Archive - Mar 21, 2013 - Story

"Markets believe that we will find a solution and that we will provide more money and this might not be the case."

It would appear that physical assets trump digital assets this morning in Europe as Silver has just spiked over 1% (and Gold back over $1615) as Bitcoins plunge on heavy volume... Did the Europeans run out of Bitcoins?

With record numbers of people out of the labor force, and hundreds of thousands falling off each month, it is no surprise that the grind lower in initial claims continues - after all there is only so long one can request insurance benefits, now that extended claims are limited. In the week ended March 16, initial claims rose from an upward revised 334K (was 332K and merely the latest in an infinite series of prior upward revisions) to 336K, just below the expected 340K, even as NSA claims declined more to 299K. It would not be surprising that with the current of labor force exodus we get a 100K-handle unadjusted print soon as the pool of eligible workers who collect benefits shrinks to record levels. A tad defensive BLS was quick to note that unlike prior weeks, no states number were estimated. Continuing claims rose also, from an upward revised 3048K to 3053K, above the expected 3050K. Overall a snoozer of a report. The biggest surprise, however, was in the emergency extended benefits, which has continued it abnormally erratic weekly pattern, with this time 136K people falling off, following last week's weekly surge. A tiny 1.8 million Americans are now on extended claims, nearly 1.1 million below the 2.9 million last year. Curious who the people applying for SS disability are? Now you know.

Until this past weekend, the scariest, and thus most important, chart relating to Europe, was that of European youth unemployment. And while its updates month after month showed a situation hopeless and constantly getting worse, the final outcome is quite clear: it is not a pleasant one especially for Europe's youth. However, now that the topic of bank confidence, particularly in the context of unwarranted and unprecedented deposit confiscation is suddenly front and center across the entire Eurozone, here is the new "scariest" European chart: that of deposits around the European periphery. We know one thing: if and when the Cypriot banking system reopens, the dark gray line for Cyprus is going straight down. The real question is: which other lines will follow Cyprus in its dramatic reintroduction to monetary gravity?

As reported yesterday, Cyprus banks are now expected to reopen next Tuesday. We would boldly go ahead and take the under following overnight news that the ECB has once more escalated its political interventions (remember the lies about "apolitical, independent" Central Banks - good times...), and following a Reuters report yesterday that the ECB is prepared to let Cyprus go, the FT now has doubled down on the propaganda, reporting (in an article with no less than five authors) that the ECB has issued an ultimatum to Cyprus to agree to a bailout by Monday (which is a holiday), or the free liquidity ends. "The European Central Bank raised the stakes in the Cyprus crisis on Thursday, telling Nicosia it had until Monday to agree a bailout with the EU and International Monetary Fund or it would cut off emergency liquidity provision to the country’s banks. The hardline stance from the ECB sets a clear deadline for Cyprus to agree to a plan after its parliament rejected a bailout negotiated at the weekend that would have taxed the deposits of account holders in the country’s banks." Which means yet another weekend of ad hoc choices and spontaneous decisions awaits, only this time with a key non-Euro actor involved in the face of Russia, whose interest just in case there is any confusion, is to see Cyprus crushed, so it can swoop in later and "acquire" the assets on the cheap, or preferably free, while the local population welcome the second coming of the glorious Red Army with open arms, delighted to be free of European slavery. Well played Putin.

• Euro zone call notes reveal extent of alarm over Cyprus (Reuters)
• Stagnant Japan Rolls Dice on New Era of Easy Money (WSJ)
• Cyprus, European data batters shares and euro (Reuters)
• UK cuts taxes to revive stagnant economy (FT)
• "Quality Control" Rat Body Linked to Blackout at Fukushima (NYT)
• North Korea issues fresh threat to U.S., South probes hacking (Reuters)
• South Korea Says Chinese Code Used in Computer Attack (BBG)
• Osborne paves way for Carney to retool Bank of England (Reuters)
• Carney Gets ‘Escape Velocity’ Mandate With Limiter (BBG)
• Osborne Pledges Five More Years of U.K. Austerity (BBG)
• Bernanke Saying He’s Dispensable Suggests Tenure Ending (BBG)
• Senate Passes Bill to Fund Operations (WSJ)

Those wondering why the overnight ramp has not yet materialized despite promises from BOJ's new governor Kuroda to openly-endedly monetize Fukushima radiation if necessary in order to reflate the economy, will have to look at Europe where a raft of horrifying PMIs confirms what most have known: the relapse into a multi-dip European recession is progressing nicely, and the hoped for rebound in the core economies of France and Germany is once again on track to not happen, but at least there will be Cyprus to blame it all on this time. The specific reason this time was French and German Flash Manufacturing and Services PMI for March, all of which came far below expectations: German Mfg PMIs printed at a contracting 48.9 vs Exp. 50.5 (back from 50.3), while Services came at 51.6, down from 54.6 on expectations of a rise to 55.0, while French Mfg PMI stayed stubbornly flat at 43.9, despite hopes of a "bounce" to 44.3, even as the Service number ticked even lower from 43.7 to 41.9, below expectations of 44.3 and the lowest since February 2009. End result: Eurozone March Services PMI down from 47.9 to 46.5, vs Exp. of 48.2, while Manufacturing slid from 47.9 to 46.6 on hopes and prayers of a bounce to 48.2. Which then takes us back to Cyprus, where things are not fixed yet, where the parliament is not expected to vote for a revised Bailout proposal yet, and where we got a cornucopia of brilliant one liners, such as these from the new Eurogroup head, who is filling in the shoes of his predecessor Juncker in style, and proving quite well that "things are serious."