The debt cycle, tariffs, and central bank hubris have created the conditions for a spectacular unwind of risk assets.
Yesterday in Turkey: Lira Bulls and Bears Duke it Out On Twitter I asked, “Is there a bullish case for the Lira? One person thinks so. Most think otherwise.”
I intended to do a follow-up post today, but Saxo Bank’s Steen Jakobsen covered most of the essentials in a recent post that I just saw today.
I have some thoughts at the end in regards to Turkey and the “other things”.
Macro Digest: It’s Not Turkey, It’s the Debt Cycle by Steen Jakobsen, emphasis mine.
There is currently a lot of focus on Turkey, and for good reason, but Turkey is really only a second or third derivative of the global macro story.
Turkey represents the catalyst for a new theme, which is “too much debt and current account deficits equals crisis”. In that sense, we have come full cycle from deficits and debt mattering in the 1980s and ‘90s but not in the ‘00s and ‘10s post- the Nasdaq crash and great financial crisis under the biggest monetary experiment of all time.
In our view, the order of sequence for this crisis is as follows:
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