Yesterday, markets were quite unusual again. The fact that BIST, USD/TRY and Benchmark Rate have all fallen together shows there is still a lack of balance in markets. A limited amount of money moves from a specific place to another.
2017 current account deficit turned out to be higher than expected 2017. We are all used to it by now. Considering the fact that imports, which is constantly kept under fiscal restraint by the Ministry of Economy and Finance, rises way faster than exports supposedly declared as “hitting record highs”; then we have to stop for a minute and really think about it.
Turned higher than expected, CPI in the United States, on the other hand, made even pro-Trump Fed Chair, Powell say, “Gradual rate hikes will continue”. It is now quite obvious that the U.S. will slowly bring policy interest rates closer to inflation. In that case, government bond yields will keep going up, especially on 10 Year Treasury Bills. I mean, at least until the Fed will be done with gradual rate hikes.
The fact that military operation dispute between Turkey and the U.S. is becoming increasingly complicated does not go unnoticed. When President Erdogan’s “I think some people didn’t receive the Ottoman slap yet” statement took the disputes to a whole new level the other day, American government chose to remain silent vis-à-vis this warning.
Here’s the real problem: United States still offers help to certain groups that it has once declared as “terrorists”. These groups operate under brand new names today in coordination with other terrorist groups responsible for the deaths of tens of thousands of innocent civilians in Turkey, whose national security is at risk because of US-Israel efforts for creating a new map of the region.
“As if Trump weren’t enough, now Netanyahu….”
Israeli PM Netanyahu and American President Trump are in deep water because of a series of allegations of bribery and infraction, and the only thing that can secure their seats is to engage in military conflicts. The sad truth is that certain groups perfectly know the Achilles’ heel of these two leaders and exactly where to hit them. As a result, they are left with no other choice but to jeopardize the lives of innocent people just to hold on to their seats.
The way these two are acting right now makes even the North Korean leader cuter and friendlier. After all, as far as we know, he caused no real harm apart from some missiles landing in the Pacific Ocean. The same goes for Iran. No country in the region displays any unrestrained violence as Israel does in Jerusalem and other places. Except may be for ISIS, also known as DAESH, because these terrorist organisation have displayed such acts of barbarity that can’t be compared with Israel’s actions. Not to mention of course, pro-regime forces in Syria.
All these things have been going on in the world for a long time now proves to us that the “age of reason” is over. Accordingly, we need to get rid of old paradigms when it comes to markets; because, in a world where no one knows what will happen next, we should always be more cautious and avoid diversifying our portfolio too much.
Prof. Dr. Emre Alkin
