Page 5 - TURKRptFeb21

2.0 Politics 2.1 Watchlist
● Global liquidity: A global market fluctuation may happen in February.
Democrats in the US have a slight majority at the Senate now. 50-50 seats and Democrats hold the speaker post.
The focus of the market is right now on the Biden administration’s virus package.
There is too much money around and there is a so-called “Everything bubble” right now on the financial and real estate markets, including some kitsch markets such as the domestic second-hand car market in Turkey.
In 2021 investment plans, institutional investors are also investing in cryptocurrencies as there is nothing left to which they have not allocated money.
The only asset with prices that have not bubbled is gold. The price of gold and inflation figures will be watched in the coming period to track whether central banks look set to lose control of the market bubbles.
The bubbles will burst as every bubble bursts. But will the upcoming big burst prove the ultimate burst or will the upcoming fiscal expenditure wave, which will follow the eye-popping money printing conducted by central banks since 2008, manage to avert the final end with a managed and controlled burst?
On January 14, Fed chairman Jerome Powell and Biden appeared to promise that there will be no let-up in the printing of dollars.
Meanwhile, talk of a “need for a correction” in financial asset prices is spreading among finance industry pundits.
The US administration seems determined to further inflate the self- evident bubbles but even global finance players appear afraid that as things stand we may be heading for a bang, not a whimper.
It seems that a managed burst will be attempted in the coming period.
Estimating the exact timing is not possible, but Biden’s stimulus package talks in Congress during February may present a suitable opportunity.
● Virus lockdowns and demand conditions in Europe: Direct impact on Turkey’s exports.
● Initial signals from the Biden administration on their Erdogan policy.
● March 1: Halkbank court hearing, the case stays politicised.
● April 24: Biden will most probably call Armenian Genocide as massacre but it is a test of his Turkey policy.
● March 25-26 EU Council Summit: May make noise in markets but no significant action is expected.
● September 26: Elections in Germany.
5 TURKEY Country Report February 2021 www.intellinews.com