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Sell-Side Strategists Summarize Cypriot Tsunami

Tyler Durden's picture




 

The usually optimistic bunch of salubrious sell-side strategists are mixed in their perspective of the latest debacle to roll ashore from Europe. Most, if not quite all, expect short-term 'nervousness' and a few hardy Pollyannas remain though looking at the other end of the rainbow - once again because, drum roll please, "central banks will respond." Adding to our summary yesterday, Bloomberg adds another 13 sell-side opinions (and Moody's), it the diversity of response is perhaps best glimpsed with one who "does not expect savers to be fearful of a confiscation of their savings and spark a run on banks" for some whimsical reason and another states unequivocally, "No sensible foreign depositor would continue to keep money in a banking system that just took nearly 10% of his deposit without any notice."

Via Bloomberg,

 * Moody’s

Cyprus bailout negative for depositors across Europe; implication for sovereigns unclear; Cyprus has negative implications for EU banks creditors

May hurt bank ratings across Europe; shows EU will act to monetary Union

 * HSBC

Decision to impose levy could trigger market contagion

 * Nomura

Sees more downside risk for EUR/USD, EUR/CHF on Cyprus

Is buying 1.30 EUR put/USD call with 3-month tenor at Asia open to gain exposure to downside move; also cutting long EUR/CHF spot positions until there is greater clarity

 * Rabobank

Yield hunt may mean risk-off tone may be short-lived; in the contagion stakes, Cyprus has clear potential to “punch far above its weight”

 * Saxo Bank

Decision to impose level  “very good for gold” and safe-haven countries like Singapore and Switzerland and “economically more healthy” Scandinavian countries that don’t use the euro should also benefit

 * Citigroup

There is room to amend Cyprus agreement

 * AMP Capital Investors

Cyprus situation could “lead to some worries regarding renewed contagion across Europe”

Compared with banks in Italy, Spain and Ireland, “the risk of the same occurring is extremely low and close to zero, but we could go through a short period of nervousness until we see how the rest of Europe responds and the ECB responds”

 * Barclays

Decision to impose losses on Cypriot depositors is the latest sign of an “ominous trend” for bondholders

 * Brown Brothers Harriman

"We do not expect savers to be fearful of a confiscation of their savings and spark a run on banks”

 * BTIG

Bailout likely to shake investors’ recent “unshakable confidence” in ever higher prices

 * Cumberland Advisors

“No sensible foreign depositor would continue to keep money in a banking system that just took nearly 10% of his deposit without any notice”

 * Goldman

While controversial, involvement of non-residents in bailout was foreseeable, and “sends signal” to taxpayers in other nations that domestics won’t bear costs alone

Contagion potential - The Cypriot tax is certain to prompt depositors in GIIPS banks to assess two issues: (1) the probability of savings participating in bank clean-ups (“bail-in”) and (2) perceiving their savings as a potential base for a “wealth tax”.

 * JPMorgan

Difficult to overstate the extend of popular anger in Cyprus; return to “more stressful” episode of debt crisis possible

 * SocGen

Bailout may be crisis trigger; “this will probably go down as an ill thought out rescue plan with consequences for peripheral Europe”

 

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Sun, 03/17/2013 - 22:34 | 3340795 AU5K
AU5K's picture

Gold bitchez !

Sun, 03/17/2013 - 22:38 | 3340808 DJ Happy Ending
DJ Happy Ending's picture

The Euro sheep will never learn, you watch. There will be no EU-wide bank run on Monday.

Sun, 03/17/2013 - 22:43 | 3340821 Careless Whisper
Careless Whisper's picture

This is actually bullish for equities. No one is taking 10% of anyone's shares in XOM.  

Sun, 03/17/2013 - 23:02 | 3340891 Fred Hayek
Fred Hayek's picture

That's like finding out that the casino in which you're playing blackjack has been cheating players at the roulette table and telling yourself that there's no way they'd cheat you. It's only the roulette table that's rigged. They'd never rig one of the other tables.

Suuuuuuuuuuure.

Sun, 03/17/2013 - 23:06 | 3340903 cifo
cifo's picture

This must be the busiest weekend in ZH's history.

Sun, 03/17/2013 - 23:27 | 3340964 TruthInSunshine
TruthInSunshine's picture

03-17 22:51: China February power consumption falls 12.5% on year

 

I'd bet a large stack of yuán that it's down even more than "officially" reported.

Mon, 03/18/2013 - 00:06 | 3341090 Antifaschistische
Antifaschistische's picture

There is one reason why the Cyprus Banks are targeted...This is a typical parasite move, just like the parasite class in the US.

When in trouble, take someone ELSEs money.  The Cyprus Banks have enough "someone elses" to infuse the EU for a little while.

Commandment #1 - Achieve Wealth

Commandment #2 - Hide It

Sun, 03/17/2013 - 23:30 | 3340972 138
138's picture

True, right now. However I KNOW no one is taking any physical AU AG PB/CU that I may or may not be holding. 

Sun, 03/17/2013 - 23:50 | 3341033 MythicalFish
MythicalFish's picture

STFR

Mon, 03/18/2013 - 03:34 | 3341390 A Nanny Moose
A Nanny Moose's picture

Is it bullish for equuities, or the dollar? At what point are these ideas mutually exclusive?

Mon, 03/18/2013 - 00:37 | 3341156 Tuffmug
Tuffmug's picture

No bank runs but stock markets worldwide will drop to suck in more shorts to fuck later when the EU says "Nevermind, we found 8 billion for the bailout under the cushions of Merkle's sofa! ". Should ramp the markets to new highs.

Mon, 03/18/2013 - 05:25 | 3341489 jmcadg
jmcadg's picture
  • No more than the US sheep with TARP.
Sun, 03/17/2013 - 22:48 | 3340844 zorba THE GREEK
zorba THE GREEK's picture

This could be the trigger for gold to unshackle from the forces that suppress it.

It is time for Europeans to take their money out of insolvent banks and buy

physical PMs. The writing is on the wall.

Mon, 03/18/2013 - 00:01 | 3341073 philipat
philipat's picture

Expect to see a sharp rise in the number of boating accidents.

Sun, 03/17/2013 - 22:52 | 3340856 icanhasbailout
icanhasbailout's picture

They'll be coming for your gold soon enough. Hope you weren't dumb enough to have purchased it on the record.

Sun, 03/17/2013 - 22:37 | 3340802 macroeconomist
macroeconomist's picture

To everyone fed up with the current state of economics:

Please donate to Professor Steve Keen's campaign to raise funds for his dynamic monetary modelling program "Minsky"

"Minsky is also a platform for modeling—not a model in itself. This means you can model any vision of the economy you have—whether that's Austrian, Institutional, Post Keynesian—so long as that vision is dynamic. So it can be used by any economist, and it doesn't lock you in to a particular view of how the economy operates."

http://www.kickstarter.com/projects/2123355930/minsky-reforming-economic...

Half an hour left for the campaign to end..

Mon, 03/18/2013 - 00:42 | 3341170 toys for tits
toys for tits's picture

I've found that the best model was Sim City 4.  Drop the taxes to 3% and the city thrives.

Mon, 03/18/2013 - 05:19 | 3341482 Non Passaran
Non Passaran's picture

In the EU they have Slim City.
A 50% tax for everyone, a 20% VAT, no one's fat!

Sun, 03/17/2013 - 22:37 | 3340805 squid virtuous
squid virtuous's picture

Brown Brothers Harriman - are those the two old guys from Trading Places?

Sun, 03/17/2013 - 22:41 | 3340817 onewayticket2
onewayticket2's picture

ObamaBank analyst: "we applaud this fresh, original thinking and look forward to our own implementation..."

Sun, 03/17/2013 - 22:48 | 3340842 glenlloyd
glenlloyd's picture

my thoughts exactly...obviously people who aren't paying attention.

Sun, 03/17/2013 - 22:48 | 3340843 Law97
Law97's picture

No, that's just the firm that handled the Nazi's money during the 30's and 40's, while Prescott Bush was a director and equity partner. 

Sun, 03/17/2013 - 22:38 | 3340809 Critical Path
Critical Path's picture

Someone interested in clarifying Barclays statement?  "ominous trend" for bond holders?  Seems to me the bond holders have been trumping the citizens of supposed soverign nations for quite some time.  Ominous for the general populations and depositers perhaps.

Sun, 03/17/2013 - 22:44 | 3340829 madddmaxxx
madddmaxxx's picture

agreed, bondholders haven't been hurt yet.

Sun, 03/17/2013 - 22:50 | 3340852 zorba THE GREEK
zorba THE GREEK's picture

Bondholders were the losers in Greece.

Sun, 03/17/2013 - 23:12 | 3340919 Fred Hayek
Fred Hayek's picture

They deserved to be the losers. They bought risky bonds. When the issuer admits its inability to pay risky bonds who the hell should be chalking one up in the "L" column if not the jackasses who bought them?

Bond holders worldwide have gotten too cushy a ride. Karl Denninger over at Market-ticker.com makes a big deal out of the significance of the bailout of Continental Illinois which I think he pegs as the first bank where the U.S. government, despite having *no* duty to do so, made bond holders whole when they should have gotten nothing.

Oh, and another thing he makes a big point of is that failing banks are supposed to be taken over just as they start to go under not after they've cost taxpayers billions. At least, that's what the law says in the U.S. Maybe EU law is different but I suspect not and that the exorbitant cost of the failure of the big cypriot banks is proof that the EU regulators were not doing their jobs. And now, the EU's capricious response to this is to go after innocent parties.

Sun, 03/17/2013 - 22:53 | 3340860 NoDebt
NoDebt's picture

Also agreed.  Comment makes no sense on it's face.  Bondholders are the ones NOT getting a haircut in this plan.  Perhaps they think it will be rejected by the Cypriot parliament and then bondholders WILL be the ones taking it in the shorts, but that's way out in the weeds at this point.

Sun, 03/17/2013 - 22:41 | 3340816 Conflict of Interest
Conflict of Interest's picture

"No sensible foreign depositor...." -- there are sensible foreign depositors in Cypriot and Greek banks? 

Sun, 03/17/2013 - 22:44 | 3340828 lotusblue
lotusblue's picture

Cabasa de Vaca

Sun, 03/17/2013 - 22:44 | 3340830 JD59
JD59's picture

FUBAR! Why would anyone keep anything in banks?

Sun, 03/17/2013 - 22:45 | 3340831 Sizzurp
Sizzurp's picture

Bank runs begets bank failures which begets derivitive meltdown contagion.  Easy to see how this could jump oceans.  Bernanke might have a busy week of printing ahead.

Sun, 03/17/2013 - 22:51 | 3340854 disabledvet
disabledvet's picture

can't say he's not doing the right thing...yes, yes? this is exactly what the "QE" program was designed to mitigate: the effects of a bank run in Europe on the North American markets and economy as a whole. I can see some very scary scenarios here--North Korea "making crazy talk", Syria melting down--Egypt looking like it could blow. An incursion by Turkish regulars. And "that's just the good side."

Mon, 03/18/2013 - 00:33 | 3341148 Sizzurp
Sizzurp's picture

I get the feeling that more wars are coming.  Little fires are being lit across the globe and it won't take much wind to get them really going strong.  It all looks very combustable.  The Korean situation, Iran, Pakistan, Syria, Egypt, Turkey, Russia, China, Japan.  Another major financial crisis will be enough to push tensions over the edge somewhere, then it will spread.  So yes sure, if Bernank can keep things calm and orderly that is good, but in the end its only temporary.  Not to mention the central bankers put us in this position to begin with.  Once again we are looking over the abyss thanks to the banker boys, and their debt based money.  The ante keeps getting larger, bail them out or face war and devastation.  It seems like the longer this goes on, the worse the consequences of letting them all fail will get.  At some point we are just going to have to face up to reality.

Sun, 03/17/2013 - 23:21 | 3340949 DeadFred
DeadFred's picture

"Everyone wake up. It's coming" I woke up to that in my head about a week ago. Maybe I know why now.

Sun, 03/17/2013 - 22:45 | 3340832 Theos
Theos's picture

So a 10% confiscation in the "first world" results in bringing sentiment back to "kinda neutral"?

 

Shit we're still fine. BTFD.

Sun, 03/17/2013 - 22:56 | 3340866 NoDebt
NoDebt's picture

Up arrow.  Unique way to put it in perspective.

Sun, 03/17/2013 - 23:32 | 3340838 chump666
chump666's picture

Please.  Market needs 2% wipe-outs for anything major, that and the ECB/NYFED 1.29 and 1.30 support is now bid via HFTs on the 5day.

DAX delivers a 3% to 5% neg (remember the old days in 2011?...such memories) we might have a substantial sell off oF risk.  Might...

Anyways the risk averse trade will come out of Asia, not Europe, it's done.  Just being held above water thanks to the FED pumping the ECB.  That's it.

In saying that HK looks tasty

Mon, 03/18/2013 - 00:24 | 3341139 Orly
Orly's picture

So, Chump, you long Euros here?  Buy the news?

Mon, 03/18/2013 - 01:27 | 3341239 chump666
chump666's picture

Orly, see now you gotta have guts for that trade.  But that 1.29, 1.28 could crack hard on Euro open .  Oil just went bid.  Heaps of players got burnt on EUR shorts, heard on wires banks setting up short positions.  Could be buy the news on ECB, EU re-working bailout etc.  Also the Cyprus peoples don't want massive EUR devaluation (forget bank account haircuts, their pensions would be slaughtered if they leave EZ)

Short answer, I'm out till full correction.

Mon, 03/18/2013 - 02:05 | 3341240 chump666
chump666's picture

wires:

* IMM CTA data show specs still building long USD positions.

Sun, 03/17/2013 - 22:49 | 3340847 lolmao500
lolmao500's picture

 

Decision to impose losses on Cypriot depositors is the latest sign of an “ominous trend” for bondholders

Ominous trend for bondholders??? More like DREAM trend for bondholders... Bondholders lose nothing, the average working man gets robbed to bail out the bondholders... how is this bad for bondholders again? Oh yes, it is not.

Sun, 03/17/2013 - 22:58 | 3340875 NoDebt
NoDebt's picture

Agreed here, again, as I did on a similar comment, above.  Bondholders lose NOTHING if the current agreement passes Cypriot parliament.

Mon, 03/18/2013 - 00:48 | 3341183 toys for tits
toys for tits's picture

It's actually bad for bondholders since the resulting run will cause the bank to fail and the bondholders won't get paid.

Sun, 03/17/2013 - 22:51 | 3340855 monopoly
monopoly's picture

Sometimes it just takes one spark to ignite a raging uncontrollable forest fire. Time will tell.

Sun, 03/17/2013 - 22:53 | 3340859 Number 156
Number 156's picture

“During my lifetime most of the problems the world has faced have come, in one fashion or other, from mainland Europe, and the solutions from outside it.” — Margaret Thatcher.

Sorry Margret, not this time. Europe is royally screwed.

Sun, 03/17/2013 - 22:56 | 3340870 casey13
casey13's picture
Gazprom Offers Cyprus Restructuring Deal to Avoid EU Bailout

http://greece.greekreporter.com/2013/03/18/gazprom-offers-cyprus-restruc...

Sun, 03/17/2013 - 23:10 | 3340911 SIOP
SIOP's picture

casey13 wrote: "Gazprom Offers Cyprus Restructuring Deal to Avoid EU Bailout"

Thats amazing. (jaw dropping)

Sun, 03/17/2013 - 22:59 | 3340876 Downtoolong
Downtoolong's picture

Sell side analysts unite. We must minimize, downplay, diminish, disguise, avoid, and distract from this event. You must soothe, instill comfort and confidence in your clients. Tell them it’s just like another run of the mill car accident. Got it? Now go, go, go, go.

Sun, 03/17/2013 - 23:05 | 3340898 sitenine
sitenine's picture

It bears repeating that, "you shouldn't be concerned about the return on your capital, you should be concerned with the return OF your capital."

Sun, 03/17/2013 - 23:06 | 3340900 Tsar Pointless
Tsar Pointless's picture

I'm having a jolly good time on HuffPo slizzering those commenters who claim the Cyprus move is somehow "socialist" in nature.

It's too easy.

Mon, 03/18/2013 - 00:21 | 3341130 AynRandFan
AynRandFan's picture

Well, it's an authoritarian act.

Sun, 03/17/2013 - 23:09 | 3340909 palmereldritch
palmereldritch's picture

 "Saxo Bank

Decision to impose level  “very good for gold” and safe-haven countries like Singapore and Switzerland and “economically more healthy” Scandinavian countries that don’t use the euro should also benefit "[emphasis mine]

Translation: Norway and their petro-backed bonds for fuck's sake....

Sun, 03/17/2013 - 23:14 | 3340927 Edward Fiatski
Edward Fiatski's picture

The Rothschild bank HSBC put it best,

"Decision to impose levy could trigger market contagion"

Curtains are on fire, do not yell FIRE in this threatre... just calmly... proceed... TO WITHDRAW ALL EUR-DENOMINATED ACCOUNTS!!!

Sun, 03/17/2013 - 23:16 | 3340935 Coke and Hookers
Coke and Hookers's picture

The EU has unilateraly declared that your savings may be confiscated within the eurozone. There is no other interpretation. Nobody in his right mind will keep his money in a European bank after this.

Sun, 03/17/2013 - 23:33 | 3340976 Flounder
Flounder's picture

So this is what a black swan looks like.

Sun, 03/17/2013 - 23:43 | 3341004 mr. mirbach
mr. mirbach's picture

DIE. Boom. Bang, Burn

 

http://youtu.be/4a4ZHm0PLJg

Mon, 03/18/2013 - 00:18 | 3341121 AynRandFan
AynRandFan's picture

It would have taken a genius to sell this idea.  I mean, increasing bank liquidity by confiscating depositor money sounds like it would backfire.  But, no.  Economic experts believe it will work.  Now, don't you feel silly being all scared?

Mon, 03/18/2013 - 00:37 | 3341157 q99x2
q99x2's picture

Q99X2: The central banks will pump the market up in response to the Cyrprus debacle should it goes down. They have infinite money printing abilities and no oversight. They also are fully aware that the debt being issued will never be repaid. Therefore until the Department of Homeland Security is fully prepared to protect the financial system and implement the bankster's complete takeover of the United States of America BTFD.

Mon, 03/18/2013 - 02:54 | 3341339 etresoi
etresoi's picture

The myopic eurocrats have lost the big picture, as usual.

Cyprus has a viable option of leaving the EU, dropping the euro and aligning with Russia.

Russia can afford to support Cyprus, can develop the gas fields at a substantial profit and as a bonus, gets a strategic deep seaport.

 

Game, set, and match !

Mon, 03/18/2013 - 08:14 | 3341739 little buddy bu...
little buddy buys the dips's picture

we really don't believe 'reassurances' from banks. we know better.

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