by Bill O’Grady

On April 29^th, Saudi King Salman announced a set of changes to his cabinet and to the order of royal succession.  We believe these changes are very significant, perhaps the most critical since the first royal succession in 1953.

In this report, we will detail the changes announced by King Salman.  To put these changes in context, we will provide a short history of the important succession plan that was established in 1964.  With this background, we will show how the king’s announcement represents the first change in the program and discuss how these changes could affect the future stability of the kingdom.  As always, we will conclude with potential market ramifications.

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by Bill O’Grady

Since the beginning of the year, rebels in Syria have been making steady gains against forces loyal to the Assad regime.  Over the past six weeks, these gains have accelerated.  The recent rebel victories are raising questions about the Assad regime’s ability to survive.

In this report, we will recap the problems the Syrian government faces, including internal dissention and military losses.  We will discuss the growing evidence of a Turkey-Saudi axis that may be aiding the rebels to weaken or eliminate Assad and pressure Iran.  From there, we will examine the potential Iranian and American responses to the rebel gains and support from Riyadh and Ankara.  As always, we will conclude with potential market ramifications.

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by Bill O’Grady

The March edition of Atlantic Magazine published an article about Islamic State (IS) that examined its theology and ideology.  This article along with a paper from the Brookings Institute on the ideology of IS form the basis of our report this week.

In this report, we will examine the intellectual foundations of IS, showing how it evolved from two different sources of thought.  We will follow this with an analysis of the concept of the Caliphate and the critical importance it has in Islamic theology.  A Caliphate is a form of Islamic government which, in some Islamic conceptions, is a universal government for all people.  An examination of the eschatology of IS will also be included.  The consequences of IS’s ideology will be discussed.  As always, we will conclude with potential market ramifications.

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by Bill O’Grady

China has founded an infrastructure bank, the Asian Infrastructure Investment Bank (AIIB), to compete with the World Bank (WB) and the Asian Development Bank (ADB).  The U.S. has opposed the creation of this bank but, despite administration opposition, 57 nations have joined it, including 14 members of the G-20.  A chorus of commentators has suggested that the founding of this bank may mark the end of U.S. hegemony.

In this report, we will describe the AIIB, including its members and capitalization.  Next, we will cover the conventional wisdom surrounding the bank, and follow up with our analysis of the real impact of the bank.  We will conclude with potential market ramifications of this framework.

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by Bill O’Grady

On April 2, the P5+1[1] negotiating team and Iran announced a framework to deal with Iran’s nuclear program.  The framework is a “roadmap” to establishing a final agreement in June.  Negotiations on this issue have been underway for years; this framework could be a major step toward delaying Iran’s entry into the “nuclear club,” the group of nations that have nuclear weapons.

In this report, we will begin with a short history of Iran’s nuclear program.  Next, we will review the details of the framework.  The third part will address the broader policy issues surrounding Iran’s nuclear program.  An analysis of the real issue, regional hegemony, will follow along with a review of the political factors of the deal.  We will conclude with the potential market effects from this framework.

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[1] P5+1 includes the U.S., U.K., France, Russia and China (the five permanent members of the U.N. Security Council), plus Germany.