İçimin Mavisi Senin Okyanusundandı.
Al, geri veriyorum.
Neyi erken yaşadıysam,
Hep geç kalıyorum!

Sana göçüyorum her sonbahar.
Yolların çıkmıyor aşkıma!
Unuttuğun yağmurların adı aklımda,
Seni içimden terk ediyorum!!!

Kuşlar ve şarkılar bu şehri terk edeli beri,
Efkar demliyorum gözlerimde.
Yaşlarımı yanağıma varmadan öldürüyorum.
Tam sancağımdan yaralıyorum kendimi…

Ne unutacak kadar nefret ettin,
Ne hatırlayacak kadar sevdin beni.
Yıkık bir duvar kadar bile pişman değilsin, biliyorum!
Beni hep bulmamak için aradın!…

Sensizliğe yenilmek sana yenilmekten zor olsa da,
Ardımda bir sürü belkiler bırakarak…
Seni içimden terk ediyorum!..
Şimdi

İçimizde öldürülecek bir anı bile bulamayan iki yarım kaldık.
Tamamlayamadık bizi…
Elinden tutmadın yalnızlığımın,
Saçlarımı da uzaklarına gömdün…

İçimin mavisi senin okyanusundandı…
Al! Geri veriyorum!
Kilitleri hep yanlış kapılara vurdun!..
Sana bensizliği terk ediyorum…

Ne tuhaf değil mi!?
İçimi acıtan da sendin, acımı dindirecek olan da…
İçi bulanık bir sevdanın ucunda seni kaybettim!
Aldırmadın aldırmalarıma…

İşte soluk bir ömrün son nefesi!
Benden…
İçimden…
Terk ediyorum!!!

Moody\’s just affirmed that their existing Baa3, i.e. investment grade, rating on Latvia already incorporates their perception of the \”moderate devaluation risk\” in Latvia. S&P and Fitch have both recently removed Latvia\’s investment grade rating, rating it BB+ at present, and S&P even have it on negative creditwatch.

Rating agencies in general never seek to amaze me.

Take Latvia\’s Baa3 rating. This puts Latvia 3 notches ahead of Turkey, which is rating Ba3/BB-. With the market pricing Latvia 5Y CDS at ~ 700bps, and Turkey at ~ 255bps, someone is clearly wrong.

Reviewing the two\’s credit fundamentals, in my mind Turkey massively outscores Latvia, and I would certainly be on the side of the market in terms of pricing the two credits.

First, the Turkish lira floats, and indeed has \”benefitted\” from a marked nomination depreciation since last October, which have produced a ~15% real effective devaluation over this period, providing something of a soft landing for the economy. Latvia\’s fixed exchange rate is a key Achilles heal in the current market environment, and indeed in real effective terms the currency has actually appreciated since last October – given currencies around it have devalued.

Second, Turkey\’s flexible exchange rate regime is being reflected in the real economy impact, relative to Latvia. Thus while real GDP is expected to contract by 4-5% in 2009 in Turkey, possibly returning to growth in 2010, Latvia is expected to post a 15-20% real GDP contraction in 2009, and we simply cannot see where growth is going to come from beyond that.

Third, the weak growth outlook is massively undermining Latvia\’s fiscal position, with the budget deficit ~ 10% of GDP in 2009, and likely to stay around this level in 2011. Turkey\’s budget deficit has increased to ~ 6% this year (from US$15bn, with US$65bn in FX reserves (sub US$4bn for Latvia) this also means that Turkey\’s net public sector debt/GDP ratio is at least ten percentage points below that of Latvia. Latvia\’s PM, meanwhile, has indicated that if the IMF does not disburse the latest credit tranche by July the country is likely to be at risk of default. Remarkable, on the basis of this comment alone, then that Moody\’s still keeps Latvia\’s investment grade rating.

Fifth, Latvia\’s current account has adjusted rapidly, moving from a deficit of ~20% of GDP in 2007, to a small surplus likely in 2009. Turkey has also though benefitted from a massive cut in its CAD, from 5-6% in 2008 to ~ 1-2% of GDP expected in 2009.

Sixth, Latvia is sitting on a huge stock of external debt, equivalent to around ~ 130% of GDP, compared to around 40% of GDP for Turkey. Servicing this debt obviously imposes a huge burden in terms of external financing reserves (see below).

Seventh, Latvia\’s short term debt/FX reserve ratio stands at a hugely worrying 555%, versus only around 60% for Turkey.

Eighth, Latvia\’s external financing needs/reserve ratio also stands at something over 600%, versus only around 160% for Turkey.

Ninth, Latvia is dependent on official financing to avoid a devaluation/default, while Turkey is still able to fund itself from the market. The IMF has though made it plain that it would lend to Turkey in time of need; lending that has been proven in the past.

Tenth, Turkey\’s banking sector, while only 40% foreign owned (versus ~ 65% in Latvia), appears in much better shape than its Latvian counterpart. It is much better capitalised and profitable at present. It has not thrown credit down consumers throats at the pace which has occurred in Latvia, and given the more sedate pace of economic downturn in Turkey, NPLs are likely to be contained (probably to sub-10% through the current crisis, versus likely 20%+ in Latvia even without a devaluation). Turkish banks have, meanwhile, proven able to roll external liabilities relatively successfully through the current crisis.

Eleventh, EU support. Evidently the above ten risk factors clearly show Turkey\’s credit fundamentals are light years away from those of Latvia, but evidently Moody\’s must attach a very big subjective element into its rating in terms of likely EC/EU support, relative to Turkey, given Latvia\’s EU membership versus Turkey\’s candidate member status. This is the only way we can explain the 3 notch rating differential between the two credits. However, if this support manifests itself in providing a drip feed of official financing, to retain a fixed exchange rate regime, at the complete expense of the real economy in Latvia, its value has to be seriously questioned. The exchange rate peg in Latvia has been described as \”key to Latvia\’s economic stability\” by various official creditors. How these officials can square \”economic stability\” with a likely 15-20% real GDP contraction this year, and possibly a peak to trough economic contraction of up to 30% is somewhat beyond us.

Turkey Rating Review My piece from yesterday attempting a comparison of Turkish versus Latvian credit fundamentals appears to have hit something of a chord, and has been picked up extensively by the Turkish press, and presumably by its Latvian counterparts (\”you cant win them all\”).

Rating agencies, analysts (including myself) and indeed investors can get stuck in something of a blinkered world sometime where we spend most of our time analysing particular sub-sets of countries but fail to see the big picture and look for better cross-region/country comparables.

The Turkey-Latvia comparison surely does suggest that the formers sub-investment grade (Ba3/BB-) ratings are extremely harsh. Numerous other rating anomalies with respect to Turkey can also be drawn. Why, for example, is Turkey rated on par with Gabon and Nigeria (true the latter now has a big oil wind-fall fund, and lowly public sector debt ratios, but I would argue that willingness to pay in a more stressed global/oil price environment might be significantly less than stress-tested Turkey). And, why on earth is Turkey rated two notches behind Egypt (Ba1/BB+); answers on a postcard please, but covering both credits for a decade or more I really, really struggle with this one. Egypts external financing position is, arguably stronger, albeit Turkeys has improved markedly over the past year (both countrys current account positions could be +/- 1% this year), but Turkeys banks are undeniably stronger, and public finances in my mind are stronger in Turkey, despite the recent emergence of a more counter-cyclical fiscal stance in Turkey. And while the rating agencies seem to attach a premium to EU membership in Latvias case (the only possible justification in my mind for Latvias current rating), they dont seem to give Turkey any credit herein for its EU Candidate Member State status, e.g. over Egypt.

On the subject of EU member states in crisis, Turkey is rated 3-5 notches behind Hungary, which has much worse external/public financing ratios and was forced to go to the IMF for emergency funding last year; at least Turkey is currently trying to get by without an IMF programme. Similarly it is also rated 2-3 notches behind Romania which was also forced to go to the IMF for funding earlier this year. A number (at least 3 on our reckoning) of other EU member states could also join the queue for IMF funding;

Standing back and taking an even bigger perspective, Turkey is rated 3 notches behind Brazil/Colombia (probably should be rated below these, but 3 notches?), is rated a notch or two behind the likes of El Salvador, Guatemala and Costa Rica. And get this one rating agency even has Turkey rated on par with Venezuela. While Latam is clearly not my \”turf\” I know enough about the latter credit to think that this is surely doing something of a dis-service to Turkey.

I think as analysts we have all been on something of a learning curve through the current crisis. Stress tests have often thrown up results which have not been backed by the actual eventual evolution of events on the ground. The obvious one here is a Russia-Turkey comparison. I dont think any credit risk model would have indicated how badly Russia would have been impacted; and remember the Russia sell-off began pre-Lehman. Yet the same models typically put Turkey at the top of the \”at risk\” category because of its large external financing requirement (~ US$110bn). As it turned out Russias ex-ante large current account surplus did not help it much, as oil prices corrected lower, and Russian corporate struggled to roll-over huge, publically held liabilities; Russias external debt amortisation is still running at ~ US$140bn annually this year . Turkey benefitted from lower oil prices and a rapidly narrowing current account deficit, while its external liabilities were typically narrowly held and much more easily \”rolled\” as a result. Turkeys banks have also massively outperformed their peers in Emerging Europe, partly thanks to the 2000/2001 crisis which encouraged a root and branch reform of the sector; NPLs in Turkey are likely to increase to 5-7% at most during the current downturn, whereas in Russia they are already at least 10%, and rising fast. True Russia still has some underlying sovereign credit strengths, e.g. a weight of FX reserves still (US$409bn), modest public sector debt ratios and cash in the fiscal reserve, and probably should be rated above Turkey, but 4-5 notches?

It is not unfair to say that Turkey has been extreme \”stress-tested\” and has come out of the other side in reasonably good shape relative to its peers. True the economy is set to contract by 4-5% this year, and the budget deficit is set to increase to perhaps 5-6% of GDP. But its growth performance is still on-par for the region (not as good as Poland, but much better than Russia/Baltics/Ukraine/Hungary), and its budget performance is still likely to be better than the EU average; the UK/US are likely to have deficits ~ 10% of GDP. Turkeys general government debt/GDP ratio (ESA-95) is sub-40%, versus a ~ 70% EU average.

Turkey probably needs credit for performing so well, against its peers, and indeed much better than many of its better-rated regional peers. Net-net at Ba3/BB- Turkey does now appear under-rated; albeit the vogue for rating agencies at present is towards downgrades so whether they will come up with the goods any time soon is debatable. Fortunately with Turkey 5Y CDS pricing around 250bps, inside six EU-member states, and 30bps inside of Russia, markets appear to be somewhat more efficient in pricing than rating agencies.

With that \”mea culpa\” out of the way, back to the business of the day. Herein the lira has been following regional currencies stronger over the past few days, on something of a post-Latvia relief rally, helped by the resumption of dollar weakness. It is interesting though that with the exception of the HUF, regional currencies have largely flat-lined against the euro, while rallying against the US$ on the cross. Rates are, however, coming down again now in Turkey, with ABN Amros TRY bond index indicated 5bps tighter this morning, around 12.80%, i.e. tighter by around 40bps on the weeks highs.

(+/-) We did not read too much into PM Erdogans comments y/day over the future course of Turkey-IMF relations. He noted that he hoped that discussions with the IMF would be concluded by the summer (so do we: please put us out of our agony death by IMF negotiations) but that Turkey would only conclude a deal on its terms, i.e. was not desperate to cut a deal with the Fund. Again, from the Turkish perspective, or perhaps more pertinently from PM Erdogans perspective, an IMF deal is Plan B, with the preferred option being Turkey managing through the crisis on her own resources to prove the naysayers wrong. Thus far, and judging by high roll-over ratios on domestic debt auctions, his strategy is working. The IMFs Lipsky is due in Turkey later this month, and will be in an unusual position of having to sell an IMF programme to a potential recipient

Ralph Nelson Elliott\’s \”The Wave Principle\” was published, in 1938. The editors announced his work as \”new developments in the art of interpretation of stock market movements\”. But in his work, Elliott has been claiming that he discovered much from just an interpretation method; he introduced his principle as the nature\’s law.

This is what R.N. Elliott writes in \”The Wave Principle\”:

Since the beginning of time, rhythmic regularity has been the law of creation. Gradually man has acquired knowledge and power from studying the various manifestations of this law. The effects of the law are discernible in the behavior of the tides, the heavenly bodies, cyclones, day and night, even life and death. This rhytmic regularity is called a cycle.

…

The trade cycle and the bull and bear movements of the stock market are also governed by the same natural law.

…

Gradually the wild, senseless and apparently uncontrollable changes in prices from year to year, from month to month, or from day to day, linked themselves into a law-abiding rhythmic pattern of waves. This pattern seems to repeat itself over and over again. With knowledge of this law or phenomenon (that I have called the Wave Principle), it is possible to measure and forecast the various trends and corrections that go to complete a great cycle.

So, where are we in the great cycle of Dow Jones Industrail Average?

In order to forecast where the index headed in the coming months and years, we must understand in what degree a wave was completed when Dow Jones Industrial index hit the final top on October 2007.

The great bull cycle started after the final bottom was hit in 1932, following the great stock market crash in 1929-1932 period. Market recovered gradually from the intra-day low of 40.56 in July 8,1932 and rose to 194 from 1932 to 1937. This 5 year bull market is marked as the wave [1] in primary degree. Then came a 5 year correction and DJI hit the low of 1942 under 100. This wave is marked as [2]. From 1942 to the orthodox top of 1966, index rose to the famous \”magic 1,000\” resistance in five sub-waves and this 24 year bull market is marked as wave [3].

Total gain from 1932 low to 1966 top was 2280% and duration of this wave was a total of 34 years. From 1966 to 1974, index fluctuated around 750 level. When the final low was hit in 1974, the correction was completed in an expanding triangle pattern. Then came the recovery and the market formed an extension wave. This extended wave overthrew the upper band of historical rising channel and hit 14,198 on October 2007.

The upper band of a rising channel is overthrown only in investment manias, and there is no doubt that from 1995 to 2007, the markets stayed in an investment mania phase of the great bull cycle. This statement is true from a fundamental point of view, too, since all of the fundamental ratios were signaling extremely expensive levels, in historical proportions.

Dow Jones Industrial Average held a total of 13 years above the upper band of rising channel, even in the 2000-2003 intermediate bear market, upper channel worked well as a technical support. Then came the 2008 crash, and DJI finally broke the upper band and fell down to the rising channel area. So the end of the historical investment-mania era is confirmed.

Studying the bull and bear market mini-cycles, it is easy to find that, all uptrend and correction periods were completed in Fibonacci numbers. Besides, waves from 1932 to 1966, which lasted 34 years was almost equal to the wave from 1974 to 2007 both in magnitude and duration. Rather than thinking this is just a random phenomenon, it will be wise to think that Elliott Wave Principle worked perfectly, within this 75 years period and the market formed an ideal five wave pattern in almost three generations lifetime.

So, what\’s next?

Since we concluded that the wave pattern from 1932 to 2007 is completed, we must expect a correction proportional to this wave, in both magnitude and time.

It\’s amazing to discover that, even if the index falls down to 4,000-5,000 range within 2 to 5 years, [2]-[4] trendline will be kept unbroken. So, the first statement we must make is that: Trendline from 1942 to 1974-1982 lows must be broken ultimately. Technically the end of this mega-trend wil be confirmed after the break of the trendline. Then from the Elliott Wave perspective, we must wait for the index to fall all the way down to the sub-wave 4 level of the previous wave number (3). Thus we come to the conclusion that 1,600-2,750 range is the \”minimum\” price target of the correction.

Then comes the question: In which pattern the correction must unfold and what is the time target of the final bottom?

Since the final stage of the 1932-2007 bull cycle, namely 1974-2007 wave is an extended sub-wave of this mega-trend, the correction will probably be completed in a double-zigzag form, which is another guideline of the Elliott Wave Principle.

Let\’s take a look at our quarterly DJI chart: After the break of 7,200-7,500 support range, a head and shoulders top formation is now equivocal. There is still a chance for the index to rise above this resistance range and hold above. But if another leg of the crash occurs in the short term and DJI falls down to 4,000-5,000 range and thereby wave [A] will be completed somewhere over there, after a bearish rally (which will be labeled as wave [B]) 1942-1974 trendline will be broken. This will be marked as wave [C].

Such a price action will complete the first zigzag of the correction. The size of the first [A] wave of the correction will signal that the next leg may go all the way down to the 1,600-2,750 range, which we predicted to be the minimum price target of the correction.

[X] waves are defined as the corrections which seperate two legs of double zigzags. [X] waves are either shorter or longer than both of the zigzags. So, after the completion of the first zigzag, DJI will either form a huge primary degree sideways pattern, or a brief sharp upward zigzag correction. This huge correction will probably be followed by another zigzag pattern, which may drift the index to 500-1,000 range. According to my prediction, the final bottom will be hit in this range.

What about the time element of the correction? Since the correction will be in proportion to 1932-2007 bull market, minimum time needed for the correction to end is 18-21 years, which leads me to think that this correction should end in 2028-2030 period. This period as a time target sounds reasonable, since a perfect symmetry will occur on the historical chart: 1974 bottom will divide the line from 1932 to the final bottom in Golden section in the time axis. Likewise, 2007 top will divide the line from 1974 to the final bottom, in Golden section.

This prediction may sound weird, but one must ask himself/herself, if it wasn\’t weird to predict 14,000\’s in 1980\’s when DJI was just breaking the magic 1,000 resistance.

(Quotations are from the book R.N. Elliott\’s Masterworks, Edited by Robert R. Prechter, New Classics Library)

\’Kredi notumuz niye düşük? Türkiye\’ye haksızlık yapılıyor\’ tartışmaları ilginç bir boyut kazandı.

Önceki gün ekonomi basını ile bir araya gelen Fitch Türkiye Genel Müdürü Ayşe Botan Berker\’in, \”Darbe ihtimali yüzünden elimiz yüksek not vermeye varmadı.\” yönündeki sözleri, başka bir dönemde Meclis gündemine taşınacak kadar önemli.

Konuşan kişi, sıradan biri değil. Berker, dünyada ülke ve şirketlerin kredibilitesine karar veren ilk üç markadan birinin Türkiye şefi. Ne diyor özetle Berker? \”2007\’den itibaren yaşanan e-muhtıra, 367 krizi gibi gelişmeler dışarıda sürekli aleyhte propaganda yapanları haklı çıkardı maalesef. Notunuz düşük, kabul ediyoruz. Yukarı çekmek istediğimizde ya siyasi gerginlik oluyor ya da negatif yorumlar Türkiye\’deki kalemler tarafından piyasaya servis ediliyor.\” Read more »

Did you know that women are receivers for the desires of men, and that women produce no new desires of their own that are stable? Women who aggressively go after what they want are aggressively obeying the things they think the men they listen to want. Feminism does not work.

A good woman obeys the true man. A good man loves truth more than anything and always listens to it.

Men work constantly to build accurate new DNA and vibrations from the senses they perceive. Their equipment is outside their bodies and their interests are into the world. They are the laboratory. Women work continually to maintain the DNA and vibrations they have been given. Their equipment is packaged away and guarded. They are the library.