Erdogan Does the Lyre In, and Europe Covered by 3rd Wave

23 Mar 2021

The main event on Monday to be discussed in the financial markets was the dismissal of the next head of the Central Bank of Turkey. Erdogan has finally found a man who believes that high interest rates are the main reason for inflation and has rushed to appoint him to the post of head of the Central Bank.

The reaction of the Turkish lira (the fall was measured in double digits) and the Turkish stock market suggests that the markets have decided to put a final end to Turkish assets as objects of interest. We wish good luck to Erdogan in the difficult task of finishing off the Turkish economy and will continue to watch the rise in inflation and the fall in Turkey's GDP. With this kind of leadership and managerial moves, it looks almost inevitable.

Europe, meanwhile, is covered by the third wave of the pandemic. The British strain was extremely contagious and punished any attempt to mitigate lockdowns. As a result, we have both the rejection of mitigations and the new restrictions' extension or introduction against the background of the maximum number of cases for all time in a number of countries.

Germany, for example, is preparing to extend the lockdown by May. And they'll do it realizing that a drop in GDP in the first quarter cannot be avoided. The Bundesbank has already said that the German economy is likely to contract sharply this quarter as the response to the pandemic hit the services sector and even slowed growth in the construction industry.

It won't be superfluous to remind that the current prices on the commodity and stock markets have largely taken into account the fact of the rapid recovery of the economy and the exit from lockdowns. And in light of current events, there's a feeling that it is time to admit a mistake and incorporate a new reality into the price.