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It has been long recognized by the investment community that power in Turkey was concentrated in Erdogan’s hands.  He enjoys incredible power in the ceremonial presidential post and brooks no rivals. Common among authoritarian leaders they habitually turn on hand-picked successors as they grow fearful of competitors.   This is precisely what has played out in Turkey in recent days and now has come to a head. Prime Minister Davutoglu returned from a trip to Europe and the Middle East to...

As Norway offers cash for refugees to leave, announcing that they won’t be accepting any more refugees from the EU, and Switzerland prepares its military to close down borders, the EU has seemingly had enough of every country acting as if it has any type of sovereignty left. The European Commission has announced that it is going to pull rank on everyone, and in Obama-like fashion, will be fining countries for not taking their fair share of refugees. Here is a detailed summary of all that...

In light of the Fed’s dovish tilt in March, the global liquidity outlook turned further in favor of EM.  As a result, EM extended the bounce off the January/February lows.  There’s no clear narrative as to why EM is softer this week, but it just seems to be a much-needed correction and positioning flush-out. Bottom line:  a dovish Fed (for now) should limit this sell-off, and the EM rally could resume for a while longer before turbulence returns later this year.  We expect many EM...

Earlier this week we observed that in what may be Europe’s latest mistake, the European Union is about to grant visa-gree travel to 80 million Turks: a key concession that Erdogan obtained as a result of the ongoing negotiations over Europe’s refugee crisis which has pushed Turkey into the key player spotlight. And then, overnight, the European Commission officially granted its support to a visa-free travel deal with Turkey after Ankara threatened to back out of a landmark migration deal....

CAD BGN Curncy It has been painful trying to pick a bottom of the US dollar against the Canadian dollar.  But now a 4-5 point downtrend from the secondary high in late-January is being violated today.    It is found near CAD1.2785 today.  Intraday penetration is one thing, but some models may take the signal on a closing basis only. CAD BGN Curncy The US dollar recorded the multi-year high against the Canadian dollar on January 20 a little below CAD1.47.  Since then the Canadian...

TRUMP . USPREZ16 This Great Graphic is a 90-day history of the “betting” at PredictIt that Trump becomes the new US President.  With Cruz suspending his campaign, the odds of Trump have risen just above 40%. TRUMP.USPREZ16 The US national interests and challenges to those interests do not change much from year-to-year, and this may help explain the continuity in US foreign policy (including foreign economic policy). Trump’s campaign style emphasized a break from the conventional...

  Pros and Cons The original Bethlehem Steel Works in Bethlehem, Pennsylvania. Photo via leggendaurbana.it The recent rally in commodity prices has surprised many market participants and has greatly supported the stock market’s rebound. It has also made bulls out of a number of former stock market bears, as one of its side effects was to cause an improvement in market internals. But does the rally actually make sense? As always, there are arguments both for and against the idea. We...

Just after sunrise on April 19, 1775, a large contingent of British military troops arrived to the town of Lexington, Massachusetts. They were under orders to search for and confiscate all weapons and munitions from the colonials– something the British army had done countless times before. In many ways it was a routine operation. And yet, that morning, roughly 80 local militiamen stood blocking their path. Paul Revere had ridden through Lexington only hours before to warn residents of the...

It might not be on investors’ calendars, but European officials will take steps toward addressing two issues tomorrow.  First, the EC will make a preliminary recommendation of visa-free travel in the Schengen area for Turkish passport holders.  Second, the ECB governing council will hold a non-monetary policy meeting.  It is expected to discuss the future of the 500-euro note. In exchange for implementing previously agreed upon measures to address the refugees going from Turkey to...

The US dollar’s downtrend is extending.  The euro traded above $1.16 for the first time since last August. With Japanese markets closed for the second half of the Golden Week holidays, perhaps participants felt less hampered by the risk of intervention and pushed the dollar to almost JPY105.50.  Despite an unexpectedly large fall in the UK’s manufacturing PMI (49.2 from 50.7), sterling has pushed to its highest level in four months (~$1.4770). The Australian dollar is the main exception. ...