France: I expect the Bernier government to fall and the budget not to be passed. It could happen today or later this week. The result will be a widening of French sovereign spreads to 110 BP over bunds. The Euro will be affected reaching parity with the USD by end Q1 next year. The centre of the EU soufflé continues to sink.
The Syrian war is a Turkish proxy offensive into Syria by two Turkish sponsored rebel groups. The HTS (Sunni) sanctioned by the US as a terrorist group) & the Syrian National Army. Components of both groups have had links to ISIS and al-Qa'ida in the past (present?). The Kurdish Syrian Democratic Force (supported by the US) is also involved but its aims are to preserve its semi official Kurdish state in north east Syria. Turkey's aim is to clean out northern Syria and prevent the formation of a Kurdish state. Erdogan timed it perfectly - just as the Lebanese truce was signed and Hezbollah is shattered and Iran very vulnerable to the new Trump Administration. The HTS & Syrian National Army are being so succesful that the Bahar al-Assad regime is threatened. If it falls Turkey will end up in control of Syria as Kingmaker.. What would replace the al-Assad regime will certainly not bring stability to Syria. But it could be a Sunni government which would stop Iranian arms crossing Syria into Lebanon etc. Here are some immediate consequences: 1. the big losers out of this are the Iranians and the Russians. 2. The big winner is Israel. 3. No impact on oil.
Russia- Ukraine: . Two things to that may matter: 1. Keith Kellog - the Trump Administration propose Peace Envoy to Ukraine- is no patsy- very tough on Russia & unlikely to dump Ukraine or hand a victory to Putin. 2. Trump will want to settle Ukraine war as a show of strength not weakness 3. Ukraine will not get NATO membership but there will be a peace corridor patrolled by NATO troops. Any attack on, above or through the peace corridor will be considered an attack on NATO triggering clause 5 of the NATO Treaty (an attack on one is an attack on all NATO members.). Ukraine will also receive generous funding to rebuild infrastructure; build a state of the art military-industrial complex and reconstitute its armed forces. Sanctions on Russia will remain. If Russia refuses the deal the US will escalate the war. So we are at a cross roads with one road leading to a ceasefire and the other to escalation. Putin has to know that his war is becoming unsustainable. Rationally he should take the deal.
China - Military Purge. China. A second high ranking military officer has been arrested. This comes on top of Admiral Dong Jun - the defence minister last week. this time it’s Admiral Miao Hua from the Military Commission (CMC) which controls the armed forces and reports to the Politburo. The CMC is chaired by Xi. Dong never made it to the military commission. Like the others Hua and Dong have both been removed for “serious violations of discipline” -i.e. corruption. The total senior military people arrested in last 2 years is 17. The significance to markets is small. This does not mean that the PLA is weakened and unable to threaten Taiwan. It is more likely that XI is tightening his grip on the military to make it a more effective tool to do so..