Month: October 2018

Amazon hiking its minimum wage to $15 per hour – a “feel good” story that was praised by everybody and that even brought enemies like Donald Trump and Bernie Sanders together – appears to be nothing more than another self-serving ploy by the world’s largest online retailer to not only bolster its staff for the holiday season, but to prevent potential part-time holiday laborers from going to the competition.

According to the Wall Street Journal, companies like Kohl’s and JCPenney had started to do their holiday and seasonal hiring months before they usually do this year in anticipation of record sales – and record competition. The needs of these retail companies, including online retailers like Amazon and its direct competitors, have grown substantially: Target for instance, is hiring 20% more workers than last year and is looking to bring on 120,000 total seasonal workers.

Amazon’s new wages will take effect on November 1 – just in time for the holiday season– as Target and Walmart have failed to keep up with Amazon’s pay floor. Target offers its employees $12 per hour, while Walmart recently bumped its minimum wage up to $11 per hour. For those looking to take on additional work this season, that makes the decision to work in Amazon’s warehouse a very simple one.

James Bohnaker, a director at IHS Markit, told the Journal: “Brick and mortar retailers need quality employees to differentiate themselves from purely online shopping. If consumers can’t find helpful staff at stores or, worse, a shortage of staff makes in-store shopping a nightmare, brick and mortar retailers can expect to lose traffic.”

So while the world stops to praise Amazon for its altruism, its important to remember that this is simply yet another masterful PR trick by Jeff Bezos: garnering tons of free publicity and praise for doing the “right thing”, while at the same time preparing his company for a record-breaking holiday season and doing what Amazon does best: hurting the competition.

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Democrats demands that the FBI expand its probe into allegations of sexual misconduct levied against Trump SCOTUS nominee Brett Kavanaugh to include interviews with roughly two dozen witnesses have predictably fallen on deaf ears. Fox News reported Wednesday morning that after interviewing Kav accuser Deborah Ramirez and a smattering of friends of both Kavanaugh and his accusers, the bureau could end its expanded background-check probe as early as Wednesday afternoon.

Once the report – which the White House and Senate Judiciary Committee are under no obligation to release to the public (though we imagine it’ll leak as soon as a Democratic member of the Senate Judiciary can get their hands on a copy) – has been filed, the Senate could move forward with a cloture vote and other procedural steps that could set the GOP up to call for a vote as soon as Saturday, five days after the start of the Supreme Court’s fall term.

To be sure, it’s still much too early to speculate that Kavanaugh has a lock on the nomination. Democrats have done practically everything in their power to stall his nomination, and will likely play every card that they have to try and delay it past the Nov. 6 midterm election (though, assuming they did lose the Senate, Republicans would still have the lame duck period to push through a confirmation). And there’s still the question of whether Jeff Flake, Lisa Murkowski and Susan Collins will all fall in line – assuming unanimous Democratic opposition, Republicans can only afford to lose one vote.

GOP Majority Leader Mitch McConnell blasted the Democrats during a Monday floor speech:

“If you listen carefully, Mr. President, you can practically hear the sounds of the Democrats moving the goalposts,” McConnell said. He added later: “Their goalposts keep shifting. But their goal hasn’t moved an inch. Not an inch.

“Do these actions suggest this has ever been about finding the truth?” McConnell asked. “Anybody believe that?”

While the credibility of each of Kavanaugh’s three accusers has been called into question in recent days (most recently, a longtime boyfriend of Dr. Christine Blasey Ford, who testified before the Senate Judiciary Committee last week, revealed that Ford may have possibly perjured herself while other suspicious allegations have arisen relating to Ford’s involvement with hypnosis therapy used to “create artificial memories”). Furthermore, Kavanaugh’s third named accuser, Julie Swetnick, has been outed as a mentally unstable, pathologically attention-seeking, individual who may have lied in a sworn affidavit. In light of this, and multiple inconsistencies and gaps in Ford’s testimony highlighted by prosecutor Rachel Mitchell, who said Ford’s testimony wouldn’t be sufficient to bring charges or even justify a search warrant, Democrats have shifted toward focusing on whether Kavanaugh lied under oath by saying he never “blacked out” – something that, conveniently, only Kavanaugh could ever know for certain.

Already, lawyers for Ford and Ramirez are complaining that the investigation is ending too soon, and that the probe has not been thorough enough.

In response to these complaints, Senate Judiciary Committee Chairman Chuck Grassley accused Democrats of meddling int he process.

“The FBI conducts background investigations in accordance with the agency’s standard operating procedures, and it has done so six previous times for Judge Kavanaugh,” Grassley wrote. “I’m confident that the FBI agents tasked with this responsibility will not succumb to public political pressure or politicians telling the agency how to do its job. Respectfully, the career public servants and professionals at the FBI know what they’re doing and how best to conduct a background investigation.”

Meanwhile, Swetnick attorney Michael Avenatti (who also famously represented Stormy Daniels) is claiming that he has found another Kavanaugh accuser whom he claimed would be able and willing to speak with the FBI on Wednesday.

Yet another accuser has come forward (see sworn stmt below). She is prepared to meet with the FBI today and disclose multiple facts and witnesses. pic.twitter.com/eNsCAau6no

— Michael Avenatti (@MichaelAvenatti) October 3, 2018

Of course, given his past behavior, those claims should be highly suspect. In fact, Avenatti is still complaining about the FBI’s decision to exclude his client from the probe, even going so far as to harass a staffer on the Judiciary Committee.

On Tuesday, Mike Davis, who works as the nominations counsel for Grassley, reportedly told Avenatti: “We have already reviewed your client’s allegations. We focus on credible allegations. Please stop emailing me.”

However, Avenatti should be careful what he wishes for. Given that his client likely committed perjury by lying in her affidavit, if the FBI does decide to pay her a visit, they might be coming not to interview her, but to slap the cuffs on.

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It took a few hours for the White House to regroup and respond to the New York Times’ massive, 15,000 word expose on shady tax dealings within the Trump family, some of which were allegedly “outright fraudulent.”

As a reminder, late on Tuesday the NYT accused President Trump of participating in “questionable” and “dubious” tax strategies “including instances of outright fraud” that greatly increased the fortune he received from his parents and allowed him to accrue millions of dollars in additional wealth from his father’s real estate empire “much of it through tax dodges in the 1990s.”

The practices allowed Trump and his siblings to gain more than $1 billion from their parents while paying a fraction of what they should have owed in gift and estate taxes, according to the Times.

Then, late on Tuesday the White House posted this response to the explosive allegations:

“Fred Trump has been gone for nearly twenty years and it’s sad to witness this misleading attack against the Trump family by the failing New York Times.

Many decades ago the IRS reviewed and signed off on these transactions.

The New York Times’ and other media outlets’ credibility with the American people is at an all time low because they are consumed with attacking the president and his family 24/7 instead of reporting the news.

The truth is the market is at an all-time high, unemployment is at a fifty year low, taxes for families and businesses have been cut, wages are up, farmers and workers are empowered from better trade deals, and America’s military is stronger than ever, yet the New York Times can rarely find anything positive about the President and has tremendous record of success to report.

Perhaps another apology from the New York Times, like the one they had to issue after they got the 2016 election so embarrassingly wrong, is in order.”

Now, moments ago, Trump personally responded to his media nemesis, and in a tweet said that “the Failing New York Times did something I have never seen done before. They used the concept of “time value of money” in doing a very old, boring and often told hit piece on me. Added up, this means that 97% of their stories on me are bad. Never recovered from bad election call!”

The Failing New York Times did something I have never seen done before. They used the concept of “time value of money” in doing a very old, boring and often told hit piece on me. Added up, this means that 97% of their stories on me are bad. Never recovered from bad election call!

— Donald J. Trump (@realDonaldTrump) October 3, 2018

While Trump’s anger is understandable, some immediately noted that Trump did not deny the story, nor did he threaten with litigation.

Meanwhile, the New York State Tax officials promptly announced that they are investigating the allegations detailed in the exhaustive tax investigation, adding to Trump’s various domestic headaches ahead of the midterms, where the main one may be the fact that the Mueller probe is reportedly nearing its potentially explosive conclusion in the coming days.

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Authored by Michael Lebowitz via RealInvestmentAdvice.com,

Investor preferences shift between active and passive investing in a cyclical manner. Periods where the market has a strong tailwind of momentum behind it tend to attract a greater demand for passive strategies especially when that momentum carries on for a prolonged period of time. Alternatively, periods of market turbulence tend to swing sentiment back to active investing as a means of avoiding the risk of large losses. In the most recent bullish cycle the combination of market direction and the availability of index-friendly instruments like exchange-traded funds (ETFs) have resulted in an unprecedented shift towards passive strategies and securities.

To clarify the difference between the two investment approaches, active investing seeks to outperform the market by beating a benchmark such as the Dow Jones Industrial Average or the Barclays Aggregate bond index. Passive investing on the other hand pursues a strategy that mimics a benchmark index and attempts to replicate its performance. It is a contrast that has been effectively described by Ed Easterling of Crestmont Research as rowing (active) versus sailing (passive). Active investors are engaged in constant evaluation of companies and their fundamentals as means of finding value investment opportunities while passive investors are at the grace (or mercy) of the winds of the market wherever they may blow.

The graph below highlights the underperformance of active strategies versus the S&P 500 index in past years which further explains the growing popularity of passive investing.

This article is primarily focused on fixed-income passive investing, however, many of the issues brought up in this article can be applied to most asset class ETFs and securities that allow ease of passive investing.

How Passive Investing Works

The mechanics of passive investing in the stock market are straight-forward. Select an equity index to which you would like to gain exposure, for example the S&P 500 or the MSCI China Index, and then buy the stocks in the proper amounts that are tracked in that index to replicate the performance. Done manually this can be a complex and cumbersome exercise especially when trying to replicate the index of a less-liquid market. As the market moves and the value of the securities underlying the index change, one must rebalance their holdings to remain aligned with the index. For a deeper understanding of the many factors that make replicating an index diffiuclut please read our article The Myths of Stocks for the Long Run Part V.

The advent of index mutual funds and more recently exchange-traded funds handle the complexities of multiple holdings, weightings, and rebalancing allowing an investor to simply pay a small fee, buy a ticker and essentially own an index. An investor’s ability to obtain general equity exposure or to build a portfolio with customized exposures has never been easier with the  proliferation of ETFs.

To offer some perspective about just how many ETFs are available, consider there are 38 ETFs available that are focused on U.S. energy stocks and over 132 ETF’s hold Exxon Mobil (XOM) shares. Looking abroad to less liquid markets, one would find ten U.S. incorporated funds holding Indian stocks. The simplicity and customizability currently offered in the market is quite powerful.

Bond Exposure

Traditionally, investors gained exposure to bonds through individual debt securities offered by brokers. Unlike stocks, the availability of most bonds, not including U.S. Treasuries, is dependent upon the inventory held by one’s broker or their ability to source a bond from another broker. As such, finding a specific bond is more challenging and comes at a higher cost for an individual investor than buying an individual stock. A similar problem can emerge in the event an investor wants to sell a specific bond. This problem results in an indirect fee called the bid/offer spread and on occasion can cost the investor multiple percentage points.

There are other considerations related to the dynamics of buying individual bonds versus acquiring bond exposure through a fund. These issue are well-articulated by Lance Roberts.

The advent of index mutual funds and ETFs relieves much of the frustration and high costs of buying and selling specific bonds.

The protocol described in selecting equity funds above is similar for bonds in that one can identify investment preferences in various major bond categories quite easily. The primary categories include:

• Treasuries securities
• Mortgage-backed securities, asset-backed securities and collateralized debt obligations
• Agency bonds
• Municipal bonds
• Investment Grade corporate bonds
• High yield corporate bonds
• Emerging market bonds
• Developed nations sovereign bonds

It is relatively easy, through these funds, to quickly gain exposure that tracks an index covering any variety of these options and specific sub-catagories of these options.

Not As Advertised

The flexibility and customizability offered through the world of index mutual funds and ETFs is remarkable. As such, there is a natural inclination by investors to assume that one will get precisely what has been advertised by these funds. However, confidence in that idea is easily challenged. Much of what has been developed over the past several years, especially with many ETFs, remains untested. The following are concerns investors should be aware of:

• Tracking Error: ETF exposures to certain markets might not be precisely what the investor receives. For example, it has been documented that an investor who wishes to invest in an ETF for the equity market in Spain actually gets exposure to a variety of companies that although domiciled in Spain, produce most of their revenue outside that country. In that instance, and many others like it, an investor would not get the exposure to Spain he or she expects and may indeed be very disappointed in the ETFs tracking of the index for Spain.

• Optimization: The structure of index funds and ETFs are such that in many cases the fund managers are only able to establish positions in the underlying stocks or bonds of the indexes they track with some imprecision. This means they will use creative means of gaining desirable exposures and then gradually, if possible, reposition over time in order to more closely track the index. This tends to be a much bigger problem for bond funds. Since full replication of a bond index is generally not possible, bond funds rely on “optimizing” the portfolio in order to most effectively replicate the index.

Bond offerings, like stocks, are finite so if the size of a fund grows as a percentage of the underlying index constituents, it will increasingly face the constraint of replicating the index and effectively mimicking index performance.  Optimization is imperfect so the ETF will suffer performance drift from the target index. Unfortanately, the flaws of replicating are often exagerated during periods of market stress when investors expectations are the highest.

• Underlying Liquidity: Another related issue that arises with bond funds is that of establishing daily market value. The market price of some bonds held in a fund, especially those that are investing in less liquid markets, may not be readily available. If a bond fund holds securities that are illiquid, meaning they do not trade very often, then a realistic current price may be difficult to obtain. Many fixed income ETFs hold thousands of securities some of which do not trade daily or even weekly. This means that pricing is dependent upon estimates of the value on those bonds. These estimates of value may be derived from a third-party pricing service, surveys of bond market trading desks and internally generated models. Mis-pricing of securities is a known problem and one not typically considered until the fund is forced to sell. If the fund receives an inordinate number of redemption requests, what happens if they have bonds that do not trade very often but are nevertheless required to liquidate based upon investor requests? It is likely the sale price could vary, and sometimes significantly, from the last assumed price. Again this is most likely to occur at the wrong time for investors.

These concerns have not yet emerged as a deterent in the new age of passive investing popularity. We have only seen slight glimpses of what may be ahead in terms of challenges for the passive investor but it is fair to say this could be a major problem.

Investors naturally assume they will be able to exit as easily as they entered these funds and at the stated value seen on their statements or trading screens. In a calm market the concerns are minor but there are serious questions about that reality should a wave of selling hit bond ETFs all at once.

Although somewhat unique in its characteristics and certainly not a bond ETF, the recent debacle related to the inverse VIX ETF, XIV, seems to foreshadow some of the issues highlighted here. The graph below shows the price of XIV over the last two years. Investors unaware of how the NAV for XIV was calculated were certainly in for quite the shock.

Data Courtesy Bloomberg

Risk Analysis – The Benefit of Stress Testing

Given the importance of the issue of liquidity and what may transpire in an adverse scenario, we decided to look at the performance of a few ETFs and their related indices through the financial crisis as an indication of what a possible “worst-case” scenario might hold. In doing so, we acknowledge no two historical events are the same but the analysis seems important to consider.

From peak to trough, between April and November 2008, the Barclays Corporate Investment Grade index fell -10.8%. At the same time the LQD ETF which tracks that index fell -12.2%. The Barclays High Yield index fell -32.3%. In the same time frame the two high yield ETF alternatives, HYG and JNK, fell -29.8% and -34.5% respectively.

Today, these funds and others like them are much larger than they were in 2008. Furthermore, Bloomberg recently reported that many corporate debt funds are reaching further down the credit and liquidity spectrum in efforts to boost returns and some are even replacing high yield bond exposure with equities. As Lisa Abramowicz put it, “While this is somewhat concerning, it’s also logical. Fund managers don’t see any imminent risks on the horizon that could shake markets, and clients will penalize lower returns.”

The remarkable thing about this observation is that paying too high a price for an asset is in itself an imminent risk.  One could convincingly argue that point as the most basic definition of risk. Nonetheless, it does indeed offer an accurate profile of the current character of the market. Unlike actively managed funds where the manager evaluates individual securities, there is no price discovery mechanism for index funds and ETF’s as their only consideration is whether or not they received a dollar to invest.

Summary

According to Benjamin Graham, this approach to putting money to work in the market defines the term speculation as it does not apply “thorough analysis” nor does it “promise safety of principal and an adequate return.” Although sympathetic to the idea that it is different this time as profit margins do indeed remain unusually high, the more defining characteristic is the means companies are using to sustain those profits. It is what has been referred to as corporate self-cannibalism as debt is ever accumulated as a means of buying back shares or paying dividends. The eventuality is credit downgrades and self-destruction.

Data Courtesy St Louis Federal Reserve

The cyclical nature of passive and active investing will continue to play out and that which is wildly popular today will eventually turn unpopular. The hidden risks embedded in passive vehicles will emerge and those who so enjoyed the cheap grace of effortless and exceptional market gains will end up begging yet again for mercy amid the markets’ unforgiving justice.

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Michael Avenatti – or his client, Kavanaugh accuser Julie Swetnick – is having a tough time being taken seriously.

On Monday, Avenatti complained Monday on Twitter that his client still had not heard from FBI agents: “It is outrageous that my client has not been contacted by the FBI because Trump is instructing them not to,” Avenatti wrote. “He is trying to ram through a nomination by purposely preventing the truth from being known.”

In response, the Senate Judiciary Committee’s chief counsel for nominations on Tuesday issued a blistering response to Avenatti’s plea to “respond to our requests.”

“Stop playing games,” Avenatti wrote in the Tuesday email to Mike Davis. “If you are the Chief Counsel, then you need to do your job. Please respond to our requests.”

To which Davis responded:

“We have already reviewed your client’s allegations. We focus on credible allegations. Please stop emailing me.”

The back and forth escalated as Swetnick’s claims have increasingly come under fire as her own credibility has been undermined by both recent interviews and her own past actions. So much so, in fact, that Louisiana Republican Sen. Bill Cassidy on Tuesday recommended an FBI investigation into Swetnick for making false statements about Judge Kavanaugh.

A criminal referral should be sent to the FBI/DOJ regarding the apparently false affidavit signed by Julie Swetnick that was submitted to the Senate by @MichaelAvenatti.

— U.S. Senator Bill Cassidy, M.D. (@SenBillCassidy) October 2, 2018

The threat of a probe into his own client did not daunt the pop lawyer, who on Wednesday morning tweeted that “we still have yet to hear anything from the FBI despite a new witness coming forward & submitting a declaration last night. We now have multiple witnesses that support the allegations and they are all prepared to be interviewed by the FBI. Trump’s “investigation” is a scam.”

And, in keeping with his “shock” approach to the practice of law, moments ago Avenatti released a sworn, redacted statement with from yet another witness claiming to have seen Brett Kavanaugh and his friend Mark Judge “drink excessively and be overly aggressive and verbally abusive toward girls.”

Yet another accuser has come forward (see sworn stmt below). She is prepared to meet with the FBI today and disclose multiple facts and witnesses. pic.twitter.com/eNsCAau6no

— Michael Avenatti (@MichaelAvenatti) October 3, 2018

In the statement, the unnamed accuser said she met both men in 1980 at beach week in Ocean City, Md, where she witnessed conduct that included “inappropriate physical contact with girls of a sexual nature.”

The witness also reportedly saw Kavanaugh and others “spike” “punch” at house parties with Quaaludes and/or grain alcohol during the period 1981-82.

With little to lose – considering the FBI investigation into Kavanaugh may conclude as soon as today – the latest Avenatti client said that she knows the other Kavanaugh accusers, Christine Blasey Ford and Julie Swetnick, and believes they are truthful, and added that she was aware of other inappropriate conduct and other witnesses.

Meanwhile Avenatti, desperate to be taken seriously, said that his witness is “prepared to meet with the FBI today and disclose multiple facts and witnesses.” The only question is whether the FBI is prepared to meet with her.

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Following August’s slump in ADP employment growth (weakest since Oct 2017), September was expected to show a rebound and it did notably, rising 230k (vs +184k exp) against a revised +168k in August.

This is the strongest monthly job gain since February…

“The labor market continues to impress,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute.

“Both the goods and services sectors soared. The professional and business services industry and construction served as key engines of growth. They added almost half of all new jobs this month.”

Services jobs dominated once again with Medium-sized businesses adding the most jobs. Only Information Services sector jobs fell in September…

Full Inforgraphic:

Despite some volatility (and a big miss in August), the average ADP print since President Trump’s election has been very close to the average BLS print…

 

Mark Zandi, chief economist of Moody’s Analytics, said,

“The job market continues to power forward. Employment gains are broad-based across industries and company sizes. At the current pace of job creation, unemployment will fall into the low 3%’s by this time next year.”   

This data does not include the effects of Florence.

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A few days ago we discussed how soaring oil prices have been a stagflationary double whammy to emerging markets, which have been hit not only by a surging dollar, resulting in a collapse in local currencies and spiking import costs, but a spike in local currency oil and gasoline prices resulting in a surge in inflation and a slowdown in the economy as local infrastructure grinds to a halt.

This morning, this dynamic was revealed clearly – and painfully for Turkish residents – when Ankara reported that consumer inflation climbed to one of the highest levels since President Recep Erdogan came to power 15 years ago, spurring more calls for higher interest rates to rein in prices or at least for Erdogan to normalize relations with the US.

Turkish inflation soared to 24.5% in September from a year earlier (up 6.3% on the month, the highest since April 2001), rising for the 6th consecutive month driven by an across-the-board spike provoked by the lira’s meltdown; it was also the highest since June 2003 and rising above all Wall Street expectations where the median estimate was 21.1%. Worse, the CPI print was higher than the central bank’s policy rate of 24% suggesting more rate hikes are now imminent… but will Erdogan agree?

Medley Global analyst Nigel Rendell said the inflation figure was “a shocker” but said he was cautiously optimistic that weak consumption might offset inflationary pressures at some point.

“Interest rates of 24 percent provide some protection, and there is a sense that the weakness of domestic demand will be the dominating disinflationary force in a few months’ time once the foreign exchange pass-through has fed its way through the system.”

As the following key highlights from the Turkstat report show, the price increases was broad based across virtually all categories (via Bloomberg):

• Food prices, which make up nearly a quarter of the inflation basket, rose an annual 27.7 percent, from 19.8 percent in August
• Energy inflation accelerated to 27.03 percent from 21.3 percent
• Producer prices rose 46.15 percent from 32.13 percent
• Core inflation, a gauge that excludes volatile items such as food, energy and gold, climbed to 24.05 percent from 17.2 percent; median estimate in a Bloomberg survey called for an acceleration to 19.3 percent
• Apparel prices rose 17.16 percent from 13.6 percent and the cost of housing rose 21.84 percent from 16.3 percent

Commenting on the soaring prices, Turkey’s Treasury and Finance Minister Berat Albayrak blamed hoarders and speculators, and predicted inflation would stop quickening in October. Whether that is the case remains to be seen, but the latest inflation report put the central bank – already frowned upon by Erdogan – in a bind, as its recent interest rate hike to the highest level in nearly two decades, has failed to halt price increases which have exploded in 2018.

“An inflation print so bad that it truly feels like old Turkey,” said Inan Demir, an economist at Nomura International in London. “But this is simply too bad to ignore. Note that annual headline inflation is now above the bank’s policy rate at 24 percent, which calls for another rate hike.”

Not only is CPI now higher than Turkey’s official interest rate, but it is almost five times the central bank’s target of 5 percent and almost double its 2018 forecast. Meanwhile, given Erdogan’s distaste for higher rates and the sudden slowdown in the economy, the central bank now finds itself trapped with little room to hike rates further.

And with the lira losing 40% of its value against the dollar since the beginning of the year, the worst may be yet to come, especially since today’s inflation report sent the lira sharply lower, reversing gains achieved in recent days.

As noted above, speaking after the data release, finmin Albayrak attributed much of the increase to “hoarding and speculative pricing by businesses taking advantage of volatility.” Yesterday, Erdogan urged citizens to report any businesses that were seen as gouging consumers; it was not clear what the punishment would be for enterprises who had the temerity of trying to pass through prices, the result of the lira’s collapse, to consumers.

Turkish officials will soon be meeting representatives of various sectors of the economy for a new framework to curb prices that the government will likely announce next week, he said.

“The current trend will be broken in October,” Albayrak promised, although judging by the Turkish lira, the market is not so confident.

Another problem is the speed with which CPI is catching up with producers’ rising costs, said BlueBay Asset Management LLC strategist Tim Ash. Producer prices exploded in September, rising 10% from the previous month, and over 46% from a year ago.

So what can Turkey do to end this toxic spiral into economic collapse? According to Ash, given the sudden economic slowdown, there is little justification to raise rates at this point, but the strategist said that the government should end its spat with the U.S. over the detained U.S. pastor to relieve market turmoil and pressure on the central bank. In light of Erdogan’s continued war of words with the US, this will not happen until Turkey is in a deep depression… and even that is not certain.

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