A year ago it was the Ruble, but for much of the last year it is the South African Rand that has been the most volatile currency in the world. That is until the last week, as Turkey deals with rising domestic instability (and Erdogan's push for total rule), the Lira has become the world's most unstable currency...
While the Turkish central bank's hand are largely tied as per Erdogan's decree that no rates are to be hiked, moments ago the monetary authority, faced with another record plunge in the currency, had no choice but to intervene when it cut FX RRRs by 50 bps, citing "unhealthy" price formation and said it would take additional measures if needed.
One day after Toshiba's new CEO, Satoshi Tsunakawa, pulled a page from the book of his ill-fated predecessor Hisao Tanaka who presided over the biggest accounting fraud scandal in the company's history, and bowed down during a press conference to apologize to investors, the company's stock crashed by the limit 20%, bringing its two day loss to 32% and wiping out $5 billion in market cap in two days.
"Markets don’t have a purpose any more - they just reflect whatever central planners want them to. Why wouldn’t it lead to the biggest collapse? My strategy doesn’t require that I’m right about the likelihood of that scenario. Logic dictates to me that it’s inevitable..."
Six months ago, Steven Mnuchin became finance chair for the Trump campaign. Having succesfully helped to raise 10s of millions of dollars for the campaign, the former Goldman Sachs partner and Soros Fund management employee is now positioned for something much larger as Donald Trump reportedly told his aides today that he wants Mnuchin to serve as his Treasury Secretary.
Global stocks continued their selloff this morning, driven by surging speculation about the liquidity, solvency and viability of Deutsche Bank, which plunged 9% after opening in German trading today, dropping to a new all time single-digit low of €9.90, while its default risk soared to new all time highs.
For most of 2016, Deutsche Bank shares had been sliding fast. On Monday, they crashed, down more than 7%, after Angela Merkel refused to consider a bailout for the troubled lender. The bank's bonds have slumped, while it default risk spiked. As some have correctly put it "it all has a very 2008 feel to it."
Turkish assets plummeted the most since an attempted coup in July and credit risk climbed after Moody’s Investors Service cut the country’s sovereign rating to junk. The immediate response by the Turkish administration was to lash out at Moody's calling the decision "politically-motivated", after a similar downgrade by S&P led Erdogan to acuse the agency of siding with coup plotters.