Last night the long-awaited Turkish central bank (CB) rate hike took markets by surprise although higher rates to fight inflation were expected for weeks. Turkish interest rates went from 4.5% to 10% in one fell swoop to try to shock lire short-sellers. This led to some reversal of the anti-emerging markets trend reported yesterday sending stocks up not only in Turkey but all over.
The exception is Argentina, where the CB sold over $100 mn worth of peso bills (at the official rate) for 90 days yielding a whopping 25.89%. And if you have dollars the CB will also sell you dollar bills yielding 4%.
I got an article by William Pesak of Bloomberg from an Asia-hand reader. Pesak unsurprisingly wrote that Bangkok stocks and the baht remain under pressure as Thai factions fighting for political power prove murderously ruthless, likely to bring the economy down. Frankly, under hapless Yingluck Shinawatra’s leadership, favoring stupid rice subsidies to keep northern anti-Chinese anti-Bangkok redshirts happy, the economy is hardly going up. The street battles and the coming royal hiatus increase the ferocity of red and yellow contenders for power. (NB: Both King Bhumibol and the Shinawatras are of part-Chinese ancestry.)
Regulars like me know that rather than making your way through the underground rabbit warren at Canary Wharf to connect between the Docklands Light Railway and the Underground’s Jubilee line, you get off at Heron Quai, the stop before, and cross Bank Street to the escalator that takes you right to the subway. Across Bank Street, no. 25 is an undistinguished but cursed modern building.
It was built for Enron traders, but bankruptcy kept them out of it. So Lehman Brothers took the lease. In late 2008, pictures of tearful or stiff-upper-lips employees carrying their personal belongings out of No. 25 after Lehman went bust made all the newspapers.
The next tenant was JP Morgan-Chase, and No. 25 became home to “the London whale.” Despite his best efforts, he didn’t cause more than a $7 bn loss to JPM which survived.
