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Dollar Firm, Anxiety Still Running High
The US dollar continues to sport a firm profile, but largely within the ranges seen yesterday. The notable exception is its performance against the yen, where it rose to JPY95.75 in Tokyo, extending yesterday's recovery off the shock JPY93.60 area low yesterday. Asian equities mostly traded firmer and the MSCI Asia-Pacific Index gained about 0.3%.
India equities tumbled about 1.5%, the most in three weeks. Although the central bank's 25 bp rate cut to 7.5% would have been expected to support the market, comments from the central bank indicating little support for additional easing, and more importantly, a key government ally pulled out of the coalition, leaving the Singh administration without a majority.
European equities are broadly lower, with the Dow Jones Stoxx 600 off around 0.5% near midday in London, though here too, yesterday's ranges remain intact. Core European bonds are firmer, while peripheral bonds are softer. We note that the US-German 2-year interest rate differential continues to move in a dollar-supportive direction. At 23 bp today it is the largest US premium since the start of the year. The gap created by yesterday's sharply lower opening in the euro is found between yesterday's high ($1.2970) and last Friday's low ($1.3000). This area is important technically, and all the more so given that it appears on the weekly charts.
In contrast, we note the US-Japanese 10-year spread, at 133 bp is near its 10-day low. This would seem to have a more negative dollar factor than is reflected in prices. The dollar filled its gap and more against the yen. It surpassed retracement levels seen from the March 12 high near JPY96.70. We now peg support for the greenback near JPY95.00.
Cyprus developments remain front and center today. The situation remains very fluid, to say the least. It is not clear if there will be a vote today, which has previously been indicated for noon (EDT, 16:00 GMT). The newly elected Cypriot President seemed to have been among the strongest advocates of taxing small depositors has been forced to reconsider. Germany and other European countries have been quick to claim that they had not wanted to tax small depositors. The Cypriot government and parliament are searching for alternatives to raise 5.8 bln euros. The problem is that there are not many other places to turn in Cyprus and a narrower base for the wealth tax will require much higher taxes on the more limited number of larger deposits.
Many, including the French Fiance Minister are claiming some taboo has been broken. Others claim a Rubicon has been crossed. We are less sanguine,. First, the generic category of wealth tax in contrast to income and sales tax is not uncommon in Europe. Second, a tax on deposits is also not unprecedented. For example, recall that in July 1992, Italy's government under Prime Minister Amato took 0.6% of all bank deposits (imposed a 0.3% tax on all real estate). It is not the amount of the tax or the moral justification that is the issue, but the principle and precedent. Third, throughout this crisis, the burden of the adjustment has fallen on those who are generally less well off. . Minimum wages have been cut. Health care benefits have been cut. Pensions have been cut. All for the sake of keeping some investors whole.
Each aid package has been tailored to the uniqueness of each country. The role as an offshore tax haven is the unique feature in Cyrpus. This means that the banks rely almost solely on deposits, rather than funding in the wholesale market or by issuing bonds. There are not many other places to turn to raise the 5.8 bln euros that the Troika is insisting upon, which as they say is why Willie Sutton robbed banks in the first place.
We do not see the developments in Cyprus (any more than the developments in 1992 developments in Italy did) portending a massive wealth grab by European countries. It is not a test case or the beginning of some process. However, it does seem to signal a greater willingness of the officials to seek a broader involvement in assistance programs, perhaps emboldened by the ECB's OMT and extra time to reach fiscal targets by the EU, with a greater focus on the structural balances.
Otherwise, there are four economic developments to note. First the RBA minutes were much like last time. The easing cycle may not be over, but the RBA shows no urgency to resume cutting rates. No one was expecting a cut in April, but even a cut in the May-June period is being pushed out.
Second, the UK consumer inflation was in line with expectations (0.7%/2.8%), though producer prices rose more the expected (input 3.2%/2.5%) warning of potential squeeze on margins. The budget presentation tomorrow is anxiously awaited.
Third, the German ZEW survey should improvement especially in the assessment of the current situation (13.6 from 5.2). The euro responded positively to the headline (~$1.2960), but just as quickly returned to where it was before.
Fourth, in Italy Berlusconi has provided a path toward a new even if limited government by offering to support the PD's Bersani as prime minister in exchange for a PDL candidate becoming president. The President in Italy is largely ceremonial but can appoint life time Senators (like Monti) and has an important role facilitating elections and new governments. Separately, the EC indicated a willingness to allow Italy to borrow more to repay debts, especially to small and medium sized businesses, many on the verge of bankruptcy due to the uncollected funds from the government. The EC comments suggest these new borrowings would be not counted against its fiscal targets. Estimates of the governments arrears range between 50 and 80 bln euros.
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Can't agree with you, Marc, here -- "We do not see the developments in Cyprus (any more than the developments in 1992 developments in Italy did) portending a massive wealth grab by European countries. It is not a test case or the beginning of some process."
Nope.
The US isn't going to default because we have a fiat currency. I wouldn't even start to worry until we hear of massive FED printing/monetization (maybe $85 billion a month or so). Until then, we should be good.
Yeah, nothing to see here. And it couldn't possibly be tried in any other EU country or in the USA because marc-to-naive says so....Yay!
Dollar firm? You can paint a turd any color you want but at the end of the day, it's still a turd. PERIOD!
Ok Forex Kong has now and just "officially" gone LONG JPY so - this as I understand usually suggests safe haven type money flows and is generally suggestive of "risk off" type behavior.
Ill need to look again - but JPY sure does look as if it's turning upward.
This is an open shot at Russia, to insure the war's opening in or around Syria....just a humble opinion and heartfelt reaction. Very similar to my heartfelt first reaction to the WTC attacks as having Mossad fingerprints. The 3 choices for individuals; fight, flight or submit. One deadly, one very difficult and one a slow devouring of dignity. Phew!!! I loved the commentors link to Jim Sinclair's historical connection to Jesse Livermore. That was a fresh new light for my day.
"However, it does seem to signal a greater willingness of the officials to seek a broader involvement in assistance programs..."
Whatever your intentions, or your true views, Marc, do you not see how that reads? You should be considered a serious candidate to be hired to write marketing copy for the TBTF banks on the sole basis of that line.
Seek broader involvement? Really? Like John Corzine sought broader involvement in extricating his company from an uncomfortably tight spot not so long ago?
For cryin' out loud...
Well you have to admit it sounds more erudite than saying "They're sodomising Cypriot savers to preserve the Euro Ponzi.."
Why shouldn't Joe Shoeseller be taxed to keep Bob Bankster from missing a caviar delivery.
Joe can't hurt the Euro Dream but Bob can blow it up if Joe doesn't do his part.
Joe is collateral damage. Sorry, but them's the breaks in the (que music)
THE EURO ZONE.*
*coming to your neighborhood soon.
Tinky, why must my intentions enter into the analysis. I say that rather than the confiscation of deposits being a prelude to a generalized run on European banks--which has not in fact happened in peripheral countries as some here suggested, I am saying that in future aid packages a broader range of stake holders will be bailed in. I see no problem with that assessment. I am not saying what I want to happen. I am saying what will happen. For crying out loud, where is your analysis? I project what I think will happen and you think that telling me what my job should be is adding a iota of value?
Marc, you are being remarkable obtuse. If you can't see how your use of language is important, even when it is highlighted as in this case, then you must have a rather large blind-spot.
My analysis is that anyone who uses a euphemism such as the one that you used (and I highlighted) above is, either consciously or unconsciously, defending the status quo, and has little (if any) concern for the average depositor whose savings will be stolen through such "broader involvement".
The point, which you apparently find to be elusive, is that the very people whose savings will be used in an effort to support a corrupt and failed banking system have not been, nor will they be asked whether they would like to be involved!
Criminals don't "seek broader involvement" from their victims – they simply take.
Finally, claiming that I was attempting to tell you what your job is an absurd straw man.
To the contrary Tinky I said exactly what I mean. You are searching for motivations. Besides teling that I am wrong, you don't really present an argument. I say the the poor, weak, unorganized have been consistently getting the short end of the stick no just in Cyprus but elsewhere. I have argued that the innocent have gotten punished more than the guilty. What you have a blind spot about is that the new democratically elected president of Cyprus agreed to hitting small depositors. This was not foisted on Cyprus. What was forced on Cyprus was a bill for 5.8 bln euros from the EU, IMF and the ECB. How exactly is was going to deliver the pound of flesh being demanded was and is in Cyprus' hands. Isn't that what the eurogroup reaffirmed yesterday? I fully agree the Cyprus banking system is corrupt--isn't that what a tax haven is about--and only thing worse that coming up with 5.8 bln euros is the failure to do so. Yes, if Cyprus leaves the euro area, as I wrote back in January could happen, it would, I believe be even worse for the domestic savers you say you are looking out for and I am ignoring or riding roughshod over. I do not recognize taxation as theft. I do not see the freely elected Cypriot government as criminals. You say an elected government are criminals, yet you don't provide evne one shred of evidence for that. You think analogies are arguments and that ad hominem attacks are rhetorical devices. They ain't, buddy.
So far outside of bond holders in Greece, I do not see a very broad sharing of the pain, which I think has been largely limited to working people (I would use class but then I am accused of being a marxist, as if marx had a monopoly on the concept), not to investors. My point in talking about broader involvement in future aid programs, more investors (this is broader participation) will be hit. I did not make a normative claim about it. I am anticipating it.
That people's savings will be used who have not been asked is a dog bites man story to me because this happens all the time under the modern political economy. Did people offer to have their minimum wage cut or pensions cut in Greece ? Portugal ? Ireland? No. No and no.
It is you, Tinky being obtuse.
I see that the answer, in this case, is "unconscious". Thanks for the clarification.
I don't think they want to mess with the Russians. People need to read Jim Sinclairs blog on Cyprus here:
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/3/19_Sinclair_-_Cyprus_Disaster_Is_Much_Bigger_Than_Being_Reported.html
European market indexes are back in the black. More prosperity on the horizon.
Ben and Barry are spending like drunken sailors to keep this house of cards up.
Krugman must be proud. More efficient keynesian activies, right Krugman?
FFS try reading Keynes and STOP equating him with the idiot Krugman.
OMG are you brainwashed ... probably also about "socialists" and "liberals". Probably also "moslems" and any other bogeyman your gubbermint and MSM have pounded into your brain since McCarthy was let loose on dumbing down Usans after WW2.
Maybe you still even believe that Osama bin Laden organized 9/11?
I despair - especially in ZH - when I read such ignorant comments as yours.
You dispose me to the common view - around the rest of the world - that Usans are generally ignorant and stupid, brash, arrogant, xenophobic, paranoid and irrational, if not quite as sociopathic/psychopathic as the presidents you serially elect since at least Ronnie Raygun. (JFK is a distant memory that few of you query the death of ... let alone 9/11 which your gubbermint clearly was at least complicit in, but Osama bin Laden NOT AT ALL.
OK I'll run it by you that Keynes has nothing to do with the current economic mess - try Milton Freidman instead.
Osama bin Laden had nothing to do with 9/11 - try Dick Cheney, Mossad and the PNAC instead.
But have you got the fortitude to realize that you have been lied to for all of your life, including about Keynes, who never advocated the shallow crap that Krugman does.
"We do not see the developments in Cyprus (any more than the developments in 1992 developments in Italy did) portending a massive wealth grab by European countries. It is not a test case or the beginning of some process."
You sir are either an idiot, or you have too much vested interest in seeing the status quo remain intact and hence bucu cognitive bias. I doubt you are an idiot.
Agreed.
I tend towards the idiotic assessment, because it is hardly likely that he is a member on the board as such as the Fed, IMF, BIS, etc., so is just guessing, like the rest of us, and has no vested interest beyond ego.
OK I'll let my ego rip with the informed guess that we are in "end game times" of the Washington Empire and Industrial Civilization generally, e.g. because of diminishing resources of every kind and, therefore, the impossiblity of endless exponential growth ... though with their compounding interest system (at least for the plebs, but zero interest for theyselves) the banksters can only survive if there could be exponential growth on our finite planet.
And that is why these parasites on Wall Str have invented financial instruments which FAR exceed, by trillions of dollars, the real economy of the world.
Seems that the author of this piece does not have a clue, unless he is a secret member of the Rothschilds family and privy to their centuries-old manipulations of their financial/banking system, which is now approaching total dominance globally ... no secret, just Google and learn about the Rothschilds and other bankster dynasties, which are now in the process of confiscating all national assets AND monies in personal bank accounts.
Marc does not understand boris.
another white shoe boy...
just because there is a disgreement does not mean that one does not understand. Poor angry WERID one--western educated industrialized rich democratic-- is misunderstood. Keeping telling yourself that. If one does not agree with you, they obviously misunderstand. Others in this space blamed what I do to support myself and my family. Others have blamed who my grandparents worshipped.
There is no misunderstanding here. I hold the elite in Cyprus including the new president responsible for the tax on small depositors, not simply the elite in Brussels or Berlin. In these pages I suggested there will not be a general bank run and thus far there hasn't. I said this because there is a precent for wealth taxes, and as my example of Italy shows, a similar confiscation was done previously.
It isn't a tax!!!
It is confiscation of savings which is THEFT, also know as (a.k.a.) STEALING!!!!
Can the working poor and average folk of Cyprus get their money today? NO!!!
The banks are closed until Thursday!!!
I am so tired of reading this in every news article and on every blog. All of a sudden, once it hits my savings account it somehow becomes my money. No. It was my money when I earned it. It just so happens that normally the government taxes it before it goes into my bank account. I do not understand how just because it is sitting in a bank account, it is more someone's money than before it made it there electronically?
When you withhold my taxes from payroll you are taking my money. When you tax my bank account, you are taking my money. If you didn't tax either there would be more in my savings account. Am I missing something here...
You know before you get your first paycheck that you will pay at least 15% income tax. It is established, known, before you earn the money.
Once you pay your tribute to the kleptoligarchy, what is left is yours.
When a cabal of bankers and politicians on a Saturday decree that 6.7%-9.9% of your savings will be stolen and that the banks will be closed until Thursday and you can't even get to the rest of your money that they aren't stealing - yes - it is different.
You have been in the Matrix far too long.
If you don't think so send me 6.7% of your savings and you are welcome to your equivocation.
marc please leave your money in the banks..of course it is hard to have a run on banks that are closed..the seed has been planted in the public mind across the globe..that banks and .govs are crooks this cyprus crime just adds to that ..let it marinate some the public is slow to act but like any craze, (tulips for all) it will and it will be impressive..
Bank of Brussels, I appreciate your close reading of my analysis. I think the evidence shows that 1) the Troika is not a homongenous entity--I do not say they are innocent of guile or malice. In fact, I tried to provide analysis not moral indignation-- and 2) at least Germany and the IMF were wiling to have a weath tax on large depositors but its was Cyrpus President, recently elected that wanted to broaded the tax base.
I see Cyrpus has its own political class and do not recognize the signficance of the difference between what it is doing and what Italy did in principle. Nor do I agree with your claim that this is the end of the moral authority of the EU. I would argue that the EU's power does not now nor before the Cyrpus crisis rest on its moral authority. It is a political entity in a capitalist system, for Pete's sake. It defends the interests of the capitalist class. Throughout this crisis the poor and innocent have been more than the guilty. Perhaps, the problem is that I see the capitalist class more consistently ruthless than you and domesitc working people's interests have been repeatedly trampled on for the sake of often foreign creditors. I take this for granted and still want to provide analysis of the unfolding of the crisis and policy reponse. Just because I am not constantly claiming conspiracy theories or that the US is root the all that is wrong in the world, or that the Federal Reserve forcing investors to change their portfolio mix is financial repression does not mean I endorse the status quo. That, my friend, is what you seem to fail to understand.
"2) at least Germany and the IMF were wiling to have a weath(sp) tax on large depositors..."
You left out, "to save their own political agenda and personal interests along with the interests of their equally wealthy friends who own the bonds."
That's where is all fails. And it answers the question, "Who decides?" Well, for the Cypriots, the deciders are unelected bureaucrats in the EU and and IMF. You fail when you pretend that they are the capitalist class and give capitalism a bad name.
My read was not that Anastasiades " wanted to broaden the tax base" but that he wanted a 10% or less wealth tax imposed on the large ($100,000 eu or more) depositors.
The implication was that he wanted the EU to "eat" the difference, knowing full well a tax on the smaller depositors would not pass Parliament.
I would not call a depsitor of 100,000EU,wealthy by any means.
Maybe 500kEU+ should be the starting point if their MUST be one.
10% to a depositor w/only 100k EU, is a huge deduction(much less those under the 100K), compared to someone w/ 500k EU +.
Either way it's still outright THEFT.
Monies already taxed, and thern re-taxed is still theft I do not care WHO is calling the shots.
Confiscating a % of a depositor's savings is THEFT, not a "tax".
I really cannot believe the equivocation and sophistry I hear!!!
The EMU and the IMF expropriating 6.7%-9.9% of depositor's SAVINGS (not income) is THEFT, it is STEALING.
Please do not insult anyone's intelligence by applying any euphemistic equivocations such as "tax" or "stability levy" or other such NONSENSE.
"It is a political entity in a capitalist system, for Pete's sake. It defends the interests of the capitalist class."
"...Paging Dr. Hegel...Paging Dr. Hegel..."
Into the Trash Can with this one. Moar Leftist Cant, moar Class Analysis. How many more millions have to be mixed in with the dirt before this nonsense stops? Do we have to bring back East Germany as Exhibit "A"? The Eurocrats show themselves as defenders of their "Leading Role of the Proles" as effectively as the Communists, with about the same results.
No one discusses the reduction of the State Apparatus.
Disgusting.
CW
Charles Wilson, attacks me for being Hegelian one hand, and a Leftist on the other hand. If I don't accept some kind of anarachistic libertarian position, I am worthless. Isn't that the kind of small mindedness and totalitarian thinking that is common for the State Apparatus? Yes we must all think the same way or we are worthless.
Stupendous misunderstanding!!!
Are you serious here? Tell us what "Capitalist Class" means? "Defending the Capitalist Class".
Let's all hold hands and sing the Internationale!
I can't help it if you don't analyse your hidden assumptions, unseen by you.
Who says you are "worthless"? I don't. I don't care one Bit(coin) about whether you adopt a "Libertarian" position or not. I am asserting that if you see the world through "Class Analysis Eyes" that you will PROBABLY go awry in your thinking eventually.
"If Truth is Class Based, there is no Truth".
If further proof was needed, look at your own statements:
"Isn't that the kind of small mindedness and totalitarian thinking that is common for the State Apparatus?"
No and No. YOUR thinking makes the "Not a dimes worth of difference between the Brief Case Totin' Bureaucrats" argument. I'm asserting that there is an alternative to Statism. Don't replace the Statist Rulers with different Statist Rulers who identify themselves with a different Class, a New! Improved! Authentic! Class.
Lookit: In this Epoch, Hegel won. "Das Noumena ist Kaput!" Sorry Immanuel Kant (but not too sorry...). Sorry about Say's Law being Tramped Jude Wanniski. Better luck next time. Better luck next election.
If there is a next time. If there is a next election.
CW
sorry, i thought when you said that my analysis was for the trash bin you we saying it was worhtless. I think there is a ruling class and as society is organized along capitalist lines I can use the short hand of "capitalist class" without having to apologize for all of Hegel or Marx's work. The alternative to statism you advovcate leads us back to Hobbes. Teh anarchy you propose benefits those who are the haves now and well organized after exploiting others for so long. Is it shcoking that the so-called libertarian agenda is supported mostly by White Male WERIDos (Western Educated Rich, Industrialized and Developed). Do go preachy here about my class analysis as you defend your class interests.
sorry, i thought when you said that my analysis was for the trash bin you we saying it was worhtless. I think there is a ruling class and as society is organized along capitalist lines I can use the short hand of "capitalist class" without having to apologize for all of Hegel or Marx's work. The alternative to statism you advovcate leads us back to Hobbes. Teh anarchy you propose benefits those who are the haves now and well organized after exploiting others for so long. Is it shcoking that the so-called libertarian agenda is supported mostly by White Male WERIDos (Western Educated Rich, Industrialized and Developed). Do go preachy here about my class analysis as you defend your class interests.
Well put sir. I'll only add that any "class" argument is much like the left/right argument or the, "that person is compensated well, so they must be very smart or knowledgable or honest".
None of this shit holds up. Keep things simple, look at nature. Why does nature work so well? Why has nature been so successful? Simple, there are real fucking consequences for bad choices. Now that fraud is the status quo on earth, possession is the fucking law. It really is that simple folks.
Law of Physica proposes some kind of social darwinism here and this is supposed to be some kind of criticism of my analysis? Really?
Wake me when you can refute anything I have put forth with some facts fucknut. With 7+ billion people competing for the same resources and a better quality of life, I see plenty of real markets everywhere. The "official" market is nothing but a casio now you ignorant fuck. Sure, the "professional gambler" might do okay, for a while...
Fuck all the mother fucking paper-pushers, they don't provide anything of any real fucking value anyway.
Marc Chandler is playing both sides in his 'Marc to Market' article above, in effect contradicting himself.
He admits the EU and Troika are ravaging the working classes and poor of southern Europe:
« ... throughout this crisis, the burden of the adjustment has fallen on those who are generally less well off. . Minimum wages have been cut. Health care benefits have been cut. Pensions have been cut. All for the sake of keeping some investors whole ... »
On the other hand he ridiculously claims this wholesale stealing of 'guaranteed' depositor funds in Cyprus by foreign orders from the Troika, is innocent of guile and malice:
« ... We do not see the developments in Cyprus ... portending a massive wealth grab by European countries. It is not a test case or the beginning of some process. »
For Italy to have carried out a less-than-1-per-cent bank confiscation 'tax' in 1992, is a noteworthy but yet quite a different story, given the nature of a nation having its own political class do such a thing internally (however wrongly) ...
But for a group of foreigners to try to seize a significant chunk of working people's bank deposits via blackmail and extortion, while posing as the 'protectors' of European peoples, is another thing altogether
This is altogether the end of moral authority for the EU ... Marc Chandler does not understand this
"still Cyprus stays." indeed this was THEIR proposal as well. nothing changes until someone takes the inflation hit and leaves. Germany is going to leave...but they have the advantage of devaluing while being in the driver's seat of the whole boondoggle. Russia ain't the problem here and Europe knows it.
correct. the problem is a tax-haven that bought greek bonds believing Europe's bullshit. Fuck them, they made a stupid choice and made their bed, let the fuckers lay in it now.
laws who exactly should be fucked?? the fisherman the farmer the shop owner?? did they all benefit and have direct actions to deserve the hit?? or do I put you in the same box as euro ghordo? a shill and hater of the people who least could impact any of this finace at the highest level?
Those who provide a product/sevice of real value will be just fine, unless of course you are against truly free markets sorting this out. The structural problems in the global market place need to be addressed, specifically that compensation is not going to those who provide real fucking value. Grow up douchebag, life is hard, deal with it.