Turkish Lira Gets Crushed As World is Awash in Discord!
To fight and conquer in all your battles is not supreme excellence; supreme excellence consists in breaking the enemy's resistance without fighting. Sun Tzu
As you get older, you tire of fighting with people. Generally, it wastes time, thoughts, emotion, and needed energy on situations that often don’t wind up getting resolved. Why bother? You only have so many hours in the day to get tasks done, hopefully efficiently, so to waste time on anything which does not get you towards your goal, or even worse, upsets you, is not real smart. In looking at today’s financial and political world, it appears tensions are mounting in a number of places which need to be monitored quite carefully.
The most obvious place the world is now focused on is the famous historical bridge between East and West, meaning Turkey. Strategically quite critical in a number of geographic areas, it’s strongman leader, Mr. Erdogan decided to fight runaway inflation and most of it’s foreign debt being held in dollars and euros by appointing his brother in law as finance minister. His resume stuffed full of family affiliations, the well qualified bro decided to continue Erdogan’s preference of keeping interest rates where they were (17% or so) to not upset the apple cart, but given the 20% or more fall in the currency this week, Mr. E has more than a little problem on his hands. Some think Mr. Trump’s bringing up the issue of a detained religious pastor and the increase in tariffs on Turkish steel and aluminum played a big part as well, along with a request of NATO to allow some missile defense purchases of Russian equipment. As European banks in France and Italy have been large funders of Turkish debt, those entities were sold hard as well.
Another interesting political bru ha ha is shaping up north of our border, this time between Canada and Saudi Arabia. The Saudis detained some Canadian activists and the chaps up north aren’t too pleased. The Saudi’s, however, are talking divestment of Canadian assets and suspended trade relations as well. Across the pond, the Brits continue to have problems negotiating their exit with the European Union. In South Africa, the newly indoctrinated leadership has decided it will be appropriate to expropriate private land for public use, especially if those land owners are not of African descent. In Mexico, the new President elect, AMLO, came up with an interesting way to try and revive oil production in that country as it is down significantly over the last ten years. He feels the most optimal approach is to not use hydraulic fracking to help stimulate the countries found reserves. I don’t think the large integrated oil companies are going to find that approach very hospitable, what about you?
In the financial markets this week, Elan Musk decided to tweet about potentially taking Tesla private through the help of a sovereign wealth fund. At a cool 80 billion for a never profitable capital intensive car business facing plenty of large competitors, good luck with that one Elan. Disney reported decent numbers but because they ruled out more stock buybacks, it sold off a bit after the release. Dropbox also put up some good numbers, but guidance was soft and it got hit as well. Hostess Brands proved the buying power of Wal Mart remains powerful as they revealed the fellows in Bentonville decided to pass on some of the offerings from the maker of Twinkies and Ho Ho’s. As the summer winds down, I am sure you are looking to take it easy and not find any conflict. Maybe world leaders will heed that advice in the next few months.
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