​Sochi Agreement: Conventional wisdom is dead wrong, but markets are probably right

TURKEY - In Brief 23 Oct 2019 by Atilla Yesilada

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I intended to pen this Market Brief much earlier in the day, but the commentary on the Sochi agreement between Presidents Putin and Erdogan is so contrary to how I interpret it, I had to do serious fact checking to make sure my convictions would stand the scrutiny and respect of my audience. At the end, I decided to go with my convictions, even though these are probably in stark contrast to what you may be hearing from the majority of political analysts and strategists out there. In the first section of this brief, I outline where I stand out from the majority view.In the second section I review market pricing, i.e. the rally in assets prices from a very short term perspective, finding it broadly correct, with the caveat that if Erdogan goes over the board with the CBRT rate cut tomorrow, asset price volatility could return rapidly.Needless to say, a more comprehensive report will be issued in the Weekly Tracker. I and them Erdogan has achieved HIS objectives in Syria with little sweat:Completely wrong. Remember, he had two official objectives. First, to eliminate the YPG-PYD terror threat, which Kurdish organization is closely affiliated with PKK.Alas, most of that terror threat is emanating from the East of Tel Abyad all the way to Sencar in Iraq, which is not covered by the Sochi Agreement. It has become a no-man’s land where angry Kurds fleeing the war zone pile up with more reason to join PKK to revenge the loss of homes and property. Secondly, Erdogan has not gained control of Kobane or Manbij, or the a.m. lands East of Tel Abyad, meaning he conquered very little land to return 1-2 million Syrian refugees. Neither has Erdogan gained much at home.The National Alli...