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Turkey Shoot

Thanksgiving is more than 3 months away and world is already worried about "Turkey" because of Turkey Shoot. A turkey shoot is a fight or contest where one side is so much stronger than the other that the weaker side has nochance of winning. That's exactly what is happening with President Trump taking the fight with Turkey's strongman Erdogan over release of American Pastor Andrew Branson. Turkish Lira dropped over 40% in 2018 (17% drop coming on Friday last week). This reminds the days of Asian currency crisis 20 years back. What started in Thailand in 1997 with its currency dropping 40% quickly spread to other countries like Indonesia, Malaysia and South Korea and caused turmoil in worldwide markets. As they say, history does repeat itself. 20 years later, world is in very similar phase. Would summer Turkey Shoot turn to be a full-blown crisis? Sept and Oct are upon us. These months are one of the worst months in terms of market turmoil. Mid-term elections in US would be unpredictable where Trump's party most likely will lose house (and maybe lucky to retain Senate). Trump is taking fight with new country every week with tariffs. Fed is raising rates supposedly on back of strong US economy. All of these could lead us into a situation where things could suddenly change leading to major crisis. So what could reverse the dark clouds on horizon? Turkish President Erdogan taming his ego and releasing Branson and Trump quickly reversing the tariffs bringing situation back to where it was few months back. Trump toning down his twitter diplomacy and ratcheting down tariffs threats. Other countries like China and Germany (and EU) reciprocating with meaningful discussions and actions giving Trump symbolic and public victory. US mid-term elections resulting in split results with democrats winning house and republicans retaining senate. Companies continuing the investments and publishing Q3 results similar to Q2. All of these could prevent another crisis similar to Asian currency crisis 20 years back. Till that happens, my recommendation is to be watchful and tread carefully if you are considering new investments!
/Shyam

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