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Turmoil In Taksim: A Contrarian View From The Grand Turk

|Includes:iShares MSCI Turkey ETF (TUR)

Today we had lunch with the Grand Turk in Boston. He's had impressive experience in both industry and finance and now is starting a private equity fund. We like speaking with the Grand Turk because he knows a lot, does not let his opinions interfere with the facts and always buys good wine.

He left Istanbul just before all the mischief started a few days ago (and swears he had nothing to do with it.) Asked whether there was any downside to running around the USA looking for money for private equity projects when the headlines are spotlighting Turkey's conniptions, his answer was, surprisingly, "No".

The Grand Turk has no love for the Prime Minister. He thinks and as do most (except for Erdogan's adoring fans of which there are apparently many in the countryside) agree that his rhetoric is ill-chosen and impetuous. But he is not stupid, and neither is his circle. Packing him off on a state visit to the Maghreb made a lot of sense. And having one of his minions prostrate himself with apologies does too.

The Grand Turk thinks there will be little immediate aftermath from the protestations of the urban secular student bourgeoisie. It is too unorganized. It has no leaders. And its complaints too vague, its fate is likely a fizzle.

No, the Grand Turk takes a contrarian view and sees good coming out of this. Longer term, the letting off of steam will serve to remind Ergogan that there are practical limits to throwing his toys out of the pram. Calling those of us who tipple the odd glass of wine alcoholics won't win him friends, and could contribute to unwanted declines in tourism (and concomitant impact on the public purse) if nothing else.

We won't see a kinder gentler Erdogan, and we may not see any development in Taksim Square for a while. But we won't see any significant negative economic impact, and probably we are witnessing the classic buying opportunity for those who subscribe to the 'blood in the streets' credo.

The bigger story with Ergogan is the rapprochement with the PKK. Who knows what he has done or promised to get the more spirited among them from their mountain hideouts and lay down their weapons. Anecdotally, according to the Grand Turk, they are headed to Kurdish Iraq, where Turkish trade is booming. A Turkey sporting a less feisty and combative Turkish that's an intriguing scenario for a broader country growth scenario. We'll be watching this at IntelliNews. (We've been reporting on good numbers in Turkey for a while and see no let up, so we're in sync with the Grand Turk.) With the Turkey ETF (TUR) near a 52 week low, it might not be a bad time to place a trade.

Looking out even farther, the Grand Turk believes the Erdogan era may be on the wane. An as yet invisible alternative is likely to emerge. He (let's face it, it probably won't be a 'she') will likely be conservative. After all, 12 years (the length of Erdogan's tenure) is a long time. Only the most connected cronies won't recognize this. It is not written in the Koran that absolute power corrupts, but even the most devout get the picture.

So get your land deals (between Istanbul and the new, yet-to-be-built airport) done now. That great real estate rush may not be as lucrative when the guard changes in a couple of years. That's what the Grand Turk is doing....

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in TUR over the next 72 hours.

Stocks: TUR