Erdogan Poised For Victory Based On Early Referendum Results Although "Yes" Lead Is Shrinking

Tyler Durden's picture

Update 4: 95.5% of the vote is in, and Yes is down to the lowest lead so far, 51.6$ vs 48.4%.

* * *

Update 3: With 93% of the vote in, Yes is down to just 52%.

* * *

Update 2: with over 75% of the vote counted, the "Yes" has 54.2% of the vote, versus 45.8% for the "No" and rising.

* * *

Update: it may be closer than expected after all, because as votes continue to trickle in, the Yes margin continues to erode, and with 61% of the vote counted, Yes is now at 56% versus 44% for No.

* * *

As previewed yesterday, on Sunday Turks voted on a referendum on the country's presidential system whose outcome will likely place sweeping new powers in the hands of President Tayyip Erdogan and herald the most radical change to the country's political system in its modern history. The package of 18 amendments would abolish the office of prime minister and give the president the authority to draft the budget, declare a state of emergency and issue decrees overseeing ministries without parliamentary approval. Effectively, Erdogan would become the closest thing to a despot possible in a "democratic" system.

For those who may have missed it, we urge readers to skim the preview, especially since the outcome appears to be largely decided, and according to Turkish media which appears to have broken the news embargo, with over 30% of the votes counted with a turnout of 87%, the pro-Erdogan "Yes" camp is set for a victory, as close to 60% of the votes allegedly support the proposed political system overhaul.

While we expect allegations of vote-rigging to emerge, especially in light of recent polls which showed a much closer margin between the "Yes" and "No" camps, we doubt there will be much political push from Turkey's European "partners", especially since Erdogan still holds the trump card of releasing over 2 million Syrian refugees in Europe's general direction should his now virtually supreme powers be disputed by Brussels or Berlin.

As for the market, as Barclays reported yesterday, it will likely take a Yes vote favorably, as it will mean little to no change in the Turkish political system.

As a reminder, from Barclays this is what a "Yes" outcome would mean for markets:

YES: A “yes” outcome would likely result in a broad-based, yet potentially short-lived, relief rally

Despite the market’s anticipation of a “yes” outcome, we think the associated reduction in near-term political uncertainty would likely still deliver some relief rally, allowing a temporary reprieve for the TRY and a steeper curve in anticipation of a “gradual” unwinding of tight liquidity policy.

In FX, still-large TRY political risk premia and undervaluation suggest room for appreciation following a “yes” outcome. While our estimate of the lira’s political risk premia has reduced from 15pp at the end of January, it remains relatively large at 8pp (Figure 6). Furthermore, our short-term Financial Fair Value (FFV) model suggests a 4% undervalued TRY against the USD (Figure 7).

We believe risk-reward argues for being long TRYZAR targeting January highs of 3.90 with a stop-loss at 3.67 for a reward to risk ratio of 3:1 (spot reference: 3.73). We prefer this to short USDTRY as South Africa’s similarly low risk-adjusted real interest rate differentials and heightened political risk should provide a degree of protection in the event of a “no” outcome. The trade also remains positive carry.

In rates, very low bond risk premia suggest a rates rally following a “yes” is likely to be concentrated at the front end of the yield curve as market participants will likely price a gradual unwinding of the CBT’s liquidity tightening measures. As such, we reiterate our existing trade recommendation of paying the 1s5s TRY cross-currency swap spread targeting -30bp with a stop-loss of -100bp.

For Turkey sovereign credit, we maintain our Market Weight rating. This balances our concerns about a likely medium-term deterioration of Turkey’s credit metrics in a presidential system on the one hand with relatively attractive valuations and likely reduced near-term political uncertainty in a “yes” vote on the other hand. In the near term, we see potential for further spread compression of Turkey against South Africa, especially in the 5y sector of the curve (Turkey ‘22s vs SOAF ‘22s), with South Africa remaining vulnerable to adverse developments.

In the corporate credit space, we also have a Market Weight rating on Turkish banks and corporates. In the case of a “yes” vote, we would expect bank seniors to benefit more than corporates given the more significant spread pick-up relative to the sovereign. Higher beta seniors trading at a discount of over 100bp to the sovereign as well as new-style Tier 2s yielding over 7% are likely best positioned to benefit, in our opinion, although this could be met with more Tier 2 supply. We would expect the opposite reaction to a “no” vote, with IG-rated corporates and more expensive bank seniors as well as old-style Tier 2s to be less vulnerable in any sell-off

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
hedgeless_horseman's picture


I am sure glad the CIA didn't influence this election.

The will of The People, truth, justice, freedom, and democracy around the globe!

Lumberjack's picture

"I am sure glad the CIA didn't influence this election."


hedgeless_horseman's picture


Turkey launches investigation into 17 US politicians, bureaucrats and academics over last year's attempted coup

Those named include the former CIA director John Brennan and Senate minority leader Chuck Schumer

Looney's picture


Turkey is done! Please pass the gravy!   ;-)


fx's picture

Who would have thought? The official result was guaranteed to show a clear victory for Erdogan, no matter how people really voted.

The Ataturk republic has officially been burried now.

I am not sure what's my biggest concern now: How Erdogan will abuse his freshly granted absolute powers. Or how his (potentially even more radical islamist) successor will do...


WTFRLY's picture

Erdogan is chief Daesh-bag

detached.amusement's picture

hm, zog puppet vs zog puppet, tough choice

BobEore's picture

It's done... 51/49

all three of the biggest cities were firmly NO.

The blood must flow.


"and the people wept."

Lumberjack's picture

Long list of buddies turned villians...,

This is it's picture

The polls? U mean the soros poll machines? 

whatamaroon's picture

Everyone likes a dicktator.

Pure Evil's picture

That's why we kept Obama around for eight years..........oh I thought you said dicktaster.

Yen Cross's picture

  This means his DIP-SHIT> pussy son can start traffickng oil for ISIS again.

  Erdotard needs to be disappeared ASAP. " Hey kid, have you ever done time in a Turkish prison?"

Lumberjack's picture

He was stashing his money in a nigerian apartment...until today.

Yen Cross's picture

   lol. I saw that article, and I think you're "spot-on".

GooseShtepping Moron's picture

Does anyone really believe that this election isn't rigged? It's fucking Turkey, for heaven's sake.

"Turkish election" is an oxymoron (an Ottomon?).

lucitanian's picture

Erdogan ; I have total faith in the Turkish election commission to verify the "right" decision of the people.

detached.amusement's picture

 I mean, you could also substitute quite a few countries in there.  USA, France,  anywhere zog operates basically

Herp and Derp's picture

I don't think anyone is surprised.  At this point anyone trying to stop the Islamo-facist dictator are too scared to vote no.  No turks want to see President Oprah destroy their country in operation Turkey Freedom.  Erdogan is just this stupid.

Davidduke2000's picture

Whatever happens to the turks they have themselves to blame.

oldguyonBMXbike's picture

"Effectively, Erdogan would become the closest thing to a despot possible in a "democratic" system."  

He's refering to the office of President.  




They're changing their system to resemble that of the US and they're being demonized.  It's hilarious.

xrxs's picture

So, you think Erdogan is deserving of more power? This is a disaster. You should ask the 100 thousand+ people who have been arrested during the purges, or all of the journalists that were arrested and their organizations shut down what they think. I'm glad I'm 10 timezones away with warm popcorn.

Jtrillian's picture

All that is required to keep the masses from revolting is THE ILLUSION OF CHOICE.  

oldguyonBMXbike's picture

How is this any different from America?

Teja's picture

Have a look at the distribution of yes/no on the map. Compare that to the US presidential election. Very obvious that people living inland, away from the coasts, tend to support a president promising to make Xxxx Great Again, and people living near the coasts, much less so.

Seems to be a general phenomenon. May be related to trade, to people living near the coasts being more open to the world, whatever.

NordikAvenger's picture

Coastal folks in Turkey have been exposed far longer to secular ideals and are much better educated.

back to basics's picture

"You have no choice. Elections are there to give you the illusion of choice" - George Carlin 

Korogaro's picture

My favorite part is how they always color the political choices. The choice that moves toward communism, socialism, collectivisim, snowflakeism is always blue.

Hurricane Baby's picture

Let's not rush to judgement, my friends.
We should wait at least until 125% of the votes are counted.

spanish inquisition's picture

So they were allowed to vote on what the US calls continuity of government.

Yen Cross's picture

    I have a good idea. Lets ship those upgraded NUKES to Incirlik , with extra short fuses<

Mr. Schmilkies's picture

Wait, so the people of Turkey voted to have their voting privileges become meaningless? Rigged!

rphb's picture

It is because they want a sultan and a caliph and Erdogan wont deny them that.

rphb's picture

Don't ever forget, the EU is a tributary state ot Turkey

BlussMann's picture

The Turks actually get to have national referendums - something our "wonderful" Constitution never allowed. Oh, right, we can "petition" for grievances and get a internet response if enough boobs sign the petition.

CRM114's picture

On a turnout of 87%, Erdogan has gained the support of over 125% of the electorate!

What a Hero!!

To show there are no hard feelings, all those who did not vote will be given a free plane ride and parachute jump*



*parachute not included.

AntiLeMaire's picture

Barclays: "YES: A “yes” outcome would likely result in a broad-based, yet potentially short-lived, relief rally"

Nonsense, a Yes means the end of progress in TR, end of EU association and hello sultanate. And sooner or later it means bye bye NATO...

Not sure who will be buying on a Yes, rest assured it will not be us.
Perhaps Barclays still has holdings and needs to dump that ASAP once it is a Yes?

SpanishGoop's picture

So 56% (for now) voted for me not having a holiday there.

O well, so be it.

Stupid Turks.


NordikAvenger's picture

Make sure you go to the No provinces

IranContra's picture

Catch Up With Fast Paradigm Switches Or Be Confused

The nature of cognition requires two things: faith in the Almighty without any false gods, and the ability to perform dynamic interpretation based on that faith.

The last few decades gave us multiple paradigm shifts (frame of reference switches). Paradigm switching is only becoming more frequent as time goes by.

Liberals, those capable of godless abstract thinking, lying, and deceiving, remain the leaders of the Deep State. Their plots are simple and transparent. However, if you are not fast enough in catching up with their frequent paradigm shifts, then you will be fooled, and you will get stuck in confusion.

It's really simple: Satan simply wants people to lose faith and die, it's not about oil or power. It's not about controlling countries or regions. It's about chaos and war. Israel doesn't matter. Iran doesn't matter.

For example, 9/11 was done by Rothschild agents who included many Israelis. However, for most Israelis, it is just a place to hide from justice, not a country. It can be abandoned and replaced at the drop of a hat.

Soon after 9/11, Iranian Jew Shaul Mofaz (Israeli chief of staff who works for Rothschild) presided over the neocons in the Pentagon (Mofaz at Pentagon) and told them: It is an obvious controlled demolition, we didn't really want to hide it. Let them focus on Israel as "the enemy" while we now focus on more important things: The Greater Iran Project. Our hit list is Iraq, Syria, Lebanon, Libya, Somalia, Sudan and "Iran." Of course we will not hit Iran, but let Wesley Clark say that for the sake of obfuscation. They all grinned. No problem.

Bush Jr liked the idea. He said: Those Iranian "Shia Fellas" are just great partners in Iraq and Afghanistan. Obama was recruited from the very beginning to love Iran. His middle name "Hussein" bonds him spiritually to Iran. As a Jew who works for Rothschild, Hillary didn't mind spilling Arab blood either.

If you feel confused, then you are not catching up with the quick paradigm shifts of evil. Trump and his team may sound confused and shallow, but they are way ahead of you. No, no, no, they are not under any influence from the Deep State. If you think that, then the Deep State has got to you.

Dre4dwolf's picture

People dont realize how crazy erdungo is, he has aspirations of becoming the caliphate leader to take over the world, essentially he thinks hes the muslim version of hitler.

Big mistake giving this dictator more power, it will only bring Turkey ruin in the long run as he turns to expansionism.


newworldorder's picture

Erdogan has the EU by the balls, - but maybe not Turkish voters.

Making Merica Great Again's picture

C'mon Turks Say NO to retardism!

heddahenrik's picture

At the same time, Turkey is investigating CIA for terrorism:

"Former CIA Director John O. Brennan, New York Senator Chuck Schumer, US attorney for the Southern District of New York Preet Bharara, Office of Foreign Assets Control (OFAC) President David Cohen and Henri Barkey, Director of the Middle East Program at Wilson Center are among the suspects."

Lost in translation's picture

The US MSM propaganda machine loves, loves, LOOOVES to brand the villain-du-jour as, "another Hitler," "the new Hitler," and "Nazi." For example, Assad, Putin, Trump (before the Syria strike), Saddam Hussein, and so on.

Yet somehow, they never go anywhere near Erdogan, whom I regard as an exceptionally dangerous authoritarian.

I wonder why...

johnnycanuck's picture

I have never heard the great leader of the Free World speak out against Erdogan either.  He has managed to find time to criticize Merkel though. Several times.