lunes, 21 de mayo de 2018

Italia y Turquía: números en rojo

Los tiempos de las finanzas marcan rocanrol de acá al futuro, chicos. Por distintos motivos, tanto los países desarrollados como los emergentes tienen que enfrentar sus complicadas situaciones financieras. Italia tiene una deuda impagable, y sus actuales líderes (foto) comienzan a dar señales de que no piensan hacer nada al respecto. Turquía, por su parte, devalúa a lo pavote en consonancia con el resto de las monedas de países emergentes. Las dos notas que siguen son del sitio web Zero Hedge

Título: Italy on Verge of Inducing a Fresh European Crisis

Epígrafe: Tired (or maybe bored) of worrying about rising interest rates, a rising dollar and higher oil prices? Then fear not, because according to Bloomberg macro strategist and former Lehman trader, Mark Cudmore, you can now start worrying about a new, or rather well-forgotten, potential risk flashpoint, namely Italy which, as he writes in his latest Macro View note overnight, is "on the verge of inducing a fresh European crisis." Full note below.

Texto: It may be time to move on from rising Treasury yields and trade wars. An Italian-led euro crisis is on the verge of becoming the dominant theme for markets.

It turns out that the euro break-up trade isn’t dead -- it’s just been hibernating and is likely to return with a vengeance in the months ahead if the populists get their way.

Their proposed economic policies make no attempt at debt sustainability. Italy already has the largest absolute debt pile in the EU and the second-largest, after Greece, as a percentage of GDP, at 132%.

The coalition’s plan sends the signal that it has no intention of ever paying back its debt. Things could spiral quickly because its fiscal promises will send BTP yields much higher, adding to refinancing costs and making the budgetary situation worse.

That creates a dilemma for the EU. Either fund Italy’s largesse at the expense of every other member country, or kick Italy out of the euro.

The first option isn’t sustainable. This isn’t a relatively containable problem like Greece. Italy’s economy is almost ten times the size of Greece’s and the third-largest in the euro zone. The PIIGS -- Portugal, Italy, Ireland, Greece and Spain -- were only ever a problem as a group because of concerns that the contagion would infect Italy.

And this isn’t just a sovereign debt problem. Italy’s banks have by far the most non- performing loans in the euro zone, more than a quarter of the total. A section of the plan makes it harder for banks to repossess collateral, further deteriorating the value of those loans.

So while the policy platform doesn’t explicitly state an intention to leave the euro, the new government plan, if instituted as is, makes that the inevitable end-game.

Fortunately, the Italian constitution forbids an excessive budget deficit, so may act as a limiting force. However, the concern is whether they can circumvent those restrictions by selecting favorable economic projections.

The proposal already seems to be stealthily planning for euro departure with a plan to issue short-term debt contracts to pay back arrears. As my colleague Ferdinando Giugliano suggested on Friday, that’s the first step toward a parallel currency.

So Italy’s prospective rulers seem to be fully aware of the end-game and are already planning for it. Investors will soon need to catch up.


Título: "God Help Turkey": FX Confiscation Rumors Launch Lira Meltdown As Yields Explode

Texto: While Turkey may have repatriated all of its gold held at the NY Fed, or at least moved it from New York to the BIS tower in Basel as we reported overnight, what markets are far more concerned about is the ongoing inactivity by the central bank to arrest the record collapse in the Turkish Lira and the just as record surge in Turkish 10Y yields, which in light of Erdogan's threats on the "independent" central bank, which is now terrified to hike rates, is perhaps understandable.

It is therefore also understandable why, as Bloomberg reports this morning, one brokerage is looking for help from a higher power: "God help Turkey" Istanbul-based broker Alnus Yatirim said in the sign-off to its morning note to clients on Monday. "We’re faced with a central bank that is watching the market when it needs to lead and direct it."

Yatirim has a point: on today's Bloomberg EM Bloodbath chart, the TRY is once again the worst performing currency against the USD...

... as the Turkish Lira drops to a fresh all time low, just shy of 4.60 against the USD.

The brokerage predicted that the TRY could fall to 4.58 per dollar by the end of this week - or rather the start as it is already there now, give or take - and 4.75 next week.

The market is testing whether the central bank’s verbal interventions are a bluff or not, Alnus said. Without policy action, the damage is likely to spiral, it said, citing the $222 billion of net debt held by Turkish non-financial companies in overseas currencies. Each 1 cent depreciation in the currency adds about 5 billion liras to the cost of Turkey’s foreign borrowings, it said.

Adding to an already dire picture, overnight rumors emerged that the government will seize foreign currency deposits although Turkey’s banking regulator chief Mehmet Ali Akben said such speculation is "absurd," Sabah newspaper reported. "Such a decision is neither discussed or a work has been done on it" he said noting that banks’ rollover ratio is around 110%, and adding that they have no problem in foreign borrowing ("for now" he forgot to add).

Although just as one Turkish official was about to sound somewhat credible, he added that similar speculations are being made before every election and accused credit rating agencies of trying to spread negative mood. He also said that the Turkish banking system is strong, although one look at today's 10Y Turkish yield which just hit an all time high of 15%, may suggest otherwise.

The good news, at least for now, is that Turkish stocks haven't followed the meltdown, with the Borsa Istanbul 100 Index down 0.3% in early trading, wiping out nearly half of last week's gain, when investors poured $10.3MM into New York and London-traded Turkey stocks ETFs in the week ended May 18, the biggest weekly inflow since Oct. 13.

We doubt stocks will be spared for long, however, and the moment Erdogan starts speaking in the next 24 hours is when the real selling will begin even as Turkey inches ever closer to soaring, Venezuela-style inflation.

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