the probability of a US attack significantly (unless Ron Paul steams ahead), as will Iran’s likely decision to move their centrifuges to reinforced facilities in Qom if not handled correctly (likely mid-year). We reiterate our view that the fallout may not be as bad as expected from an Israeli strike, horrendous from a US one.” And if they are right, what happens to oil will likely be the biggest catalyst of events in 2012 – a topic PIMCO has already had some extended observations on.

Religare Geopolitical Outlook 2012

Don’t look now but oil is spiking as the market is finally realizing that the escalation in the Persian Gulf is more than just for show (which curiously was once again set off by Obama establishing a full financial embargo of all Iranian activity on New Year’s Eve, leading the Rial to plunge to a new record low, and about to set a brand new scramble for physical gold in the country on the verge of hyperinflation). At last check WTI was up over $2.50 with the market realizing that either Dalio will be right (central banks going into overdrive) or the Iranian escalation will finally pass the trigger threshold, and Brent was over $110. Today’s escalation, just as requested by the US, is not another missile launch but a threat by the Iran military to retaliate if the US carrier John Stennis were to once again cross the Straits of Hormuz and return to the Gulf. As a reminder, as of December 23, as was observed by Stratfor before the hacker takedown and reported here, the Stennis was within shouting distance. From Reuters: “Iran will take action if a U.S. aircraft carrier which left the area because of Iranian naval exercises returns to the Gulf, the state news agency quoted army chief Ataollah Salehi as saying on Tuesday. “Iran will not repeat its warning … the enemy’s carrier has been moved to the Sea of Oman because of our drill. I recommend and emphasise to the American carrier not to return to the Persian Gulf,” Salehi told IRNA.” Which is interesting because considering that the 5th Navy is stationed in Bahrain, i.e., deep in the Gulf, there is no waythat the Stennis or other carriers will not come back, meaning what is likely the terminal escalation has now been set in motion. >> Read More

With many expecting 2012 to be a replica of 2011, at least for US stocks which the non-permabull consensus sees closing the year largely unchanged for the second year in a row, one open question is whether this will also be applicable to Europe. As a reminder, the EURUSD opened this year near the 52 week lows, only to rise by several thousand pips as concerns about European contagion were brushed away on hopes Europe’s politicians had it “under control.” They didn’t, and the EURUSD returned to its year’s lows recently. But is the same pattern in store for early 2012, where as we already noted, the bulk of gross debt issuance is due to take place, especially in January? Below are UBS’ 5 other key reasons why the European resurgence (however brief) that was experienced early this year will not be recreated in the new year that is now just around the corner.

From UBS:

  

So how do we expect the Eurozone crisis to evolve in early 2012 and how will it affect the euro? Last year, most observers expected Q1 2012 to bring an escalation of the crisis, particularly on peripheral bond markets. Instead, the periphery rallied and so did the euro, from about 1.30, just where we are today, to almost 1.50. Could the same happen early next year? We do not think so for the following reasons:

 1) The ECB

 In early 2011, the ECB sounded hawkish and then went on to hike rates in April and July, just as the Fed prepared to embark on QE2. 2012 will arguably be very different as the ECB is likely to cut rates to a new historic low of 0.50% and might well then embark on outright QE. At a time when the Fed looks largely done with its QE efforts, this could hit EURUSD hard and for us is the single most important reason to be structurally bearish the euro in 2012.

 2) Greece

 There is now a non-negotiable deadline for the Greek PSI, which is the bond redemption on 20 March. Negotiations for the new troika programme continue to assume a ‘voluntary’ PSI resulting in a 50% haircut and a debt-to-GDP reduction to 120% by 2020. However, revenue shortfalls due to the deeper-thanforecast recession look set to result in additional financing needs, which in the absence of new official money might mean a larger haircut and hence a coercive restructuring. >> Read More