A lot of nothing
The politics update you will soon be gazing at on your screens is penned with an extraordinary lack of enthusiasm, even an adrenaline drain, which left the politics author lethargic to the point of falling asleep on his keyboard. The 30-year veteran nevertheless rises up the challenge of producing a Weekly Tracker, talking about exotic political developments at home and “thunder clouds in remote horizon” in foreign policy. Yet, there is nothing his steely gaze can identify as a story, calamity or even high-probability risk. Perhaps, this is the scariest part because crises happen when no one expects them.
On the econ front, things are dull in a different, somewhat more vexing way. Despite a very weak balance of payments backdrop, Ankara has been trying to bring growth to full speed by boosting money and credit, as it also tries to forestall the hemorrhaging in CBRT reserves through myriad tricks. The two most recent of these include: (i) compelling banks to park more of their F/X liquidity with the CBRT following a 300 bps hike of reserve requirement ratios on F/X deposits, and (ii) have the state banks deploy their balance sheets directly to intervene in the F/X market by carrying open F/X positions beyond the permissible limits.
Assuming we did not waste some 40 years as a student and a practitioner of basic economics, we are almost certain this dynamic cannot possibly end well, but it is continuing for now.
Looking to the calendar, the key event of the week is the MPC meeting on July 23rd, where we expect no change in rates. There is also an S&P review scheduled for July 24th, but we anticipate no change there, either.
Cosmo, too, spent most of the week in a chemically-induced stupor, only sobering up on Sunday to scratch a few lines on FX shortages and speculative bubbles cropping up in strange corners of the economy.
Please note that today we are putting our Weekly Tracker on its traditional summer holiday through the end of August, a week earlier than usual, because we plan to release a more comprehensive monthly report during the final week of the month. Needless to say, our updates/briefs will continue in the interim.
Now read on...
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