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Erdogan Tells Lira To Drop Dead As Currency Collapse Threatens Financial System, Bank Runs, Hyperinflation

Erdogan Tells Lira To Drop Dead As Currency Collapse Threatens Financial System, Bank Runs, Hyperinflation

In what should not be confused for a masterclass in FX trading, on Monday Turkey’s President Recep Tayyip Erdogan defended his…

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Erdogan Tells Lira To Drop Dead As Currency Collapse Threatens Financial System, Bank Runs, Hyperinflation

In what should not be confused for a masterclass in FX trading, on Monday Turkey’s President Recep Tayyip Erdogan defended his pursuit of lower interest rates to boost economic growth and job creation, sending the lira cratering to a new record low against the dollar and plummeting to an unprecedented 35% down on the year, surpassing such banana republic currencies as the Argentina, Colombia and Chili Peso.

In his latest validation of the bizarre economic school known as "Erdoganomic" which confuses cause and effect as follows...

  • ERDOGAN: INTEREST RATE IS THE REASON, INFLATION IS THE RESULT

... Erdogan said that Turkey has abandoned old policies based on high borrowing costs and a strong currency in the name of slowing inflation, and instead shifted to a new set-up that prioritizes greater investments, exports and strong job creation, while allowing the currency to collapse and no longer engaging in any lira defense.

“We were either going to give up on investments, manufacturing, growth and jobs, or take on a historic challenge to meet our own priorities,” he said after a cabinet meeting in capital Ankara.

While most central banks are talking of tightening policy as the global recovery fuels a surge in prices, Turkey’s decision to slash 4 percentage points off borrowing rates since September even as inflation has soared above 20%, has stunned markets and frustrated investors who complain its monetary policy is becoming increasingly erratic and unpredictable.

Some, such as Swedbank AB strategist Hans Gustafson used the dreaded "H" word: “It is very hard to have a view on a fair value for the lira as long as economic policy is out of sync with fundamentals. The lira will continue to fall until economic policy tighten. Current path will lead to hyperinflation and a balance of payments crisis."

As everyone knows, Erdogan is a proponent of the insane mantra that high borrowing costs cause inflation rather than curbing it, and he has demanded a so far receptive central bank cut rates even while price gains race along at near 20%.

Erdogan’s pledge to double down on his most recent push for cheaper funding by the nation’s central bank sent the lira tumbling after Turkish markets closed. The currency dropped as much as 2.1% to 11.4767 per dollar and was trading 1.4% lower at 11.450 at last check.

Below are some of the highlights from Erdogan’s bizarre, paranoid, at time schizophrenic speech, which reveals that Turkey truly is on the verge of a hyperinflationary collapse:

  • There is a “game” being played against Turkey by those using interest rates, the currency’s exchange rate and inflation
  • “We’re pleased to see that the central bank’s policy rate is being kept low”
  • Turkey will crack down on “unfair, inexplicable price increases” by those using a weak lira as an excuse
  • “We know quite well what we’re doing with the current policy, why we’re doing it, and the kind of risks it entails and what we’ll achieve at the end”
  • The belief that inflation can only slow if the economy contracts has no basis

Erdogan’s ruling AK Party has for decades based its electoral success on rapid levels of economic growth, often driven by reducing borrowing costs to encourage credit expansion. When the economy sank during the pandemic, support for Erdogan and his party also fell to all-time lows, prompting him to redouble efforts to propel growth though rising prices are hurting his traditional working class base the most.

However, in recent months, perhaps having realized that trying to defend the collapsing lira is futile, Erodgan shifted his tone and questioned why business people did not take out loans and instead of investing in the economy, don't invest in risk assets (i.e., buy stonks) as rates were lowered in the last few months.

"Then they get together (and) talk about high interest rates," he said last week. "What type of people are you? If you are a businessman you are on the side of investment, so here are you go: loans with low interest," Erdogan said.

While it remains to be seen if Erdogan's pivot is accepted by the population, one thing is undpistable: Turkey’s currency crisis is driving up the cost of food, medicine and other essentials for average Turks, and poses a threat to the country’s banks and large companies if the lira’s slide isn’t arrested, economists quoted by the WSJ said.

The steep drop in the lira - which as noted above has lost more than a third of its value to the dollar in eight months - is shaking a Turkish society that had long prided itself as an ascendant economy that rivaled its European neighbors. Ordinary people are now struggling with a decline in their living conditions, with rampant inflation putting pressure on wages and eating into savings.

“My life is completely changed,” said Kemal Ince, an Istanbul shopkeeper who hails from Rize, the conservative Black Sea stronghold of President Recep Tayyip Erdogan. Ince says that he is ashamed to have to increase the prices of coffee, olives and cheese, and that even as he charges his customers more, he still feels squeezed.

“I don’t have the luxury of spending money on anything,” he said.

Turkey’s current crisis is the worst the country has faced since 2018, when the lira also dropped precipitously amid a crisis in relations with the U.S. Worries over potential loan defaults and stress on banks were so high in 2018, the country’s banking regulator allowed lenders to extend loan maturities and facilitate debt restructuring.

Turkey’s major banks and companies—many crippled by big foreign-currency loans—now face longer-term risks of instability if Erdogan continues down the path of cutting interest rates further, economists and businesspeople here said.

“These kind of imbalances might end up with a run on banks,” said Omer Gencal, a former executive at several Turkish and international banks and now an official with an opposition party. “The current situation isn’t sustainable.”

According to the Turkish central bank, nonfinancial companies had about $160 billion in foreign-exchange assets and $280 billion in liabilities as of August. The gap has narrowed since 2018, though it is still wide. Banks’ lending in foreign currency ranged from 24% to 45% of their total loans in the first half of the year, according to Fitch Ratings.

While banks have kept their nonperforming loans in check, including through the pandemic, Fitch warned in a report last month that “risks remain high given exposure to the volatile Turkish operating environment, risky segments and sectors, significant foreign-currency lending and the high lira interest-rate environment.”

Jason Tuvey, senior emerging-markets economist at Capital Economics, however, told the WSJ that the greatest threat for Turkish banks is their ability to rollover their external debts if investors get increasingly spooked.

Short-term external debt of banks stood at $84 billion, or close to 10% of the country’s gross domestic product. Mr. Tuvey said April next year will be a key month for banks, given some of that debt will be due then. Tuvey said that back in 2018 banks were able to draw down their foreign-exchange assets held at the central bank to meet external debt repayments.

“The upshot is that banks would be able to muddle through for a short period as in 2018, but they may struggle to cope if access to international capital markets were to be restricted for a considerable amount of time,” Tuvey said.

Turkey’s large companies may be able to cope with the crisis for the moment because of foreign-currency reserves that he said might be even larger than official figures show, an ability to pass costs onto consumers, and government assistance including loans, according to Hakan Kara, a former chief economist at the central bank.

But as with every case of soaring inflation, the crisis has fallen hardest on ordinary Turks, many of whom are swapping their earnings into foreign currency and cryptos, or looking for ways to flee the country.

“I have no confidence left in the Turkish lira because we cannot see what lies ahead for us in this country anymore,” said a woman in her 60s who walked into an exchange office in Istanbul to change 50,000 lira into dollars. The woman, who owns a pharmacy, asked to have her name withheld because of fear of government reprisal.

The government imposed a new rule this week requiring customers to present identification cards any time they exchange more than $100 worth of currency.

Alas, as noted above, Erdogan doesn’t appear likely to change course, despite the political risks of soaring inflation. He has intensified his calls for low interest rates and the central bank this week used language that suggested it would cut rates again in December.

Having ruled Turkey for nearly two decades as both prime minister and president, winning elections in part by vastly expanding the country’s economy, Erdogan’s time in power is at risk of coming to an end as the plummeting lira erodes the standard of living for millions of Turks, driving away potential voters.

“Erdogan runs everything. He doesn’t allow either the finance minister, or the central bank governor, or anyone else to do their jobs,” said the owner of an exchange office in Istanbul.

Tyler Durden Mon, 11/22/2021 - 14:07

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Spread & Containment

TV Show Mysteriously Deletes Poll After Vast Majority Oppose Mandatory Vaccination

TV Show Mysteriously Deletes Poll After Vast Majority Oppose Mandatory Vaccination

Authored by Paul Joseph Watson via Summit News,

A major morning television show in the UK deleted a Twitter poll asking if vaccines should be made mandatory..

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TV Show Mysteriously Deletes Poll After Vast Majority Oppose Mandatory Vaccination

Authored by Paul Joseph Watson via Summit News,

A major morning television show in the UK deleted a Twitter poll asking if vaccines should be made mandatory after the results showed that 89% of respondents oppose compulsory shots.

Yes, really.

Good Morning Britain, which often tries to set the news agenda, posted the poll which asked the public, “With Omicron cases doubling every two days, is it time to make vaccines mandatory?”

The last screenshots Twitter users were able to obtain before the poll was wiped showed 89% oppose mandatory vaccinations, with just 11% in favor after a total of over 42,000 votes.

People demanded to know why the poll had been pulled, although it wasn’t exactly hard to guess.

Why did you delete this poll, is it because you were asked? Or because it shows the people don’t support this s**t, this tyrannical future your colleagues seem to want. We see you,” commented one respondent.

“Guess that wasn’t the answer they were looking for,” remarked another.

Good Morning Britain has failed to explain why it removed the poll.

However, it’s unsurprising given that the broadcast has been a vehicle for pushing pro-lockdown messaging since the start of the pandemic.

For most of that time, it was hosted by Piers Morgan, an aggressive proponent of lockdowns, mandatory vaccines and face masks.

The show also regularly features Dr. Hillary Jones, someone who at the start of the pandemic warned that face masks could make the spread of the virus worse, before getting the memo and doing a complete 180.

*  *  *

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Tyler Durden Thu, 12/09/2021 - 03:30

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Science

Life Sciences Expansions Take Off as 2021 Wraps Up

Several life sciences companies and life science-focused real estate firms announced expansion plans as 2021 comes to an end.

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Life Sciences Expansions Take Off as 2021 Wraps Up

Several life sciences companies and life science-focused real estate firms have announced expansion plans as 2021 comes to an end. Here’s a look.

Novavax to Expand Maryland Campus

Novavax, on the cusp of getting its COVID-19 vaccine authorized in numerous countries around the world, is expanding its footprint in Gaithersburg, Md., where it is headquartered. The European Medicines Agency (EMA) is expected to authorize the company’s vaccine soon, and so is the U.S. Food and Drug Administration (FDA). Czechia has already ordered 370,000 doses, with deliveries expected at the beginning of 2022. The company also has a deal with Fujifilm Diosynth Biotechnologies to manufacture millions of doses of the Novavax vaccines at its facilities in Billingham, U.K., with a £400 million investment in expansion.

Four Corners Acquired 150,000-Square-Foot Complex in Belmont, Calif.

Four Corners Properties acquired a 150,000-square-foot office building in Belmont, Calif., called the Shoreway Innovation Center. The seller was Westlake Group. Westlake bought it in 2016 for $61 million. The company plans to expand its use for life sciences, noting that 82% of it is currently leased to a mix of tenants with an average of less than three years lease term remaining.

“Shoreway Innovation Center offers the opportunity to bring office and life sciences space to a market where tenant demand is far outpacing available supply,” said Mike Taquino, executive vice president of CBRE’s Northern California Capital Markets team.

Genentech Leases Building Under Construction in South San Francisco

Source: BioSpace

Boston Properties and Alexandria Real Estate Equities are leasing a building under construction in South San Francisco to Genentech. It will be the first phase of a life sciences campus. The building is at 751 Gateway and is 229,000 square feet. The campus will be called Gateway Commons and is a joint venture between the two real estate firms. They expect initial occupancy toward the end of 2024. Genentech has been headquartered in South San Francisco for forty years, with a large corporate headquarters made up of 4.7 million square feet of five neighborhood hubs. The new site is about one mile’s distance from their main campus.

Mispro Biotech to Open New Facility in North Carolina in Early 2022

Mispro Biotech Services plans to open a new facility in Research Triangle Park (RTP), N.C., in early 2022. Mispro is a leading contract vivarium organization (CVO). The new facility, a full-service vivarium research facility, will be central to one of RTP’s biopark campuses.

“Since we first opened our doors here in 2013, we have seen incredible growth in the RTP cluster,” said Philippe Lamarre, chief executive officer of Mispro. “The time was right to expand into a new facility with more space and modern amenities where we can support the influx of biotechs who are seeking in vivo lab space.”

Laura Gunter, president of NCBIO, representing the life sciences industry in North Carolina, noted, “Mispro has become a cornerstone of the Triangle ecosystem as contract research and support companies are finding increased favor. Biotechs of all sizes and therapeutic disciplines are focusing more on their core competencies, which is opening the door to innovation like Mispro’s contract vivarium option. We are pleased to see their decision to expand here and support more North Carolina companies.”

BioSpace source:

https://www.biospace.com/article/life-science-companies-announce-expansion-plans-as-they-wrap-up-2021

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Government

Over 170 companies delisted from major U.S. stock exchanges in 12 months

  Over the years, United States-based exchanges have remained an attractive destination for most companies aiming to go public. With businesses jostling to join the trading platforms, the exchanges have also delisted a significant number of companies….

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Over the years, United States-based exchanges have remained an attractive destination for most companies aiming to go public. With businesses jostling to join the trading platforms, the exchanges have also delisted a significant number of companies.

According to data acquired by Finbold, a total of 179 companies have been delisted from the major United States exchanges between 2020 and 2021. In 2021, the number of companies on Nasdaq and the New York Stock Exchange (NYSE) stands at 6,000, dropping 2.89% from last year’s figure of 6,179. In 2019, the listed companies stood at 5,454.

NYSE recorded the highest delisting with companies on the platform, dropping 15.28% year-over-year from 2,873 to 2,434. Elsewhere, Nasdaq listed companies grew 7.86% from 3,306 to 3,566. Data on the number of listed companies on NASDAQ and NYSE is provided by The World Federation of Exchanges.

The delisting of the companies is potentially guided by basic factors such as violating listing regulations and failing to meet minimum financial standards like the inability to maintain a minimum share price, financial ratios, and sales levels. Additionally, some companies might opt for voluntary delisting motivated by the desire to trade on other exchanges.

Furthermore, the delisting on U.S. major exchanges might be due to the emergence of new alternative markets, especially in Asia. China and Hong Kong markets have become more appealing, with regulators making local listings more attractive. Over the years, exchanges in the region have strived to emerge as key players amid dominance by U.S. equity markets. As per a previous report, the U.S. controls 56% of the global stock market value.

A significant portion of the delisted companies also stems from the regulatory perspective pitting U.S. agencies and their Chinese counterparts. For instance, China Mobile Ltd, China Unicom, and China Telecom Corp announced their delisting from NYSE, citing investment restrictions dating from 2020.

Worth noting is that the delisting of firms was initiated due to strict measures put in place by the Trump administration. The current administration has left the regulations in place while proposing additional regulations. For instance, a recent regulation update by the Securities Exchange Commission requiring US-listed Chinese companies to disclose their ownership structure has led to the exit of cab-hailing company Didi from the NYSE.

Impact of pandemic on the listing of companies

The delisting also comes in the wake of the Covid-19 pandemic that resulted in economic turmoil. With the shutdown of the economy, most companies entered into bankruptcies as the stock market crashed to historical lows.

Lower stock prices translate to less wealth for businesses, pension funds, and individual investors, and listed companies could not get the much-needed funding for their normal operations.

At the same time, the focus on more companies going public over the last year can be highlighted by firms on the Nasdaq exchange. Worth noting is that in 2020, there was tremendous growth in special purpose acquisition companies (SPACs), mainly driven by the impact of the coronavirus pandemic. With the uncertainty of raising money through the traditional means, SPACs found a perfect role to inject more funds into capital-starving companies to go public.

From the data, foreign companies listing in the United States have grown steadily, with the business aiming to leverage the benefits of operating in the country. Notably, listing on U.S. exchanges guarantees companies liquidity and high potential to raise capital. Furthermore, listing on either NYSE or Nasdaq comes with the needed credibility to attract more investors. The companies are generally viewed as a home for established, respected, and successful global companies.

In general, over the past year, factors like the pandemic have altered the face of stock exchanges to some point threatening the continued dominance of major U.S. exchanges. Tensions between the US and China are contributing to the crisis which will eventually impact the number of listed companies.

 

Courtesy of Finbold.

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