Remember when the biggest controversy about the eurozone was whether Turkey would become the next full-fledged member? Now the eurozone has much bigger problems as it deals with Greek and Italian sovereign debt -- not to mention worries about whether it can continue to exist as a united entity.

 

And Turkey? Well, Turkey has become a force to deal with in its own right.

 

This week was important for Turks as they marked the 73rd anniversary of the death of the founder of their nation, Mustafa Kemal Ataturk. He fought for Turkey's independence after the fall of the Ottoman Empire and became its first president in 1923. Prime Minister Recep Tayyip Erdogan laid a wreath at his mausoleum to mark the anniversary of his death on November 10 -- and when the prime minister was done, he likely got back to talking tough to neighboring nations.

 

Here's how our Asian-Pacific analyst, Mark Galasiewski, explained Turkey's new-found toughness in the October issue of EWI's monthly Asian-Pacific Financial Forecast (bold added for emphasis):

 

Turkey's new boldness first surfaced last year when a flotilla of Turkish ships sailed off Gaza to protest the Israeli-Egyptian blockade of the Palestinian territory. The flotilla ended up clashing with Israeli commandos, leaving nine Turkish protesters dead. In response, the nation's Prime Minister, Recep Erdogan, called Israel's actions 'state terrorism' and a 'bloody massacre' and called for Israel to be punished.(Washington Post) Overnight, the popularity of Turkey and its leader surged throughout the Muslim world.

 

The nation went on the offensive in September when Erdogan angrily announced that Turkey would increase its surveillance of the eastern Mediterranean and impose diplomatic and military sanctions on Israel since it had refused to apologize for the flotilla incident. He then toured the Arab Spring nations of Tunisia, Egypt and Libya and threatened Cyprus with a military response after that nation decided to proceed with mineral exploration in a disputed maritime territory. Then, in late September, Erdogan unveiled Turkey's first domestically produced warship, saying that the nation had 'taken its place among 10 countries that can design and construct warships.' (Ynet news)

 

Why the sudden swagger? The wave patterns in the ISE National 100 explain a lot. The long-term pattern in the ISE 100 shows that the social mood in Turkey is approaching the end of a multidecade impulsive advance. Historically, that's the stage when major powers tend to make mistakes of over-confidence. For example, the United States sank into the quagmire of Vietnam near the end of the 1942-1966 Cycle Wave III bull market. Since the end of the 1974-2000 bull market, it has been engaged in another era of costly military adventurism....

 

Soon after EWI published this forecast, Turkey asserted itself again when Kurdish militants attacked and killed more than 20 Turkish soldiers near the Iraq border. Turkey immediately sent troops into northern Iraq in hot pursuit. Said Erdogan: "We will combat terror on one front and, on another front, we will continue our path to destroy the grounds that terror manipulates."

 

So, exactly why is Turkey both talking and acting tough now? Galasiewski shows how the wave pattern on the long-term chart of the Istanbul Stock Exchange Nation 100 explains it all. He also goes on to explain what may come of Turkey's saber-rattling.

 

EWI can offer this different kind of forecasting because its analysts look not only at price charts but also at the social mood that those charts reflect.