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Wed, 26th April 2017

Anirudh Sethi Report

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Archives of “April 16, 2017” Day

South Korea Says Missile Launch “Threatens The Whole World” As Pence Arrives In Seoul

In its first official comments on Sunday morning’s failed missile launch, South Korea said the latest North Korean provocation threatens the entire world, and warned of a punitive action if it leads to further actions such as a nuclear test or a long-range missile launch.

“North Korea showing a variety of offensive missiles at yesterday’s military parade and daring to fire a ballistic missile today is a show of force that threatens the whole world,” South Korea’s Foreign Ministry said in a statement. “We have to warn again that if this leads to a strategic provocation of a nuclear or ICBM test, the North will face strong punitive measures that it will find hard to endure.”

Shortly after the failed test, U.S. Vice President Mike Pence touched down in South Korea Sunday for his first visit in a five-leg trip to the Asia-Pacific region, being the highest-level official from the Donald Trump administration yet to arrive here amid escalating tensions with the North. The arrival marked Pence’s first-ever visit to the South, and was nine hours after North Korea conducted its fifth ballistic missile test this year earlier in the morning, though it ended in failure.

Pence arrived at the Osan Air Base in Pyeongtaek, Gyeonggi, at 3:30 p.m. but has yet to make any public remarks. A joint statement between him and Prime Minister Hwang Kyo-ahn, who concurrently serves as acting president, is expected to come this afternoon after the two leaders discuss North Korean issues at Hwang’s office in central Seoul.

“This morning’s provocation from the North is just the latest reminder of the risks each one of you face every day,” Pence told a fellowship of U.S. soldiers and Koreans at a dinner in Seoul.

Erdogan Declares Victory In Turkey’s Constitutional Referendum Tyler Durden’s picture by Tyler Durden

With over 97% of ballots counted, Turkey’s president Erdogan and soon, quasi dictator, declared victory in the Turkish referendum and called the leaders of three political parties supporting changes to the constitution to congratulate them on the victory, Anadolu news agency reported, and added rather comically that “many world leaders send congratulatory messages to President Erdogan.” One wonders who exactly…

Absent some last minute fireworks, Turkey is now set to shift to a presidential system as the outcome of the referendum puts “Yes” votes at 51.3%, according to unofficial sources.

“Yes” votes were ahead at 51.3% or 24.598.880 votes, while “No” votes fell behind at 48.6% or 23,326,636 votes. “Yes” votes prevailed in four of Turkey’s seven regions, including southeastern Anatolia.

The reforms were approved by 339 deputies on January 21st, and Erdo?an signed the amendments on February 10th. Under the proposed changes, the post of prime minister is abolished and the president, vice president(s) and cabinet officials can be investigated by the parliament. The current system has no mechanism that monitors presidential conduct.

How Marine Le Pen is facing wipe out in French election after COMPUTER BLUNDER

Le Pen

Despite leading in the polls for Round One, The Express reports that a monumental computer blunder could cost Marine Le Pen the French general election as 500,000 citizens living outside of France have the chance to vote twice.

The election has become extremely close with just 4.5 percentage points separating Macron, Fillon, Mélenchon, and Le Pen…

Which is why this shocking error in election procedures could be the swing to crush Le Pen’s hopes. As The Express reports, half a million people received duplicate polling cards in the post, which would allow them to cast two votes at the first round of the election, held on April 23.

French authorities confirmed they would not be investigating the potential electoral fraud until AFTER the election, when retrospective prosecution may take place.

We are sure this is a simple ‘accident’, but coincidentally (for the establishment), this could crush Ms Le Pen’s dreams of surging to power, as most French nationals living outside of their country are not right wing – demonstrated by the fact many feel they depend on the European Union (EU) to guarantee their stay in foreign countries. Far left candidate Jean-Luc Melenchon, who has surged in the polls recently and threatens to break into the leadership race against Ms Le Pen and Mr Macron, could also benefit from this catastrophic error.

Emerging Markets :An Update

  • Malaysia’s central bank said it will allow investors to fully hedge their currency exposure.
  • Egypt declared a 3-month state of emergency after two deadly church attacks.
  • South Africa’s parliamentary no confidence vote has been delayed
  • Argentina central bank surprised markets with a 150 bp hike to 26.25%.
  • Brazil central bank accelerated the easing cycle with a 100 bp cut in the Selic rate.
In the EM equity space as measured by MSCI, South Africa (+3.1%), Turkey (+2.5%), and the Philippines (+0.9%) have outperformed this week, while Russia (-3.9%), Peru (-3.4%), and Brazil (-2.6%) have underperformed.  To put this in better context, MSCI EM fell -0.3% this week while MSCI DM fell -0.7%.
 
In the EM local currency bond space, South Africa (10-year yield -18 bp), Poland (-8 bp), and Indonesia (-8 bp) have outperformed this week, while Brazil (10-year yield +11 bp), Peru (+9 bp), and Colombia (+9 bp) have underperformed.  To put this in better context, the 10-year UST yield fell 15 bp to 2.24%.
 
In the EM FX space, ZAR (+2.5% vs. USD), RUB (+1.9% vs. USD), and ARS (+1.2% vs. USD) have outperformed this week, while HUF (-0.9% vs. EUR), KRW (-0.5% vs. USD), and PLN (-0.5% vs. EUR) have underperformed.