Egypt-

It looks like for the time being the regime in Egypt has pulled a fast one and survived through a military ouster of Mubarak. Understand that the regime in Egypt since Nasser has always been a military regime, they choose the leaders from their own ranks and are held in high esteem by the people.

As we talked about, the longer Mubarak stayed, the longer the protests would continue and threaten the regime should the protesters, whose only weakness is unification behind a strong opposition leader, find that leader that embodies the movement. It was only a matter of time before the military dispatched of Mubarak one way or another.

The likelihood of a successful transition of power, at least in the short run, looks pretty good. The question now remains, did the Muslim Brotherhood make any significant in-roads during the protests and if so, whose their traveling companions as we know that armed Hamas crossed the border and joined up with the brotherhood.

Several scenarios could play out, the Brotherhood could have made enough of an impact to become players at the table or the more dangerous one, for them-the military may seek to wipe them out and leave them in a worse position then before the protests. The people of Egypt still haven't put 1+1 together to understand that the regime is the military, Mubarak has nothing without their support as we see today.

The situation on the ground in real terms of quality of life is likely going to remain little changed which is why I say the regime won out, at least in the short term. Many of the radical islamists came from Egypt and I don't believe for a second that after years of living in the mountains hiding out from Predators, they are going to let this opportunity slip through their fingers.  Clearly anti-Western rhetoric has risen in Egypt-our main strategic ally in the region, so what face does the regime paint for public consumption and what are the realities?

Saudi Arabia may become the focal point for extremists now, something to keep a close eye on in the coming days. This is not an ideal time for transitions of power in the region and any perceived vacuum is an opportunity. Despite what Iran may say, they certainly don't want to see their base eroded by a competing islamic state.

To me, this looks more like the start of turbulent times then the conclusion of them. It won't take long for popular opinion among the public to realize that whoever takes control of Egypt is still a puppet of US foreign policy so long as the military regime puts that leader in place, thus the dangers that they may have to turn to a more radical face then the US would like to see.

On another note, in last night's video and the 2 preceding videos I talked about the crumbling liquidity structure of out equity markets and showed a chart of traders leveraging up on margin as the VIX touched intraday lows not seen in 5 years. So in that spirit, here's a chart a reader sent in that makes it easy to understand the cycle of human emotion -which is all a price chart represents when you think about it, and how and at what stages it effects the market.

I think we are pretty much at the Euphoria stage as the "buy the dip" crowd feels the Fed will continue their Jedi market tricks. The margin rates-(leveraged debt in a collapsing liquidity structure) show traders have very little fear, as does the VIX. DANGER Will Robinson!