Turkey

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The Breaking Point Is Upon Us

Signs of collapse are suddenly everywhere around the world
Friday, May 25, 2018, 7:29 PM

Executive Summary

  • Why despite winning battle after battle, the central banks will lose the war
  • The viscious cycle is already underway in the Emerging Markets
    • Turkey
    • Argentina
    • Brazil and Mexico (not to mention Venezuela)
  • Italy is dragging Europe into crisis
  • The weaker segments in the US are already in collapse

If you have not yet read Part 1: The End Of Stimulus? (And The Start Of The Crash?), available free to all readers, please click here to read it first.

Suddenly everywhere we look in the emerging markets, we're seeing things quickly get out of hand. EM currencies are plunging and their bonds are being sold hard. It’s a broad-based sell-off. 

Expect similar disruptions in the EM equity markets soon. The collapse progression is always the same: currency first, bonds second, then equites.

Our view of what’s happening in the EM universe is that the carry trades are unwinding. What this means is that the big piles of money unleashed on the world by the OECD central banks are turning tail and running away from the periphery (EMs)  and back towards the core (US, EU).

The virtuous part of this cycle for the EM countries was that big funds would borrow in a major currency, like the dollar or euro, and then buy a particular EM currency (causing that currency to strengthen) as well as its debt (causing those bond prices to rise).

The opposite and unhappy part of that story is when that whole things gets reversed. A vicious cycle is initiated which causes the bonds of the EM country to be sold, jacking up EM interest rates, and then the currency is sold (weakening it), and then dollars/euros are bought again causing those major currencies to strengthen.

That’s the pattern we're seeing right now and it’s consistent with the falling global liquidity markets are experiencing, which indicates that a big problem is brewing.

For several EM countries, as well as weaker players in Europe and the American lower and middle classses, that problem has already arrived.

We see clear evidence of it in... » Read more

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Russian Jet Shot Down By NATO Member

A very dangerous provocation by NATO
Tuesday, November 24, 2015, 2:35 PM

This morning two Turkish F-16 fighters shot down a Russian jet, claiming that it was in Turkey’s airspace after it had ignored repeated warnings.

There are two problems with this story. The first is that Russia claims to have evidence that the Russian jet never left Syrian airspace.  The second is that even if the Russian jet had strayed into Turkish airspace, Turkey knew there was zero threat to its security from a single Russian jet. Everybody and their uncle knows what Russian jets are doing in the area.

This means that NATO, of which Turkey is a member, had given a greenlight to the idea of shooting down Russian planes. » Read more

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Is This It?

Global market weakness is now quickly escalating
Friday, January 24, 2014, 11:59 AM

Is this it?  Are we seeing signs that after a very long period of Fed inspired insanity, et al. (courtesy of folks who lack any imagination beyond sustaining the unsustainable), are we finally entering a long-awaited financial correction?

Using our ‘outside in’ methodology, there’s lots to suggest we are entering such a phase.

All is not well on the periphery, with weaker economies now flashing serious warning signs in their bond and currency markets. It's enough that it’s time to... » Read more

Featured Discussion

A Report From Europe

A Report From Europe

How bad are things there, really? A reader gives a boots-on-the-ground account after a recent trip.