The headlines in the news this week are all about Turkey. On this week’s Tape Talk we dive into the recent drama and explore why it seems to be impacting markets here in the US.
Emerging Markets Dive
The news of Turkey’s war of words and tariffs with the United States set off a massive currency slide for the country. In the course of months, the Turkish Lira plummeted nearly 50%. An aggravator of the problem for the country is its foreign currency denominated debt. This debt, which is repaid in a currency other than its own, is causing currency moves to have disastrous effects for both the country which must now pay more and for the debt holders who face increasing default risk on their investment.
Markets might not just be worried about Turkey here. Since the exposure to the country’s currency and debt may reach far and wide, Wall Street must contend with what the potential fallout of an expanding crisis might be. This is the action investors are seeing transposed into the financial markets with the recent volatility as managers attempt to assess and position for the potential risks to spread beyond borders.
Under the Hood
So, how does an investment manager navigate through such tumultuous times? Quint and Daniel give a look into some of the methods they use to manage clients’ investments as well as their own.