Highlights Analysis on Turkey is published below. The key reason why we believe the ongoing EM rally will falter is that EM corporate earnings have begun to contract. When EPS growth turns negative, low interest rates typically do…
The odds of a policy reversal in Turkey are rising. The government’s patience with tight monetary policy may be running thin. The nation’s GDP contracted by 3% in the final quarter of 2018 from a year ago. Further contraction…
Highlights So What? Our best and worst calls of 2018 cast light on our methodology and 2019 forecasts. Why? Our clients took us to task for violating our own methodology on the Iranian oil sanctions. Sticking to our guns would…
Interest rates on bank loans to businesses and consumers have risen much more than the Turkish central bank’s policy rate. The interest rates charged to the private sector are now 850 basis points higher than the policy…
The above chart demonstrates that local-currency broad money growth now exceeds the growth rate of bank loans. This bifurcation exists because Turkish banks are currently creating money via their purchases of government…
Highlights Lesson 1: Inflation is a non-linear phenomenon. Lesson 2: Beware government interference in monetary policy. Lesson 3: An emerging markets shock is deflationary for developed markets. Lesson 4: The 'Rule of 4' for…
Highlights The Turkish economy is in disarray, ... : The lira's plunge has reminded some investors of the Thai baht's in 1997, but we do not foresee a replay of the Asian Crisis. ... highlighting emerging markets'…
Dear Client, We had intended to send you the second part of our two-part special report on long-term inflation risks this week, but given the sharp moves in the dollar and emerging market assets, we decided to write this bulletin instead…