Turkey is bust and will get more so. However, with the risk of capital controls imminent, it is time to close our two-year short position. The spill-over effects to Europe are both geopolitical and financial through the over-exposure to Turkey of selected Dutch, French Italian and, above all, Spanish banks. We are cutting our long EUR positions and increasing our peripheral sovereign debt shorts in Europe, particularly in Italy.

It’s undeniable that we’re living in an epoch of technological transformation. And one that is unprecedented in history. With the creation of thinking machines, we face technologies that could end up competing directly with what it means to be human. This changes the rules of the game. And the policy responses to cope will have to be equally innovative. There is a number of structural shifts that are happening in lockstep, most of which are rooted in demography. Disentangling these interwoven threads will be difficult. Explaining the impact of these changes to an electorate whose lives are being disrupted will be a task of even greater magnitude.

North Korea can go four ways from here. 1) Nothing changes. 2) Voluntary unification (German style). 3) Implosion. 4) Or development along the lines of the Chinese model 20 years ago. This is the most likely scenario (60% probability). Much of the cost would be transferred from the South Korean budget to the private sector, leading to outward flows of FDI and repatriation of profits. There is no diaspora as there is no free movement of labour between North and South. Under this scenario South Korean equities would be the major beneficiary. And the budget and the won don’t suffer much.