Photo: NurPhoto via AFP
Photo: NurPhoto via AFP

DAX is down about 0.7% but most of that is an 11% drop in Bayer due to a civil judgment vs its subsidiary Monsanto. BMW and Daimler are up. Banks are down.

In SXXP Europe 600, banks are down 1.54%; most sectors are down 0.2%-0.5%.

There’s a bit of fraying at the edges among the weaker Asian currencies, with Philippine peso and Indonesian rupiah volatility up significantly. Indonesia has a current account deficit of 2.36% of GDP and is the most vulnerable. The Jakarta Index was down 3.55% overnight, the worst in Asia, with Philippines second at -2.14%.

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IDR is weaker and currency volatility is higher (again Indonesia has a current account deficit of about 2% of GDP).

So the “contagion” such as it is penalizes countries with external borrowing requirements.

Turkey otherwise is in full meltdown. The banking sector is worst hit: Garanti, the largest Turkish bank (owned by BBVA) has lost 3/4 of its market cap in US dollar terms since January. Senior credit protection is trading at 576 bps for five years up from +300 in May. The sovereign CDS is trading at the same level at +572. That’s wider than 2008-2009.

There’s no way to staunch the bleeding without a massive cut in demand. It’s past the point of reducing the current account deficit to zero; I doubt that Turkey can roll over its short-term credit lines (especially interbank lines).