Mubarak Pulls a Fast One...

And perhaps a very dangerous one. All indications from the intel sites I've gathered have shown that Mubarak's failure to step down was a surprise to everyone from Washington right to the Egyptian Military regime itself which is now faced with some very difficult choices as dawn in Egypt approaches.

The military has few options, none very appealing. The military regime that has been in place since Nasser is now in a very dangerous position. Should the crowd of protesters coalesce behind a leader of the movement, the military regime will have huge problems especially as they are now in question among the protesters as to where their loyalties lie, that has not been in question yet as the protesters have identified with the military and seen them as part of Mubarak's removal.

You can be sure the military is now redeploying to contain protests and taking positions around the presidential palace.

First the military could stand back and let events develop while trying to maintain some semblance of order and hope that a universal figure head of the anti-Mubarak protests does not emerge. Second they could support Mubarak until September and perhaps be drawn into conflict with protesters. Third and in my opinion most likely, they could remove Mubarak by force or a coupe. What is apparent is that a decision will have to be made within days if not hours.

Considering events in Saudi Arabia where the king is said to be dead, the extremist must view this as the will of God. Suddenly the world just got a lot more dangerous. Expect the market to discount this uncertainty and we will see how committed the FOMC Jedi council is to levitating the market in the most uncertain of circumstances in the most volatile region of the world. Their credibility is at stake n more ways then one now.