Focusing on the essentials
We urge our readers to keep their eyes firmly focused on the essentials, amidst the feel-good mood encompassing the EMs and Turkey.
The nation is nowhere close to reaching herd immunity via vaccination, as new strains are running rampant in the population. Each day with lockdowns and shop closures adds to the misery of a nation, with very large segments of the population experiencing material deprivation. To make matters worse, Turkey and the world is poised to lose 2021 summer tourism, too.
Amidst these twin threats, Turks don’t care one way or other about a new constitution. If Bosporus University protests morph into a second Gezi, about which we firmly sit on the fence, it could become the third national topic of interest. One recent poll suggests respondents don’t approve of the way the protests handled. Same poll and many others attest to the declining ratings of Erdogan as well as the AKP-MHP alliance.
Biden has served notice to China and Russia that a new, more confrontational game is about to take start in the global arena. Turkey is not mentioned in his keynote speech, but his lieutenants did warn Ankara to abandon S-400s, before fire and brimstone treatment starts. Turkey could receive the notice of new sanctions to come, as early as February 17th.
In an interview with Reuters, the CBRT Governor Naci Agbal stuck to his hawkish rhetoric, which the markets loved, but the language could be much tighter, and the narrative more coherent and comprehensive. We insist that this is a very short-term affair. At least three questions need to be answered properly, before we also turn more constructive.
The January manufacturing PMI data was very strong, but trade data pointed to a momentum loss of sorts with exports and imports both slowing visibly over a year ago.
The cash budget deteriorated sharply in January, but that was largely because of the elevated non-tax revenue base of the same month of last year.
A key release of this week is December balance of payments. In line with the consensus, we see the current account deficit (CAD) at around $3.5 billion, which, if true, would mean the CAD ending the year at just under $39 billion, barring any major revisions to back data.
Having read this dire commentary on the affairs of Turkey, the Cosmic Guru reluctantly tells His readers to buy hedge against the downside.
Now read on...
Register to sample a report