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Overnight Centrally-Planned Futures Levitation Weighed Down By Cyprus
Not even the usual monthly futures panacea (which in fact manages to fool the entire centrally-planned market twice every month, all the time), the always rising German ZEW Economic Sentiment survey, which mysteriously did not come at an all time high, but still rose from February's 48.2 to 48.5, despite expectations of a decline to 48.1, has managed to push the EUR higher in overnight trading, as a result keeping a lid on any of the generic no-volume futures levitation we have all grown to love. The reason is not that concurrently with the German data we got abysmal Eurozone Construction Output data, which plunged -7.3% Y/Y, the most in four months, following a slump in French and Spanish activity offsetting the German "confidence-boosting economic miracle" but simply because there continues to be no clarity whatsoever on events in Cyprus, where as noted earlier, the parliament may vote as soon as 6 hours from now to veto the proposed deposit confiscation "bailout/in" plan, which could lead to the first Eurozone banking system collapse, and the first expulsion of a member Eurozone nation, setting the wheels in motion for the unthinkable.
A recap of where global markets stand as of last check:
- S&P 500 futures down 0.1% to 1545.4
- Stoxx 600 down 0.4% to 295.5
- US 10Yr yield down 2bps to 1.94%
- German 10Yr yield down 3bps to 1.38%
- MSCI Asia Pacific up 0.3% to 134.5
- Gold spot down 0.2% to $1603.2/oz
Europe and Asia:
- 14/19 sectors falls, led by miners, construction
- U.K. February Inflation Accelerates to Fastest in 9 Months
- Italian Output Unexpectedly Rose in January Amid Ongoing Slump
- ASIA Asian stocks pare earlier gains, Japan’s Nikkei 225 outperforms.
- MSCI Asia Pacific up 0.3% to 134.5
- Nikkei 225 up 2%, Hang Seng down 0.2%, Kospi up 0.5%, Shanghai Composite up 0.8%, ASX down 0.6%, Sensex down 1.4%
Deutsche's Jim Reid recaps the overnight action:
The view we had yesterday on the Cyprus situation still stands that in systemic terms this is a slow burner of an issue more than an immediate macro shock but not one to be under-estimated in importance medium-term. For now assuming the proposal gets passed (the votes are seemingly not yet there – see below) and even better watered down with small depositors bearing less or even none of the levy, Europe will likely only see small short-term collateral damage. However in spite of the protests that Cyprus is a unique case, the incident has probably ensured that if a bank or banking system in Europe is again under strain then depositors are, as a minimum, likely to be on the table as a bargaining tool and these depositors would be rational to think hard about the safety of their money and potentially seek alternatives.
However if you’re looking for a positive, the outcry over the turning back on the pledge to protect depositors, especially those with less than 100k, might perhaps persuade the EU to tread more carefully in the future even though where the levy was set may have ultimately not been their call. They did sanction the deal though and perhaps both the EU and the Cypriot Government have been surprised by the verbal backlash, even if markets were less aggressive in their reaction.
Late yesterday evening, the Eurogroup issued a statement saying that the Cyprus government will introduce “more progressivity in the one-off levy” and reaffirmed the importance of “fully guaranteeing deposits below EUR100,000”. While it’s unclear exactly what this statement means, there has been talk of reworking the levy to 3% for deposits under EUR100,000 (from 6.7%); while account holders with EUR100,000 to EUR500,000 would be levied at 10% and deposits above EUR500,000 levied at 15%. At the same time, Bloomberg quoted an unnamed EU official as saying that Cyprus could meet its target of generating EUR5.8bn in funds by imposing a 15.6% levy on deposits of more than EUR100,000 and no levy on deposits below that amount. If they do go the whole way and exempt those with less than 100k it probably won’t be great for EU/Russia relations given the geographical concentration of large depositors. Although we aren’t experts on the Cypriot economy we can’t help thinking that its GDP still relies on its financial system. Indeed, a bigger hit to the larger depositor, who are likely to reside overseas and therefore have more alternatives, may actually be counter-productive to the Cypriot economy even if it makes ethical sense. So there are dilemmas for the domestic Government.
In terms of the banks, the Cypriot finance ministry has extended the bank holiday to March 20th meaning that in practice the government has a couple more days to pass legislation approving the deposit levy. On this front, unconfirmed reports suggest that Cypriot President Anastasiades held a telephone conversation with European Economic and Monetary Affairs Commissioner Olli Rehn on Monday night to inform him that there might not be enough parliamentary support for the levy (Ekathimerini). The parliamentary vote has reportedly been rescheduled to this afternoon, while earlier news reports had suggested that the vote had been postponed indefinitely. It’s possible that a reworking of the levy might help build the necessary votes.
Recapping the market reaction yesterday, the Stoxx600 opened 1.25% weaker, before rallying to close to finish just 0.2% lower on the day with investors
probably taking some comfort from comments by European officials that the levy in Cyprus was one-off, driven by a “unique” set of circumstances.
Unsurprisingly, European banking stocks were the underperformers yesterday with the sector closing 1.76% weaker. It was a similar story in credit, with the European senior and sub financials indices finishing 10bp and 15bp wider respectively, underperforming the European iTraxx (+4.25bp), although all indices were well off the day’s wides seen earlier in the session. Risk sentiment seemed to improve further with the US market open. The S&P 500 closed only -0.55% lower on the day – with a strong performance from tech stocks including Dell and Apple helping US equities find a floor. EURUSD closed 0.9% lower yesterday but is managing to claw back some of those losses in overnight markets.
Turning briefly to Asian markets, and with the exception of Chinese stocks, most equity indices have rebounded modestly from yesterday’s losses, paced by gains on the Hang Seng (+0.27%) and KOSPI (+0.60%). The regional outperformer is the Nikkei (+2.05%) which is trading near last Friday’s closing levels.
BoJ governor Shirakawa steps down from his post today, while incoming governor Kuroda has officially resigned from his current post as Asian Development Bank president according to newswires. Asian and Australian credit markets are 3-4bp tighter, while the Australian dollar (-0.2%) is marginally weaker against the USD after the release of a relatively dovish set of RBA minutes. Despite, the better risk sentiment, 10yr UST yields are broadly unchanged at 1.95%, as is gold at $1605/oz.
Looking at the day ahead, Cyprus’s parliament is scheduled to begin its debate on the deposit levy at 6pm local time (4pm GMT). Ahead of this, we have a number of data releases today including inflation and house price data in the UK. We also have the German ZEW survey; as well as housing starts and permits in the US. So there is a fair bit going on today, not to mention Pope Francis’s inaugural mass which will be attended by a number of heads of state.
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Sunny skys....with a sense of impending doom.
Did we just hit the last part of the Elliott Wave Grand Supercycle top?
http://thespiritoftruth.blogspot.com/2013/02/dow-14000-world-war-three.html
Can't wait for the banks to open and the run starts. Maybe then the MSM will report that the banks don't keep the customers' deposits back in the vaults.
"If it keeps on rainin', the levees' gonna break"
http://www.youtube.com/watch?v=WbrjRKB586s
US futures now rallying on this great news
How can we fool them today?
Just snuggle up with the horse head in the bed...
The Russian energy company Gazprom is offering to bailout Cyprus in exchange for gas exploration rights, according to media reports.
"Russian energy giant Gazprom has offered the Republic of Cyprus a plan in which the company will undertake the restructuring of the country’s banks in exchange for exploration rights for natural gas in Cyprus’? exclusive economic zone, local media reported," reports GreeceReporter.com.
The banks stole the country, and now the country does not want to be sold to the mafia.. A slippery slope if I've ever seen one.
boris is headed to cyprus and he is not happy...
shadows beware...
If the Cyprus government rejects this scheme it means they are more scared of the Ruskis than of EU ire.
Its consequences for world capital markets are not clear; but it should affect the WS/Euro asset levitation pumps adversely.
But who knows...anything goes these days, the markets are disassociated from fundamentals!
Victory for Putin put, but Cyprus...hmmmm. A government and no money : how long will that last?
No Ruski is going to bail out 30 billion of bank debt; thats their total investment!
Nicosia will outperform Athens in dystopia! I don't see Gazprom shelling out 30 B Now, for a return over twenty years in Cyprus; sorry. If they do then Putin has real Cojones!
Please hold....Cyprus is on the phone with Iceland.
Iceland had no ruskis breathing down their necks...
here is an interesting alternative solution : Walking Back From Cyprus - Business Insider
CDS wizardry anyone?
CDS wizardry anyone?
I'd take my chances with the Russians first.
boris was not consulted - not very smart to piss him off.
boris don't fuck around...
"S&P 500 futures down 0.1% to 1545.4"
This Cyprus stuff is interesting but can we all call a spade a spade here and agree the market does not give one iota of a crap about it? Neither do deposit holders in any other country.
I disagree. Anyone with even a tiny brain in any other country should be pulling out any savings they have. The market is now in a jittery QE levitated freeze.
This is a full blown poker game. Sit back and enjoy.
I am not debating what people should be doing. just pointing out what they are doing. Believe me i hope i eat my words. but right now financial repression is kicking ass.
You are correct. Only reality matters.
Recently, Day in and day out I think only thing:
When is Barack Obama going to give the order?
Iran seems to be the only issue.
"Neither do deposit holders in any other country."
Thats a fairly broad brush-stroke you just swept across the thread.
If your sat at a poker table wondering who the fool is, its you.
show me any actual proof. otherwise it's you.
Proof of what? Your using the "market", whatever that is, to prove to yourself that this means nothing. Sounds like Stockholm syndrome to me.
this is a financial based site that spends the whole day trying to tie news like this to it's impact on the markets. All I am pointing out here, is that there is no impact, nor should we expect any. But that is not good news for news sites like this, because people eventually tune out.
Either way my only point is the market does not care, so let's just call it out. if you say I am wrong I am asking you to show me where the market is proving me wrong.
Outside of that, I don't mean to disagree or even argue with you or toys.
S&P rallied 50 points the day after Bear Sterns collapsed. Two months later it was still up over 150, but of course no one would say Bear Sterns didn't matter, except maybe during those two months...
But this isnt about the market. This is about the entire european banking system. The banks have been pretty much completly insolvent for God knows how long and the only thing keeping the whole facade going has been hot money, fudged goverment statistics and the large amounts of ignorance that ordinary people have with regards to how our banks operate. That mask is slipping and i am of the opinion that we should all be extremly concerned about how long this creaking insolvent and corrupt banking system can continue to operate.
I'm not calling you a fool, but try and recall how long it took you to realize your core belief in the banking system was a fraud... one day, two?
These people are in shock at the moment. They probably have never heard of a bank holiday before or had atm's not working and they will require a couple of days to come up with a plan.
ZH and its imitator sites are probably now being scoured by these now open-minded people who are trying to figure out what to do.
When the banks do open they'll try and get their money out and if the EU is smart, which they haven't been so far, they'll make sure the money is there for them. Otherwise it will be largely reported.
you know what toys....you may be spot on. I will stfu and watch how this plays out. You may be absolutely right.
Spot on.
Personally, all it took for me was watching 2 videos on youtube in 1 day.
Debt As Money:
http://www.youtube.com/watch?v=jqvKjsIxT_8
The American Dream:
http://www.youtube.com/watch?v=tGk5ioEXlIM
Those were like swallowing the red pill to escape the matrix these fuckers are pulling off.
Burn mother f******
I´m portuguese and this all sucks, every month new taxes, strikes, unemployment at 17% (oficial numbers)...
Solution? Emigrate when i still can to another european country... looking for a better life. Politicians and bankers they destroy nations... this is the new World War, the economic war.
The game is up. If they now u-turn on this, even if they don't steal ANY of the money, the depositors especially the Russians will still pull their money.
This is now a lose lose situation for Cyprus and thus the Eurozone.
Get out the popcorn.
Controlled demolition of the Euro?
The irony of all this is that the EU caused the Cyprus banks to be bankrupt when it shellacked the Greek bondholders 70% even after saying it wouldn't.
It's not a levy. It's not a tax. It's THEFT.
DavidC
yes it is. in broad daylight. the market should be throwing a fit. but it's not. the fed speaks tomorrow and the giant crackhead market just wants to know it's next fix is coming
The bondholders should get nothing
Govt planning Cyprus-style bank tax for NZ say Greens !!!
"New Zealand savers could see a Cyprus-style tax on their bank accounts, the Green Party is warning, accusing the Government of planning similar solutions for the country."
http://tvnz.co.nz/politics-news/govt-planning-cyprus-style-bank-tax-nz-s...
http://www.greens.org.nz/press-releases/national-planning-cyprus-style-s...
I wish someone could explain why the mini-levitations we're seeing are always up, never down. I understand the easy profits of algos hitting smaller shorts each day, profiting from the push, then the short back down, but given the worries about a "top" and a "correction" out there, despite the professional protection out there in the form of S&P puts I would think occasional downside mischief, e.g., throwing in a few bigger down days in a row twice a month to hit weaker "catastrophic" sell stops after first shorting, then resuming the levitation, would yield more than going for 5 - 14 Dow points each day. I would think this could be done judiciously without spooking the alleged individual investors they want to eventually sell to. In fact, it's obvious they're not coming back in droves, so why not play both sides of the fence mid-term, or push bigger forward, rather than add slowly like the rings of an oak tree. And don't tell me this is the workings of a sensible, uncertain market . . .
Cyprus was going to default before the idea of stealing depositors accounts, so either way things won't end well for the criminal banking system in Cyprus and will be the start of massive mistrust for the rest of the world. Can they take 10% from your gold pile buried at X on the map?
SP500 hourly looks like it's in a corrective move - another push up may occur.
http://bullandbearmash.com/chart/sp500-hourly-day-channel-support/
Q1 earnings is near. This could be the undoing.
housing up for feb 0.8 percent compared to jan -7.1 pct.
this is what the fucking futures are up on????? 0.8 percent is fucking shit, yet the market rallys like its the greatest number. yet we have a real fucking banking crisis in cyprus ( yes i know cyprus is a small little nothing country but still nonetheless) and the market totally ignores that.
i fucking hate these ppl so much.
also, what bs rumor are ppl going to start about aapl today to drive it towars 500 and beyond? maybe they will make up something how they r coming out with a tv next month, or will own the entire mobile market, lol. fucking joke
People need to raed the comments of Jim Sinclair of the Cyprus issue here:
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/3/19_Sinclair_-_Cyprus_Disaster_Is_Much_Bigger_Than_Being_Reported.html
I don't mean to hijack the thread, but does anyone have a link to the leaked Blumenthal-Clinton memos?
The ONLY outlet even mentioning them is The Smoking Gun. Where are they?
Hillary Clinton's hacked Benghazi emails sent to RT — RT USA
http://www.google.com/search?q=Blumenthal-Clinton+memos