Emerging markets breathed a collective sigh of relief last week as U.S. non-farm payrolls came in at just the right level. The data which reflects the state of the U.S. economy is closely watched to predict if and when the Federal Reserve (Fed) will raise interest rates. Too many jobs added means the economy may be overheating, warranting a potential rate hike. Too few jobs added and the Fed would fear another imminent economic crisis in this era of never ending crises. Apparently 151,000 jobs is not good enough to start discussing cooling off the economy and is also not enough to warrant a mode of panic. Fed officials pointed to a delay in any rate hike at the September meeting with Wall Street predicting the earliest rate increase at the last meeting of the year at the earliest. And it was this prediction, no rate hikes, that allowed emerging market equity markets as well currency markets to rally. So with the earliest rate hike coming a full year after the first hike in a decade, the Fed last raised rates in December 2015 after 10 years of cuts and stability at near zero levels, policy makers have a few months of breathing room to plan for the future. Turkey will certainly benefit from these developments as a stable Turkish lira is a prerequisite for the government to continue implementing further market liberalization steps. The private sectors of emerging markets, including Turkey's, will also invest funds waiting on the sidelines as uncertainty as to the fate of the currency has abated in the near-term.

Another important metric for Turkey's economy is that of political stability in its largest trading partner, Europe. As Italian policy makers met last week in the Lake Como region to discuss their banking sector, Germany reeled from news of a political shift, at least at the state level, and questions rose as to the future of that country's leadership. As Brexit continues to unnerve European economists and rising unemployment in France worries European Central Bank officials, it seems no major EU country is without a mini-crisis de jure.

Chancellor Angela Merkel's Christian Democrats placed third in her home state of Mecklenburg Western-Pomerania Sunday, leaving her party the weakest in that state's legislative elections during her tenure as chancellor. Despite being the poorest state in the Republic, xenophobia was the main issue at hand, not the economy, as anti-immigrant "populism" led to the second place newcomer "Alternative for Germany" or AfD party, to best the Christian Democrats. Both parties fell short of unseating the Social Democrats, who retained a plurality despite losing nearly five percentage points of support to the AfD. The AfD ended up weakening all other parties, as all lost support relative to their 2011 showing. Merkel's new pro-asylum policy adopted last year was seemingly up for its first referendum on Sunday and if her home state is any indication of public support for Merkel, she may soon find her own position in danger during next year's election.

The death of Islam Karimov, infamous dictator of Uzbekistan was met with mixed emotions last week, as his potential successors vie for Russian support in ascending to what is essentially a throne in Central Asia's most populous country. Long an elusive dream of Turkish leaders hoping to unite Turkic Asian countries in some sort of economic union, Uzbekistan appears not to be headed for any such union, but will probably move closer to Russia as lame duck President Obama has no interest in gambling with closer ties to a new leader in that country. Ethnic strife between China as well as neighboring countries, gives Uzbekistan and its new leader, whoever that ends up being, little choice but to curry favor with the only game in town, Moscow. While an economic union would be great for the interests of all countries involved, persistent corruption and strongman rule in Central Asian countries has made "development" all but impossible.The war in Afghanistan was a blessing for Karimov as well as other central Asian dictators as their support was critical to supplying U.S. forces there. Aware of their sudden importance, these same dictators had little incentive to improve their human rights records and Karimov led the list of brutal dictators unwilling to reform his post-Soviet fiefdom granted him by no less than Mikhail Gorbachev himself. A bold initiative by Turkey would be in the best interest of both countries as well as the United States and NATO allies but it appears this opportunity will be passed up, as the Russians have made the first move with the dispatch of Russian Prime Minister Dimitry Medvedev to the state funeral. It seems Uzbekistan will soon rejoin Moscow in the neo-Soviet Union.