Competing bands of rebels and government forces fighting on the ground. Terrorist groups operating throughout the region. Covert funding and weapons supplies flooding in from regional and far-flung governments. Fighter jets and drones being flown by several global and local air forces.
Market Roundup
Syria and northern Iraq have all that and more — and today, it came to a head when Turkish forces shot a Russian Sukhoi Su-24 fighter jet out of the sky. Turkey said two of its F-16 fighters downed the plane, while Russian president Vladimir Putin called it a “stab in the back that will have serious consequences.”
Turkey and Russia also vehemently disagreed about the circumstances of the event. Turkey said it warned the two Russian pilots on board 10 separate times to get out of its airspace before attacking. Russian military officials said the jet was flying on the Syrian side of the border. There were conflicting reports about the fate of the two pilots and whether one or both were killed or captured.
This is big news for several reasons …
First, the two countries have been edging close to confrontation for months. Turkey supports ethnic Turkmen living just over the border in Syria; Russia backs Syrian President Bashar al-Assad and is supporting his attacks on rebels in the region. Turkey already shot down an unmanned drone several days ago, one that was suspected to be a Russian Orlan 10 model.
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| The Turkish military released a graphic showing that the Russian jet (the red line) passed over the Turkish border (blue line). |
Second, Turkey is a member of the 28-nation NATO military alliance. With Russia conducting more than 4,000 airstrikes just over the border in Syria, the worry has been that conditions could rapidly spiral out of control — and drag the U.S. or other NATO members in.
Several dozen Russian fighters and helicopters are operating in the region, as are scores of jets and drones from the U.S., France, Gulf states and more. NATO officials held an emergency meeting in Brussels after the attack to discuss how to move forward.
Third, this incident follows ISIS-inspired or ISIS-led attacks in France and against a Russian airliner, as well as a hotel strike in Mali that may have been conducted by other radical, non-ISIS terrorists. That shows how the terrorism scourge is spreading far beyond the Middle East, and how the attack/counterattack cycle is rapidly intensifying.
From an investment perspective, we could see some flight-to-safety buying in assets like Treasury bonds or gold if the tensions continue to escalate. The broad averages could also come under increasing pressure. That’s the last thing stocks need, considering the festering credit market issues that are hurting many names behind the scenes.
| “We could see some flight-to-safety buying in assets like Treasury bonds or gold if the tensions continue to escalate.” |
On the flip side, defense contractors are an obvious beneficiary. Many have been on an absolute tear in recent months, with stocks like Raytheon (RTN) and Lockheed Martin (LMT) setting all-time highs. I wrote in April about how these kinds of companies could benefit from the significant re-arming in the region, regardless of what we all think about the social or political consequences of what’s going on there.
Bottom line: Watch developments in Syria and Turkey closely. They could have a significant impact on the geopolitical scene and investment markets in the weeks ahead.
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Pfizer’s (PFE) move to shift its tax jurisdiction overseas sparked several comments at the website — all focused on why the drugmaker is doing the transaction and whether it’s justified in doing so.
Reader Tom said: “Money flows to where it gets the best treatment. A corporation’s sole duty is to its stockholders. The U.S. should change laws to tax only income earned in the U.S., not world income for both individuals and companies, as do all other countries.”
Reader R.J.F. picked up on the reform theme, saying: “Both corporate and individual tax laws need major reform. I hope that the Pfizer deal and any future ones go through. Perhaps that will provide the necessary kick in the butt for Congress to act. The idea that corporations have a ‘patriotic duty’ to pay more taxes is absurd.”
Reader Bruce piled on even more with these comments: “The Left-wing people who run our government just don’t want to get it. These deals are increasing because we have the highest tax rates in the world. So why not lower them, stimulate the economy and simply remove the incentive for these international mega-deals. Duh!”
But Reader D countered by saying: “Every tax dollar saved by Pfizer is a tax dollar that must be paid by the American people. The exorbitant prices of their drugs shows just what they think about Americans. The battle of ‘Corporate profits vs. Nationalism’ has been started again.”
Finally, Reader Vic said: “I am tired of companies making all their money in the U.S. and not wanting to pay taxes. The corporate tax rate seems high. But corporations don’t pay those rates thanks to all kinds of credits and other tax dodges given to them by a Congress that has been bought.”
Thanks for weighing in, everyone. The Pfizer deal is so massive compared to earlier transactions that it’s sure to spark more debate in Washington about current tax rules and policy. Whether anything will (or can, legally) be done to torpedo the deal remains to be seen. But there is sure to be plenty of pressure on legislators, the Obama administration, and presidential candidates to do something about this trend.
Didn’t take the chance to comment yet? Then make sure you add your thoughts below.
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Thanks to the ongoing turmoil in the credit markets that I’ve been harping on, investors in distressed debt are getting hammered. Many hedge funds invest in the bonds and loans of companies with credit problems on the cheap, hoping to rack up big profits when and if their businesses turn around.
But this is the worst year for that strategy since 2008. Distressed debt funds lost 5% through October, and the month of November has been even worse. One debt index has dropped almost 8% this month alone.
You know things are getting bad in retail when even the company behind those iconic light blue boxes misses targets. Tiffany & Co. (TIF) missed earnings estimates for the third quarter by five cents per share, and also warned that profit could drop by as much as 10% for the full year. It blamed the strong dollar and “volatile, uncertain economic and market conditions in the U.S. and other regions.”
Three suicide bombers — two on foot and one in a car — attempted to attack the Suez Inn hotel in Egypt’s troubled Sinai Peninsula. They managed to kill three people and wound 12 before being gunned down by security forces and police. ISIS has a presence in the region, and are believed to be behind the downing of a Russian jetliner a month ago.
Any thoughts on the ongoing terrorism threat in Europe? Let me hear about it online.
Until next time,
Mike Larson
P.S. Larry Edelson’s VITAL new report, “7 Commodity Windfalls for 2015-2021” could prove to be the most PROFITABLE report you read all year.
Hurry, click this link to read it now! It could make you very, very rich.
Mike Larson graduated from Boston University with a B.S. degree in Journalism and a B.A. degree in English in 1998, and went to work for Bankrate.com. There, he learned the mortgage and interest rates markets inside and out. Mike then joined Weiss Research in 2001. He is the editor of Safe Money Report. He is often quoted by the Washington Post, Reuters, Dow Jones Newswires, Orlando Sentinel, Palm Beach Post and Sun-Sentinel, and he has appeared on CNN, Bloomberg Television and CNBC.
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Hi Mike
Well it’s a setback, but it won’t start WW3. Our travel plans have changed, why go over there and be part of this? We will be spending our time at home for the forseeable future
Hi Mike
Regarding taxed profits, I’d like to offer this. I am a trustee for a super fund and I feel absolutely no responsibility to fund the outragious promises made by stupid governments. The likes of B.S. who want to get elected by offering free stuff at everyone elses expense are going to kill this country. We were not founded on free stuff, we were founded on using opportunity to get off it and go and find work. Taxing to fund mountains of red tape and bureauocracy is what has driven trustees like me, overseas in the first place. When the government wants to encourage capital to come home and give people jobs then this investment flow will change. Money goes where it earns a return, is accessable and safe. Not where it is squandered, wasted and used to fund the public life of ……… well I guess I’d better stop here.
If Pfizer wants to leave, fine but the government should end the practice of protecting drug profits by restricting import of cheaper foreign manufactured drugs. Let me buy imported drugs at 30% the cost.
Regarding the Russian plane,Dear Jesus did the dumb turkish fighter think the jet belonged to ISIS after all the only thing flying over there is fighting the same enemy,Im not a pilot but surely some common sense went astray here,repercussion are quite possible,then what, since nobody can forsee Putin thinking
Do you really think those Turkish pilots attacked without getting the okay from higher ups on the ground? Or that the Russians won’t come over in multiples next time, looking for bear? The real question seems to be, will we get involved – or France or Britain? And how many times did the Russkies fly over that little tip of Turkey? Were they looking for a provocation of some sort? And did the Turks actually hit the Russians over Turkey or Syria? Lots of questions – unclear answers.
This little peninsula of land has been disputed since the 30s. Putin will not just let this thing slide…it is not his nature and he also has a lot of pride. He will hit the Turks hard……give him a week or so, maybe less.
ian, Turkey knew exactly who they were targeting. My opinion is they are provoking Russia to get the west involved. This has destroyed Russia’s chance of cooperating with us. Putin will have to go to plan C, which is not good. It could escalate into something I can only imagine 99.9% of the world does not want.
The Russian plane was only guilty of a minor incursion; Turkey, under Islamist Erdogan, over-reacted. We should not fall in line with Turkey’s creepy shari’ah government. I do not care if Turkey is part of NATO…we do not have to endorse insanity.
i endorse this analysis.
Agreed. Erdogan is an idiot. Besides all of that, he has supported ISIS by buying their oil exports.
You bomb my friends. I shoot you down. Jim
The West is treating ISIS as an Nation Enemy. Hitler made Germany a Enemy Nation, this is a big mistake, ISIS is a Religion, and the West wants to prevent it from expanding, that is one thing, but, if the West make it too difficult for ISIS to survive, then forget the rules of War.
Recognize that a small group of People have drastically more Power to destroy, than anytime in history.
Irreparable damage can be done that 100 years may not be able to repair.
Mike knows nothing about trading options. When he was with Weiss he recommended 8 loses in a roll & I quit……….Good Luck
First understand that companies collect the money to pay all their costs, including taxes, from higher prices that are finally paid in the form of a hidden regressive sales tax by the final consumer (We the People). The U.S.A. federal tax code drives out and discourages the entry of jobs, companies and capital for our economy. The tax code is over 74,000 pages because the lobbyists, special interests and politicians are buying and selling it for their advantage. Let’s end all this foolishness!!! Pass the FAIRtax bill HR 25/ S155. Learn more, join the cause and contribute at fairtax.org.
ANY tax plan, such as this one, brought by a Republican has ONLY has two intentions, reduce the taxes paid by their 3% Ultra Wealthy handlers and increase the taxes paid by the 97%!… This has NO chance of passing…… Only when the 3% pay taxes at the level they did from 1932-1981 will America be able to reduce the huge deficit that has built up since Reagan gave his handlers that disastrous gift….. Incidentally, the period from 1932-1981 was the longest and greatest increase in the stock market, the greatest increase in the Middle Class the greatest increase in the living standards of the average American and the greatest increase in Manufacturing and Economic output in our history….
You cannot tax anyone in this country enough to pay for the runaway deficit spending of your beloved Barack Obama. He has almost doubled the National Debt in 7 years. Roughly $10 Trillion when he started is now almost $19 Trillion. And that $10 Trillion had accumulated from the days of Geo. Washington.
$550 BILLION added to the deficit, just since Oct. 30 – over half another Trillion in less than a month since the limit was lifted. Have you seen any benefit from it? WE elected these idiots. WE can unelect them. Let some other idiots see what they can do. Our politics has become a joke – a dirty joke, at that.
I really don’t get this rich Republican deal. I see plenty of very rich Democrats playing the same game. Like the Kennedys and their tax free foundation that allows them to live like kings and pay very little in taxes. The poor Clintons have put hundreds of millions in foreign money into their tax advantaged foundation. The Northeast Political Establishment rigs the whole system to their benefit. That membership includes both parties. There is a huge difference between the nominal tax rate and the effective tax rate. No matter what time frame you reference or what party they belong to the same rules apply. The rich don’t pay taxes. We do. Jim
This R&D game is pure political theater meant to pit you against me. We have the same enemy. The Political Class. Nothing comes out of Washington they don’t agree upon. The Government has received a stable percentage of GDP for many years, no matter what the tax structure. It has actually gone up a few percentage points under Obama. We do not have a revenue problem. We have a major spending problem. Jim
Yes Jim
We have a very bad spending problem, leaving all politics aside.
Just be extremely careful! We are being herded into one barrel.
I think Mike Larson Safe Investment newletter is excellent .. However he needs to do a bit more outside of US stocks. .What about EU /UK stocks
JD
Assuming the deficit spending figures (posted by Fred151) are correct, and my not being an Obama supporter, are you suggesting that Congress and its hoard of lobbyists and wealthy friends had nothing to do with the deficit increase? All those wars we keep fighting, overt and covert, have nothing to do with that deficit? Defense and related costs and spending spending are the biggest part of the budget. Some of these commentors must live on Mars.
As far a the Pfizer deal and copout, so they shouldn’t pay taxes here while occupying our land, using our transportation systems (paid for by the taxpayer), use our media and communications services, etc. etc. Having lived in Europe, I guarantee it doesn’t happen there.
I agree that corporate taxes should be lowered. But what are the no, no, no, to everything Republicans doing to help their wealthy friends? And as productivity increases, who profited from the increased profits, not us shareholders or the workers. Guess who?
Mike,
It is said the corporations do not pay taxes as they simply
are tax collectors for the government. Their customers are the
source of taxes and why should foreign customers of our corporations pay
American taxes?
Ted
Keep in mind that corporations’ lobbyists have gamed every aspect of the tax code. They earn far more than they report as income thanks to myriad non cash writeoffs thanks to gaming of accounting standards. In just a few decades they have reduced the share of federal tax revenue they pay from 30% to 12%– a drop of 60%. We really need an operating cash flow tax on corps so that those who generate millions and billions of operating cash actually pay some taxes instead of being allowed to phony up income figures after obscene writeoffs.
Is that you Donald. How about sparing us the vile hate bile. Did you erupt similarly when Putin goons shot down the passenger plane in Ukraine.
The Russians have been slaughtering ethnic groups along the border who are kin to the Turks. They are killing the rebels who are trying to end the reign of terror of the Syrian dictator/murderer. The Russian command was testing how far they can push the Turks and NATO and the pilots paid the price. The deaths of these pilots is nothing compared to what Russia is doing to thousands of innocents.
The repub tax plans are simple and transparent. A $100 tax cut for you and a $10million cut for my billionaire benefactors who fund my campaigns.
I can’t believe you guys. What are Putin and his henchmen doing there in the first place. Protecting the rabid dog Assad. This is Turkey’s backyard and the Turkmen are their allies. They aren’t bombing ISIS. If those Russian pilots had just killed your best friend you would hose them too. This is the inherent danger in this complex theater. I’m surprised it hasn’t happened before and it will continue to happen. Screw the Russian S.O.B.s. Jim
very well said Jim….. And very correct….. Sadly, this would not have happened if Cheney/bush had not let our oil companies go to Russia whereupon they rebuilt the Russian oil and gas system at great profit to themselves…. Now all of that money is going into rebuilding the Russian Military Machine and here we are again……. Virtually ALL of the mess we have now goes right back to those chicken hawks in the Cheney/bush Administration…… The stupidity and misunderstanding of the Middle East of those goons is so bad it is hard to grasp. NEVER in history has an American Presidential Administration made such a mess of world peace!….. :(
There is one condition that would gain my support of closing Guantanamo. If the prisoners were transferred to the King of Jordan (whose pilot was burned alive as a public spectical) I would support closing Gitmo.
I support progressively taxing consumption. Food and basic needs would have very low (i.e. zero for most generic foods) but sales taxes would increase as the value of the item increases. This is the only way everyone has skin in the game. Its the only way to keep many legal and illegal cash based activities from avoiding taxation. Every dollar is eventually spent. IRS would collect all taxes from businesses not individuals. Property taxes would remain since they buy services.
The last time the Middle East was stable was when the Ottoman Empire controlled it. The British and French colonialists set this whole mess in motion by breaking up that Empire after WW I. Their arbitrary boundaries ignored ethnic realities. Many of these ethnic groups are descendants of the Turkomans. The Turks are a relatively stable and civilized country. They are the only one in the area with a real “heavy iron” military, not to be trifled with. I can’t think of any better resolution to the Middle East crisis than to have a Muslim NATO ally restore order there. Muslims solving their own problems sounds like a good idea to me. Turkish supremacy would be much more acceptable to them than dominance by Western European or American interests. Jim
Jim, I cannot believe there is now, or ever was a muslim capable of solving any problem unless it involves beheading it…
Get use to it… Obama wants to bring that solution to America starting with 10K ISIS muslims pretending to be persecuted Christians and before the end of the year another 80 to 90 thousand more…
You’ve got to know there’s something very fishy about Obama wanting to bring Christians to America when everything he does is to eliminate Christianity in the U.S.
All I want to know if the US mARKET WILL DECLINE –We have bought a few bear ETFS on your recommendation last month–Your other friend who reports says if Europe crashes the money will ccome to the US wich will make the US market go up–Is this a joke that you are only making investors scared
Please answer my question if not I may decide to quit and take a few friends along
Delves
Fred 151,
You need to turn off limphog and do your own research…… Government spending has actually come down under Obama…… You are WAY off on the deficit figures…… Most of what you are referring to is the cost of temporarily buying treasury bonds to stop the Depression that came out of the Cheney/bush Stock Market Crash of November 2007-March 2009……. Cheney/bush started it and Obama repaired it, just as Hoover (another Republican) started the first one in 1929 that was stopped and repaired in 1932 by FDR (another Democrat)… Get your facts straight!… :(
One thing you can say for Obama: until the rise of ISIS, he HAS tried to reduce our involvement in the Middle East. Of course, reducing our involvement allowed ISIS to develop, in the first place. One bunch of politicos seems as bad as the other.
By the way, Russia supplies over half of the gas that Turkey uses. Something tells me this could be a rather chilly winter in Turkey.
Chuck,
First, the Iraq government would not indemnify our troops under the new deal, so we left. We should NEVER have invaded in the first place.
Second, Saudi Arabia wants to build a pipeline to Europe, but it has to go through Northern Syria then Turkey. The Russians don’t want that as the Saudi’s cost is much lower than Russia’s…
By the way, did you hear that Russia rescued the one pilot who survived the shootdown? They lost one marine in the operation, but this seems to show a pretty high degree of efficiency in their operations. They put the rescue together in one day, after all. We might do no better in a similar situation – if we didn’t hem and haw until our man lost his head.
Our pararescue guys are stationed in Turkey and on the Navy ships in the Med and the Gulf….
If the Russians were to attack the Turks… Would Greece, France and Germany help the Turks….?
Sure, they’d start sending “refugees†to Russia…!
Turkey supports isis period as the oil tankers from isis held oil fields flow through Turkey.
Putin is putting an end to the funds isis depends on to wage its war. I guess we can pretend Turkey is ignorant of this fact and only shot the Russian jet to protect their border.
TRUMP 2016