The Greatest Risk Next Year Is That The Fed Gets Its Way
Authored by Simon White, Bloomberg macro strategist,
The market’s view for next year is now pretty consistent:
inflation will keep falling at its current pace;
the Fed will exercise a relatively large pivot later next year and into 2024;
the economy will avoid a recession (even though most forecasters expect one);
and stocks will remain in a bear market.
The main unpriced risks are that:
inflation stops falling as quickly as it has been and the Fed pushes through its “higher-for-longer” agenda, which would lead to sharp falls in stocks and bonds, and higher equity volatility; or
we get a recession, and this happens much faster than expected.
The first is unlikely.
Fixings from inflation swaps (as inferred by Bloomberg calculations) show that monthly y/y headline CPI prints should steadily fall all next year to under 2.5% by November, which accords with several other leading indicators.
Secondly, this year the Fed has stated its desire that rates will remain restrictive for some time, but to no avail. Generally the market has heeded the Fed’s calls for a higher peak Fed Funds, but then it has implied that the Fed will have to make an even deeper and faster about-turn.
This is the greatest “unexpected”, endogenous risk facing markets: that the Fed is able to ram home its “higher for longer” preference. However, without a sudden change to the expected inflation path next year, it’s hard to see how the Fed will be able to do this. Still, its unexpectedness means this is where the greatest trading opportunities lie — i.e. much weaker stocks than current bearish expectations, rising equity volatility, and higher bond yields and steeper curves.
The more likely risk, but one still not yet fully priced, is if we get a recession.
The market continues to infer the anticipated Fed pivot (about 180 bps of cuts over 2023/24) is enough to dodge a recession, with equities currently behaving as if they are in a bear market that does not coincide with one.
A final downside risk facing markets is that recessions tend to come on abruptly, leading to a much deeper and faster Fed pivot than is now priced.
Costco will be increasing membership fees as early as next year, CFO Richard Galanti confirmed during an earnings call last week. Galanti hinted at the increases earlier this year in an earnings call, when he responded to a UBS analyst who asked about the possibility of a membership hike this year, and noted the move might come “especially in light of companies like Amazon and Netflix raising their fees.”
That said, Galanti suggested that Costco “look[s] less at what others do,” and more about the intervals between Costco’s previous increases.
The hike may come as early as January 2023, but he said the company was in no rush.
“We feel that we’re in a very strong competitive position right now,” he said, adding “If we have to wait a few months or several months, that’s fine,” Galanti said, adding that he believes in the loyalty of Costco members – who have remained members throughout previous increases in fees regardless of inflation.
Right now Costco’s executive memberships cost $120 per year, for which members earn a 2% reward on some purchases. These constitute around 45% of of memberships, but represent around 73% of worldwide sales according to Galanti. Business and Gold Star members pay $60 per year.
Costco earned around $1 billion in membership fees between July and the end of September.
The company has 847 warehouses worldwide – including 583 in the US and Puerto Rico. Outside the US, Costco has a presence in Canada, Mexico, Japan, the UK, South Korea, Taiwan, Australia, Spain, France, China, Iceland, New Zealand, and Sweden. The company opened 24 locations this year, and hopes to increase that to 30 per year over the next 5-10 years.
“Certainly, we have a lot of activity going on,” he said, adding that the company has tried to keep prices as low as possible as inflation spiked during the year.
“As commodity costs are mostly coming down, whether it’s corn flour, sugar, and butter or even some things like steel, a few things are up. But overall, we’re seeing a little bit of a trend,” he told investors.
In October, competitor Sam’s Club raised its membership fees for the first time in a decade, from $45 to $50 per year for Club members, and from $100 to $110 per year for Plus members.
The major left leaning U.S. news networks have spent only 14 minutes between them covering Elon Musk’s ongoing release of the Twitter files, which have highlighted a policy of censorship based on the partisan political alignment of woke former company executives and employees.
The data drops, which have also revealed that former Twitter execs, were regularly meeting with U.S. intelligence officials and policing content at their behest, have been almost completely ignored by the likes of CNN, NBC, ABC and CBS.
Let’s see which mainstream media outlets cover the “Twitter files”
Fox News reports that Grabian’s analysis of news transcripts shows the term “Twitter files” has only been used six times by anchors.
The report notes that “CNN covered the story for three minutes, only on Dec. 9, while MSNBC spent two minutes on the story the same day, as well as five minutes on Dec. 11 and four minutes on Dec. 12.”
“CBS News, ABC News, and NBC News have not discussed the Twitter files in the last week,” it adds.
MSNBC’s coverage basically consisted of hosts Mehdi Hasan and Joe Scarborough dismissing the bombshell revelations as nothing of any importance.
“Do the Twitter files show evidence of left-wing bias on Twitter?,” Hasan asked rhetorically, answering “No. In fact, the whole Twitter-discriminates-against conservatives-line that Elon or his spin merchants, conservative journalists, like to spout, is literally the opposite of the truth.”
According to the legacy media, despite concrete proof, it’s still a ‘conspiracy theory’ that Twitter was shadow banning and blacklisting accounts of conservatives.
As we highlighted last week, Musk announced that he thinks it is likely that some data that was contained in files on Twitter servers has been hidden and deleted since he vowed to make everything public.
Musk’s comments came in the wake of the ‘exiting’ of James Baker, the FBI affiliated Twitter Deputy General Counsel who was revealed to have vetted the first round of files without Musk’s knowledge, before they were sent to journalist Matt Taibbi.
In the age of mass Silicon Valley censorship It is crucial that we stay in touch. We need you to sign up for our free newsletter here. Support our sponsor – Turbo Force – a supercharged boost of clean energy without the comedown. Also, we urgently need your financial support here.
“Anyone Who Thinks This Is A Pivot Is Wrong”: ECB Doubles Down On Hawkish Signals As it Hikes Into Recession
Here are the top five takeaways from the hawkish ECB policy decision and Lagarde’s even more hawkish press briefing (via BBG).
The ECB opted for a 50 basis-point rate hike, following in the footsteps of the Fed and BOE with a slower pace of tightening
Yet Lagarde and other officials set out to send a more hawkish message, stressing the ECB’s intention to raise rates significantly at a steady pace. “Anyone who thinks the ECB is pivoting is wrong”, she said.
The reason is a significant increase in inflation forecasts, with even core inflation seen above target in 2025.
The euro reversed losses to hit a six-month high versus the dollar; euro-area bonds dropped, German two-year yields surged by 28 basis points. The Euro has since dropped and reversed almost all gains, however.
The ECB also gave an overview of how it expects to begin reducing its balance sheet, saying it will start in March at a “measured and predictable pace” amounting to €15 billion per month on average until the end of the second quarter
After successive hikes of 75 basis points, the ECB lifted the deposit rate more slowly on Thursday, to 2%, as economists expected. But there was little dovishness elsewhere: pledging to push borrowing costs “significantly” higher, officials widened efforts to tame prices with a decision to shrink their €5 trillion ($5.3 trillion) bond portfolio.
“Anybody who thinks that this is a pivot for the ECB is wrong,” Lagarde told a news conference. “We should expect to raise interest rates at a 50 basis-point pace for a period of time.”
“We have more ground to cover, we have longer to go and we are in for a long game,” she said adding that “we will sustain a course, it will not be enough to hit and withdraw, we will sustain the course because we want those levels of inflation to remain at those restrictive levels long enough so that we can be confident that inflation returns to target.”
And speaking of inflation, here is the ECB’s latest forecast.
Similar to the Fed, the ECB raised its inflation projections for the euro zone on Thursday and said price growth would remain above its 2% target throughout a projection horizon that now extends to 2025. Which is funny, because the ECB has persistently underestimated inflation over the past two years, and the bank has raised interest rates at four successive meetings to tame unexpectedly persistent price pressures. So it has gone from overly dovish to overly hawkish, and inflation will tumble long before the 2025 bogey.
In any case, the bank now sees inflation in the 19-country currency bloc at 6.3% next year, compared with expectations for 5.5% made in September. Its 2024 forecast was raised to 3.4% from 2.3% while, in its first estimate for 2025, the ECB sees inflation then at 2.3%. Initially driven by post-COVID supply chain bottlenecks – which the ECB had some control over – inflation has been surging on sky-high energy prices – which the ECB has no control over – but food and services costs are now becoming increasingly prominent, making price growth relatively broad.
Economic growth will meanwhile suffer badly next year as a result of Russia’s war in Ukraine, particularly the impact of high energy prices. The ECB now sees GDP growth at 0.5% next year – the same as the Fed does for the US and hints at a recession next year – compared with 0.9% forecast in September, while in 2024, it is projected at an unchanged 1.9%. In 2025, the ECB sees growth at 1.8%.
Traders added to rate-hike bets, pricing a deposit-rate peak of 3% next year, compared with 2.93% earlier. The Stoxx Europe 600 Index dropped as much as 2.5%, sinking to the lowest level in a month and the most in nearly two months as rates-sensitive sectors like technology and retailers slumped.
Lagarde said financial markets hadn’t adequately accounted for the amount borrowing costs would need to rise to quell inflation.
Earlier:
Expectations of a 50bps hike were pretty much locked in – so no surprise there at all from The ECB’s decision today (to hike 50bps), but the timing of the start of quantitative tightening is what most traders are eyeing with expectations for a ‘grey’ ‘first quarter of 2023’ range being expected (kicking the decision can down the road).
The 50bps follows the Fed, SNB, and Boe decisions in the last 24 hours, and the guidance that interest rates “will still have to rise significantly at a steady pace” sounds pretty hawkish.
Additionally, The ECB to continue to be flexible in its PEPP reinvestment (as needed) and added that QT will begin in March at a “measured, predictable pace”, with the average monthly decline in bonds will amount to 15 billion euros until the end of the second quarter.
🇪🇺 The ECB hikes rates by 50bp as expected, but gives *very* hawkish guidance, based on the “substantial upward revision” to inflation, noting that interest rates will still have to rise “significantly at a steady pace” to reach levels that are sufficiently restrictive. pic.twitter.com/uKT6PYsg85
The ECB raised its inflation expectations and notably it remains above 2.0% targets into 2025…
ECB Sees Inflation at 6.3% in 2023, 3.4% in 2024, 2.3% in 2025
Sees Inflation Ex-Food, Energy at 4.2% in 2023; Prior 3.4%
Sees Inflation Ex-Food, Energy at 2.8% in 2024; Prior 2.3%
Sees Inflation Ex-Food, Energy at 2.4% in 2025
And cut 2023’s GDP forecast (while hiking 2022):
ECB Sees GDP at 3.4% in 2022; Prior Forecast 3.1%
ECB Sees GDP at 0.5% in 2023; Prior Forecast 0.9%
ECB Sees GDP at 1.9% in 2024; Prior Forecast 1.9%
The Euro has fallen on 5 of the last 7 ECB meeting days and while options implied this would be one of the quietest ECB days since April, there was still lots of room for volatility. For now the initial reaction is a small rebound in the Euro…
German 2Y yields spiked on the news…
Watch Lagarde live here (due to start at 0845T):
Full ECB Statement:
Monetary policy decisions
The Governing Council today decided to raise the three key ECB interest rates by 50 basis points and, based on the substantial upward revision to the inflation outlook, expects to raise them further. In particular, the Governing Council judges that interest rates will still have to rise significantly at a steady pace to reach levels that are sufficiently restrictive to ensure a timely return of inflation to the 2% medium-term target. Keeping interest rates at restrictive levels will over time reduce inflation by dampening demand and will also guard against the risk of a persistent upward shift in inflation expectations. The Governing Council’s future policy rate decisions will continue to be data-dependent and follow a meeting-by-meeting approach.
The key ECB interest rates are the Governing Council’s primary tool for setting the monetary policy stance. The Governing Council today also discussed principles for normalising the Eurosystem’s monetary policy securities holdings. From the beginning of March 2023 onwards, the asset purchase programme (APP) portfolio will decline at a measured and predictable pace, as the Eurosystem will not reinvest all of the principal payments from maturing securities. The decline will amount to €15 billion per month on average until the end of the second quarter of 2023 and its subsequent pace will be determined over time.
At its February meeting the Governing Council will announce the detailed parameters for reducing the APP holdings. The Governing Council will regularly reassess the pace of the APP portfolio reduction to ensure it remains consistent with the overall monetary policy strategy and stance, to preserve market functioning, and to maintain firm control over short-term money market conditions. By the end of 2023, the Governing Council will also review its operational framework for steering short-term interest rates, which will provide information regarding the endpoint of the balance sheet normalisation process.
The Governing Council decided to raise interest rates today, and expects to raise them significantly further, because inflation remains far too high and is projected to stay above the target for too long. According to Eurostat’s flash estimate, inflation was 10.0% in November, slightly lower than the 10.6% recorded in October. The decline resulted mainly from lower energy price inflation. Food price inflation and underlying price pressures across the economy have strengthened and will persist for some time. Amid exceptional uncertainty, Eurosystem staff have significantly revised up their inflation projections. They now see average inflation reaching 8.4% in 2022 before decreasing to 6.3% in 2023, with inflation expected to decline markedly over the course of the year. Inflation is then projected to average 3.4% in 2024 and 2.3% in 2025. Inflation excluding energy and food is projected to be 3.9% on average in 2022 and to rise to 4.2% in 2023, before falling to 2.8% in 2024 and 2.4% in 2025.
The euro area economy may contract in the current quarter and the next quarter, owing to the energy crisis, high uncertainty, weakening global economic activity and tighter financing conditions. According to the latest Eurosystem staff projections, a recession would be relatively short-lived and shallow. Growth is nonetheless expected to be subdued next year and has been revised down significantly compared with the previous projections. Beyond the near term, growth is projected to recover as the current headwinds fade. Overall, the Eurosystem staff projections now see the economy growing by 3.4% in 2022, 0.5% in 2023, 1.9% in 2024 and 1.8% in 2025.
Key ECB interest rates
The Governing Council decided to raise the three key ECB interest rates by 50 basis points. Accordingly, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be increased to 2.50%, 2.75% and 2.00% respectively, with effect from 21 December 2022.
Asset purchase programme (APP) and pandemic emergency purchase programme (PEPP)
The Governing Council intends to continue reinvesting, in full, the principal payments from maturing securities purchased under the APP until the end of February 2023. Subsequently, the APP portfolio will decline at a measured and predictable pace, as the Eurosystem will not reinvest all of the principal payments from maturing securities. The decline will amount to €15 billion per month on average until the end of the second quarter of 2023 and its subsequent pace will be determined over time.
As concerns the PEPP, the Governing Council intends to reinvest the principal payments from maturing securities purchased under the programme until at least the end of 2024. In any case, the future roll-off of the PEPP portfolio will be managed to avoid interference with the appropriate monetary policy stance.
The Governing Council will continue applying flexibility in reinvesting redemptions coming due in the PEPP portfolio, with a view to countering risks to the monetary policy transmission mechanism related to the pandemic.
Refinancing operations
As banks are repaying the amounts borrowed under the targeted longer-term refinancing operations, the Governing Council will regularly assess how targeted lending operations are contributing to its monetary policy stance.
The Governing Council stands ready to adjust all of its instruments within its mandate to ensure that inflation returns to its 2% target over the medium term. The Transmission Protection Instrument is available to counter unwarranted, disorderly market dynamics that pose a serious threat to the transmission of monetary policy across all euro area countries, thus allowing the Governing Council to more effectively deliver on its price stability mandate.
US Industrial Production Annual Growth Slowest Since March 2021
After a slew of weak data, US Industrial Production did not do anything to help matters as it fell 0.2% MoM (worse than the 0.0% expected) – its weakest MoM drop since Sept 2021.
Source: Bloomberg
On a YoY basis, the +2.5% growth is the weakest since March 2021.
Manufacturing also tumbled in November, dropping 0.6% MoM – also the worst since Sept 2021…
Source: Bloomberg
Overall capacity utilization dropped further in November to 79.66% – the lowest since Feb 2022…
Source: Bloomberg
Is this what Powell wants to see? Is monetary policy’s long and variable lag finally catching up to the real economy?
During a Congressional hearing on ‘anti-LGBTQ violence,’ a Democratic Representative parroted the same claim as several LGBTQ activists that the terms ‘groomer’ and ‘pedophile’ are discriminatory against sexual preferences and gender identity.
During the hearing before the House Oversight and Reform Committee, California Rep. Katie Porter asserted that the phrase “groomer” is a “lie” used to maliciously discriminate against LGBTQ+ people and make them appear to be a “threat.”
“You know, this allegation of ‘groomer’ and ‘pedophile,’ it is alleging that a person is criminal somehow and engaged in criminal acts merely because of their gender identity, their sexual orientation, their gender identity,” Porter claimed.
The Democrat then complained, with the aid of Human Rights Campaign (HRC) president Kelley Robinson, that Twitter allows the “dangerous” terms to be used.
“This is not just about what happens online. What happens online translates into real harms in people’s lives,” Porter proclaimed.
Rep. Katie Porter (D-CA) says that the terms “groomer and pedophile allege that a person is criminal somehow merely because of their sexual orientation and gender identity” and laments that Twitter allowed groomer “to reach 72 million users.” pic.twitter.com/hi6tuAPm4F
The same argument was made throughout the hearing by a parade of cartoon character activists:
Despite there being zero evidence anti-LGBT hate motivated the Club Q killings, congressional Democrats are nonetheless exploiting the tragedy & using it to call for new restrictions on speech. #TodayInWashingtonhttps://t.co/CnY7rmYI14
The House is currently holding a hearing on “Anti-LGBTQ” violence where a person named Olivia Hunt says “there is a straight line that can be drawn” between laws banning boys from girl’s sports and sex changes for kids “to the acts of violence that have taken far too many lives.” pic.twitter.com/mbb2uhmFFN
Club Q survivor James Slaugh: “Hate rhetoric from politicians, religious leaders & media outlets is at the root of attacks, like at Club Q, & it needs to stop now … Hate starts with speech.” pic.twitter.com/Qeaf5BzJ5o
The same claim was amplified by trans activist Alejandra Caraballo, who earlier this week was exposed as a hypocrite at the hearing by GOP Rep. Nancy Mace for having her own history of tweeting violent rhetoric.
Wrong! People are calling you groomers and pedophiles because you won’t stop sexualizing, indoctrinating and mutilating children.
We’re gay and no one ever calls any of us those things. Stop gaslighting everyone.
Elsewhere during the hearing, another witness opined that parents shouldn’t have any right to know if their children as young as 12 are being put through gender transitions:
When asked about the many cases of de-transitioners who have spoken out about feeling they were forced into sex changes as children, another activist claimed those people don’t even exist:
A witness in the House hearing on “anti-LGBT violence” is asked about de-transitioners:
“I’ve never heard of a case of anyone de-transitioning so I honestly don’t think it’s a real thing.” pic.twitter.com/G2ujamy9AF
The children’s books in question contain graphic depictions of oral sex between gay men, as well as a host of other material that is objectively unsuitable for children.
Earlier this week, GOP Senator Rand Paul raised the issue of doctors carrying out transgender surgeries on children, and the propaganda that has prompted a massive increase in young Americans feeling they do not have the ‘right’ body.
“Who is responsible for telling a four-year-old that we need to talk about their gender and whether they’re in the appropriate body?” Paul asked.
“Who’s talking about giving picture books to six-year-olds with illustrations of surgery to remove their genitalia?” the Senator continued.
“It’s Democrat politicians and wokeleft-wing people,” Paul asserted, further urging “Republicans are not perfect. But Republicans are not pushing your child to have surgery to remove their genitalia as early as elementary school.
In the age of mass Silicon Valley censorship It is crucial that we stay in touch. We need you to sign up for our free newsletter here. Support our sponsor – Turbo Force – a supercharged boost of clean energy without the comedown. Also, we urgently need your financial support here.
Initial Jobless Claims Unexpectedly Tumble To 3 Month Low
Thousands of tech workers laid off every single week as the Silicon Valley ponzi crumbles under the weight of the Fed’s rate hikes? Not according to the Department of Labor, which moments ago reported that in the latest week, initial claims unexpectedly tumbled by 20K to 211K from 231K, the lowest since September 23 and far below the consensus estimate of an increase to 233K; at the same time unadjusted claims dropped from 288K – the highest since January – to 248.9K.
Meanwhile, continuing claims continued their ascent, and in the latest week rose from 1.670MM to 1.671MM…
… which while also missing the exp 1.674MM was the highest print since February.
On a 4-week average basis, initial claims are almost back to unchanged on a Y/Y basis, although it is safe to say that there was a pronounced seasonal component to today’s unexpectedly strong print.
On a state by state basis, there was a big reversal of last week’s surge in claims, with New York seeing a solid 6.9K decline in claims while not a single state posted a more than 418K increase in claims in the latest week.
So just as sliding JOLTS job openings data series and the Household survey both scream labor market slowdown, the Dept of Labor decides to throw in yet another stick in the spokes of the Fed’s induction machinery, and hits pause – if only for another week – on expectations that the job market is heading for a recession. That this is not good news for stocks is obvious: only look at futures sliding since the print to fresh lows is all you need to know.
“I Cannot Speak To This”: White House Won’t Say Whether Biden Will Return Donations From FTX’s Bankman-Fried
With Sam Bankman-Fried now officially in custody for allegedly swindling his investors out of “at least $1.8 billion”, questions have begun to swirl about whether or not campaign donations made by the former FTX CEO would be returned to the company, which is now trying to manage a bankruptcy.
In focus over the last few days has been campaign contributions that SBF made for President Biden’s 2020 campaign.
When asked about whether or not the Biden campaign would return 2020 contributions from Bankman-Fried, “White House press secretary Karine Jean-Pierre wouldn’t say Tuesday whether President Biden” would ask aides to return the cash, the NY Post reported.
Associated Press reporter Zeke Miller asked her: “The president received campaign donations [from Bankman-Fried]. Will the president return that donation? Does he call on all politicians … to return those funds?”
“So look, I’m covered here by the Hatch Act — [I’m] limited on what I can say and anything that’s connected to political contributions from here, I would have to refer you to the DNC,” press secretary Karine Jean-Pierre answered.
Miller followed up, stating: “I’m asking the president’s opinion, though.”
But the press secretary continued to dodge the question, stating: “You asked me two questions: You asked me about will he return donations and then you asked me about his opinion. I’m answering the first part, which is I’m covered by the Hatch Act from here. I’m limited on what I can say. And I just can’t talk to political contributions or anything related to that — I cannot speak to that from here.”
“I just cannot speak to this from here, even his thoughts,” she continued. “Even his opinion, even his thoughts about the contributions, donations, I cannot speak about that from here.”
Bankman-Fried is now well known to be one of the Democratic party’s largest donors, and the Post reports that he even had the chance to meet with Biden’s White House advisers prior to the collapse of his firm.
As Fox News notes, SBF sent $262,200 to Republicans throughout the 2021-2022 election cycle – a figure that pales compared to the $40 million he contributed to Democratic campaigns.
US Retail Sales Tumble In November As California ‘Anti-Inflation’ Stimmies End
US Retail sales notably disappointed in November, just as BofA expected…
Against expectations of a 0.2% MoM drop, US retail sales tumbled 0.6% MoM – the weakest since last December…
Source: Bloomberg
On a YoY basis, this is the weakest since Dec 2020.
Core retail sales dropped 0.2% MoM (notably worse than the +0.2% MoM expected).
Finally, the control group – which flows through to GDP -saw retail sales decline 0.2% MoM (against expectations of a 0.1% rise).
Nine of 13 retail categories fell last month, according to the report, including electronics, furniture and building materials stores. Vehicle sales also declined, due in part to a drop in the prices of used cars and trucks. The value of sales at gasoline stations were down 0.1% as pump prices fell.
Sales at restaurants and bars – the only service-sector category in the report – rose 0.9% in November, the fourth-straight increase.
What’s behind the retail sales miss?
The unwind of California’s one-time “anti-inflation” stimmy check
Credit card spending in October was boosted by the additional round of Prime Day and related promotions, as well as one-off stimulus payments in California (CA).
The disproportionate weakness in total online retail spending and total card spending in CA suggests that there was negative payback in November for the October distortions.
Erdogan Rival Handed Nearly 3-Years In Prison For “Insulting” Election Authority
To the surprise of no one… given the now years-long crackdown on all media including internet and social apps by President Recep Tayyip Erdogan and his Islamist-leaning Justice and Development Party, a main political rival of Erdogan has just been issued a stiff prison sentence by a Turkish court for mere political speech.
On Wednesday Istanbul Mayor Ekrem Imamoglu was sentenced to 2 years 7 months and 15 days in prison by a Turkish court for “insulting the election authority,” according to national media.
Specifically Imamoglu was accused of unlawful speech directed against Turkey’s Supreme Electoral Council, which the mayor has denied, instead saying it’s part of a political purge backed by Erdogan loyalists.
“They have stopped fighting honestly and bravely. They are resorting to all kinds of tricks to protect their order,” he told protesters who gathered in the capital in support of his innocence. “This decision is proof that the rulers of this country have no aim to bring justice and democracy to the country,” he also said.
According to the government allegation cited in the Associated Press:
The mayor denied insulting members of the electoral council, insisting his words were a response to Interior Minister Suleyman Soylu calling him “a fool” and accusing Imamoglu of criticizing Turkey during a visit to the European Parliament.
“The will of 16 million Istanbulites is on trial,” the mayor’s office said in a firm statement just before Imamoglu’s sentencing. “They are seeking to deprive the mayor of Istanbul of his political rights.”
The supposed initial “insult” that Imamoglu is “guilty” of came after Erdogan’s AK Party successfully achieved a new election after Imamoglu won a March 2019 upset for Istanbul mayor (he won the ‘do-over’ election too). It was considered a huge, historic defeat of the AK Party. And then, as AP recounts:
Imamoglu was charged with insulting senior public officials after he described canceling legitimate elections as an act of “foolishness” on Nov. 4, 2019.
Erdogan has become a political superstar when he was slapped with 6 months jail sentence and a political ban two decades ago.
İmamoğlu has already faced one election cancellation which made him a hero. Now a possible political ban?
For this reason the obvious heavy-handed politically motivated prosecution is expected to result in fierce backlash from Imamoglu’s supporters and other opposition groups, possibly resulting in large-scale protests and unrest. Erdogan and his political network have have spent years stacking the judiciary with loyalists, who have in turned worked to stamp out dissent, even in the areas of political speech – as has been made clear with Imamoglu’s nearly 3-year prison sentence.
What’s more is that the court “imposed a political ban that could lead to his removal from office,” according to the AP, ahead of the upcoming June 2023 presidential election.
In the meantime countless journalists as well as Kurdish and Armenian activists have also languished in Turkish prisons, given over the past decade mere speech-related “crimes” have been relentlessly clamped down on.
