Structural long USDTRY, trust Erdogan to be Erdogan
Strategic Trade / Buy
Price Target: 50% at 5.00 and 50% at 5.24
Market Price: 4.574
Note: this trade view was originally flagged on this week’s Macro Monday Call on July 10.
At the end of the day, President Erdogan won an election where he campaigned on single-digit inflation, based on lowering interest rates. There is a high probability that he ends up meddling in the independence of the Turkish central bank. At the same time, the country is reeling from running hot on government influenced stimulus (part of the re-election campaign) which may not be curbed post the elections.
Target: 5.00 and 5.24
Time Horizon: Strategic
Position is circa 0.25x capital, so for the Macro Monday book that is circa $2.5m
Key risk is obviously broader-based USD liquidation, Erdogan doing better than expected and lower US rates.
Targeting 50% at 5.00 and 50% at 5.24. Could potentially be looking to add to the lira short if we pull back to 4.50 levels.
Latest Market Insights
Quarterly Outlook Q3 2022: The Runaway Train
- Central banks' attempts to kill inflation is a paradigm shift, which could end in a deep recession.
Tangible assets and profitable growth are the winnersWith US equities officially in a bear market, the big question is where and when is the bottom in the current drawdown?
Understanding the lack of investment appetite among oil majorsThe everything rally seen in recent quarters has become more uneven, as its strength is driven by commodities in short supply.
The pressure is on as the wind leaves the sailsWith cryptocurrencies in sharp decline, are we entering a crypto winter or is the bear market a healthy clean-up of the crypto space?
Why the Fed can never catch up and what turns the US dollar lower?Many other central banks are set to eventually outpace the Fed in hiking rates, taking their real interest rates to levels higher than the Fed will achieve.
Bank of Japan: Swimming against the tideThe Japanese economy has gone from the age of deflation to rapidly rising prices in no time, leaving the Bank of Japan in a pickle.
Green transformation detour and bear market hibernationWith the impending risk of global econonomic derailment, we share the five things investors need to consider in this new half year.
Crisis redux for the eurozone?Whether there's going to be a recession in Europe or not, the path towards a stable economy will be agonizing.