Indeed, the world doth have many piles of prairie grass to be LIT. After the NYSE closed for the weekend but while CME‘s electronic markets were still trading news broke about a COUP in Turkey. To readers of NOTES, this possibility was forecast in a post from October 15, 2015. The coup was not a surprise but the execution of the COUP was a comedy of errors (except for the deaths) as the leaders failed to prevent any communication from President Erdogan. In the world of social media the first action OUGHT to have been the jamming of all radar and wireless communication so that the overthrowers of the elected government would have a monopoly over all messages. It seems that George Friedman of Stratfor was the first to doubt the ability of the military conspirators and announced that the coup had failed.
Others followed Friedman and posited that the coup was a ruse propagated by President Erdogan as a tool to tighten his grip on control of entire government. Ben Hunt of Epsilon TWEETED #TURKEYREICHSTAGFIRE, comparing the Turkey coup to the Nazi’s burning the German legislature as a ruse to declare martial law and suspending all constitutional guarantees. It is far too early to confirm the veracity of Erdogan’s actions but it certainly makes for provocative rumor mongering. Since the coup failed, the markets returned to “normalcy” as the global equities found reason to rally–another real-time example that MONEY IS FASCIST. The threat of a coup in a NATO member and the cornerstone of the current war against ISIS is nothing for a market floating on the calm seas of central bank liquidity. But there are areas of concern about this Turkish coup regardless of whatever rumors swirl.
The Turkish government is pointing fingers at possible U.S. involvement. The COUP took place while Secretary Kerry was in Moscow discussing combined Russian/U.S. actions against the Jihadis in Syria. It is now the Russian military that will determine the outcome of events in Syria and Erdogan’s nemesis, President Assad, seems to be secure in his position. The U.S. and Russia have both been unhappy with Turkish actions in providing sanctuary,safe passage and banking facilities for ISIS and other actors in the Syrian rebel “coalition.” Could the Russian and the U.S. intelligence community have known of an intended action to remove Erdogan? If so, this was the most bungled involvement since the Bay of Pigs and certainly brings Woody Allen’s Bananas to life, even with social media playing the role of Howard Cossell.
If this coup removed Erdogan it would have been a horrific problem for the Saudis for they would have lost a Sunni partner in their efforts to thwart the influence of Iranian Shite forces in the current struggle in Iraq and Syria. The COUP may be a bigger problem for the European Union. The Erdogan government is arresting military officers and judges, as well as noted critics of the present regime. Remember that Angela Merkel recently censored a comedic critic of Erdogan when the Turkish government protested against off-color remarks about the Turkish president. Today, Chancellor Merkel and other Western leaders were cautioning Erdogan about too severe a crackdown on civil liberties. In order to placate the EU, Turkey had suspended capital punishment but there is talk that Erdogan will reinstate the laws in order to dispense with those convicted of treason. The EU has no leverage as Erdogan can again force thousands of refugees into the EU and provide further political problems for Chancellor Merkel and President Hollande.
The Olympics are approaching–beginning August 5. When the world’s attention turns to sports it seems that President Putin tends to focus on other things: Georgia in 2008 and the seizure of Crimea while hosting the Sochi Winter Olympics. The political fissures in the globes vulnerable areas are widening providing courage to those actors seeking to create chaos. It is this growing sense of political uncertainty that will provide the major central banks with the rationale for increasing monetary stimulus or at least maintaining the status quo in keeping interest rates steady. Global political headwinds the new concern for all bankers. It was in the Sara Eisen interview with Stanley Fischer that the Fed Vice Chair admitted that the strength of the DOLLAR was a concern. Referendum, coups, elections, failing banks, over-indebted emerging market economies … the list will go on. Now we get ready for ECB and Mario Draghi on Thursday. Oh dear.
July 19, 2016 at 6:57 am |
Two things hit me this morning, Yra. Won’t say they are random, but they came to confluence as I looked at the chart of Phillip Morris forward P/E in WSJ p C1.
From that chart I pondered if it isn’t that valuations as measured by P/E have gone beyond “norms”, rather that the earnings aren’t reflecting the future inflated $, while price is just current price. Not certain I am making sense here…
The other thing that has concerned me is the 10 – 5 year treasury spread is well under 0.5%. Does that portend recession or merely sit as an interesting and likely correlation?
You have some terrific, insightful and thoughtful (as in they give thought to topics before spewing words) readers, and I profit by learning.
I have also become a proselytizer of “The Rotten Heart of Europe” and am forcing family and friends to at least read the Introduction to 3rd edition. It is a dire warning of what the malignant intents of the intelligentsia elites want to do to enslave us.
July 19, 2016 at 7:26 am |
El Contango—keep spreading the word on RHOE.Now on to the meat of your question.Phillip Morris is the recipient of investor money seeking steadyyields via consistent yields over many years.Companies with high dividends and not debt impaired enjoy inflows of investor money and for those with high debt that have refinanced even better.Earnings are indeed weak across the board but money is simply chasing large cap[SAFE] stocks.As a regular reader you know my views on the yield curves—central bank massive buying programs have made all global yields a relative play and thus are distorting the historical implications of yield curve movement–trade what you see and make no commitment for a sea change can occur suddenly
July 19, 2016 at 3:04 pm |
Also the Austrian redo election on oct 2 might be of some importance
July 23, 2016 at 6:39 am |
You consider that Erdogan conducted a false flag to sieze more power, so why don’t you consider that the CIA/NATO did the same? A faux coup sponsored by the west to see how the natives would react seems more plausible. If true, they learned that a real coup is going to be more difficult, which means overwhelming force will be needed. Maybe if the west claims Turkey’s nukes are in jeopardy of failing into the hands of US-backed rebels, the coup can be justified.
Does anyone find it odd that Gulen is permitted asylum in the US, and to expand his charter schools, at US tax payer expense? Now that Erdogan has formally requested Gulen’s return, we should see Obama intentionally fumble the ball foward. It’s amazing what people and countries can get away with when they donate to the Clinton crumbling Foundation.