A date with fate
Going deeply against the grain, we call only for minor sanctions from the EU at the upcoming Leaders’ Summit on September 26th, maintaining our view that short of a Biden Presidency, foreign policy shocks are very likely to be too mild, compared to the domestic political-cum-economic ones. Yet, we must admit that President Erdogan’s combative approach to foreign policy is storing trouble for the future.
According to September polls, AKP-MHP’s August blip disappeared. We have convincing evidence that a large portion of AKP voters are ready to walk out on their leader and party, using raw data to reach our conclusions. We detect a strong positive correlation between economic recovery and AKP-MHP standing in the polls, and an inverse one between the corona outbreak and the latter. The opposition is staging a counterattack through CHP-run municipalities and CHP leader Kilicdaroglu’s constructive proposals to mitigate the outbreak and some of its economic impact.
Apropos COVID-19, President Erdogan admitted to the severity of it, mentioning unspecified new restrictions “soon”. We list three reasons that will escalate the epidemic, briefly touching on the sectors/industries, which are likely to be hurt badly. We plan to follow this sectoral report up during the week.
At this Thursday’s meeting, the Monetary Policy Committee may lift the corridor up, i.e. O/N as well as LLW rates, in a compromise move of sorts, given that gradualism is not working but that bold action is simply ruled out because of Palace scares.
Industrial production continued to rebound in July and the budget performance was encouraging in August, but we are not out of the woods, i.e. things will look very different, we insist, later this year/early next.
Cosmo was cautiously bullish on some Turkish asset classes last week, a view He suspends until He sees the outcome of CBRT/MPC meeting and the EU Leaders’ Summit.
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