Erdostan – formerly Turkey – goes belly up

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.

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