What you believe is often different than the truth…

I had a friend once, to whom I don’t speak very often nowadays. He used to criticise others all the time, including me. “I always speak the truth”, he used to say. I’ve always smiled at him in return.

One day, when he was sharply criticising something, I couldn’t stop myself and said, “Look my friend, you don’t speak the truth! You speak what you believe is true”. He remained silent, probably because a type of short-circuit occurred in his brains.

The situation I described above is very common to Turkey as when Monday comes, many people talk about things they’re interested in and read about during the weekend like they’re some kind of expert. From debate programs to other broadcasts on Ottoman history, let’s not forget that a large majority of people believe what they hear on television is absolutely true.

The same will probably happen when the data growth data will be released today at 10.00am. Here’s my expectation of the third quarter data: If it turns out to be lower than 0.5% I will be “shocked”, but if it turns out to be higher than 3%, I will be surprised. Let me tell you why there’s a large gap between the lower and upper bands of the expectations.

We are going through an era where financial institutions are revising countries’ 2019 GDP growth outlook to negative. Naturally, Turkey is seriously affected by this. Credit rating agencies are revising Turkish banks’ stability outlook as well as GDP growth rate to negative which brings not very positive impacts on investors’ decision-making processes.

“People hopelessly have hope…”

As my method of analysis is not merely based on numbers, I also try to observe human behaviours. A considerable amount of people are convinced that 2019 will be a terrible year. But those people have already taken precautions to protect themselves from the disrupting effects of 2019. As for the rest, they seem ready to crash and burn, accepting the fact that they’ve gone through the same troubles before.

But many people have still hope. And these people are the ones who have managed to make money in small caps. Therefore, they have a large amount of debt. And the mood they’re in cannot possibly be called “faith”, maybe “obstinacy”. They’re making plans that they will somehow be able to go through 2019 safe and sound. That’s why there’s high probability that the incidence dud cheques can suddenly start to rise in the first months of 2019. Be aware.

A majority of firms are not planning to reduce their balance sheets. Some of them, on the other hand, naively believe that their balance sheets will shrink on their own. Wherever I go, I always tell business people to first start with costs, leave the revenue for later. Otherwise, they will panic and have to reduce costs as profits are sharply falling down, causing things to get messier. I think it will be our duty to guide the business owners through the troubles days in 2019; because as the title of the report implies, everyone says what they believe is true but they rarely say the truth.

In conclusion, it’s not easy to conduct a solid analysis in a country where people have truly complicated expectations. Based on industrial production index data, it would be a miracle, and would also raise suspicions, if the third quarter turns out to be higher than 3%. On the other hand, a GDP growth very close to 0% would lead to further pressure on the Central Bank.

People who that they’re vastly experienced might say they’ve seen everything so far. They too are saying what they believe is true. Turkey has never faced anything close to the thing it is about to experience. Let this be a warning to you all.