If something cannot go on forever...
Attentions in the political arena were briefly diverted to foreign affairs, which promise to be fleeting. The decision to “open” UN protected TRNC district of Varosha turned out to be nothing more than a ploy to help out the pro-Erdogan candidate in Sunday’s presidential elections. The testing of S-400s doesn’t seem to herald immediate activation and may be a gesture to appease Putin.
Apropos Putin and Erdogan, the relationship is burning out faster than a candle subjected to heavy air draft. In Nagorno-Karabagh, a Russian-mediated cease fire is likely to last despite mutual accusations of violations on Sunday. Yet, Erdogan has destroyed whatever is left of the trust between him and Putin, with Turkey’s soon-to-be-updated potential gas reserves likely to make chasm wider.
At home, Ankara and the Main Street have distinctly different agendas. Ankara is preoccupied with Byzantine maneuvers to saw dissent in the opposing alliance, with calls for early elections by the opposition. We doubt Erdogan or Bahceli will bite the bait, but polls augur ill for the duo.
Meanwhile, locals are increasingly being crushed under the twin threats of COVID-19 and economic distress. Data doesn’t fully serve justice to the suffering of the people on the street. We fear a voter revolt, but can’t divine the shape it might take.
There is not much to report on the econ side. The cash budget slipped into deficit in September. Although the deficit was lower than our estimate, the 12-month rolling deficit started to rise again after the August respite, exactly as expected.
There are a number of important releases this week. We forecast the August current account deficit (CAD) at some $4.8 billion, slightly over a median consensus forecast we saw. If true, this should lead to a sharp jump in the 12-month rolling CAD to around $23 billion in August, from around $15 billion in July.
In sectoral news, Facebook refused to abide by the directives of the new Honesty in Social Media Act. Twitter and Google, too, are expected to defy it. AKP is stuck between two very unpleasant choices. Passenger data revealed THY is financially in very bad shape, potentially requiring a bail-out, but with what kind of funding? After medical diagnostics equipment suppliers, Turkey’s pharma industry, too, is revolting in reaction to state’s refusal to pay outstanding bills. Turkey may face a raging epidemic with inadequate medical ammunition.
Cosmic Strategist finds little new to say about markets, taking a brief vacation this week.
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