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No Overnight Futures Levitation Due To Abysmal European PMIs, Deteriorating Cyprus Chaos
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 excuse 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 (down 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.
So much for the economy, which as everyone now knows is irrelevant for the market which means that all else equal we can expect K-Hen and the BIS boys to do everything in the next few hours to return the futures levitation ramp on schedule.
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":
- Dijsselbloem Says Additional Loan by Russia Wouldn’t Help Cyprus: “If the Russians were to say we could lend more, that wouldn’t help on the sustainability of the debt situation,” Dijsselbloem says. “Building up the debts in Cyprus doesn’t help them to work toward a new future,” Dijsselbloem says at EU Parliament
- Dijsselbloem Says Not Sure Cyprus Package Has Completely Failed, Says doesn’t see many alternatives for Cyprus
- Dijsselbloem Says Most Cyprus Deposits Are Investors, Not Savers: “The vast amount of deposits in Cyprus are not really savers, are investors,” Eurogroup head Jeroen Dijsselbloem says at the European Parliament.
- Dijsselbloem Says ECB Not ‘Using Threats’ With Cyprus Deadline: “I don’t think the ECB is using threats,” Eurogroup head Jeroen Dijsselbloem says. “What they are doing is doing as much as they can within their mandate,” Dijsselbloem says at European Parliament
Then we got a reparte from Russia which said it doesn't want a separate Cyprus deal with the EU, even as the ECB earlier said there would be ELA liquidity for Cyprus provided until March 25, which as already noted is a bank holiday in Cyprus. It is unclear what happens afterwards.
Then we got headlines out of Cyprus itself:
- Cyprus’s parliament speaker Yiannakis Omirous says initial decisions on how to tackle the country’s crisis taken today, in comments to reporters broadcast live on state-run CYBC.
- Spoke after meeting with President Nicos Anastasiades, political party leaders
- European attitudes to Cyprus “unacceptable,” Omirou says
- All solutions will go through euro area, Omirou says
Finally, putting the cherry on top, Germany's deputy parliamentary leader of Merkel’s CDU party, Michael Fuchs had a raft of his own pearls, as follow:
- Even 12 percent tax on Cyprus deposits “is not too much,” Merkel ally Fuchs says in Bloomberg TV interview.
- Germany ready to help “as much as we can” but can’t ask German taxpayers “to pay everything” for Cyprus
Michael Fuchs is deputy parliamentary leader of Merkel’s CDU party - “We want them in the euro -- no question,” Fuchs says
- Don’t believe there will be contagion
- Don’t want any country to be a tax haven
- If Cyprus bankrupt, business model is gone
To summarize - absolute, and total chaos, with ad hoc decision attempts out of everyone, even as Fitch itself says that Cyprus stalemate shows the dangers of ad hoc crisis respones in Europe. Which if funny, because in Europe everything is an ad hoc response.
For all the rest in the overnight action, here is DB's Jim Ried
I suppose when the Fed is continuing to buy $85bn a month of securities it puts the argument over where to find the €5.8bn in Cyprus in some perspective, however dramatic the situation remains. Indeed just over 2 days worth of Fed activity would get us to the amount the Cypriots are trying to conjure. After last night’s FOMC and press conference the most interesting remark was from the Chairman himself who said of a potential slowing in asset purchases that “we need to see sustained improvement (in the labour market)….so we’re just going to have to keep providing support for the economy and see how things evolve.” This suggests that payrolls need to maintain their recent improvements for a few months before they would consider changing the rate of purchases. Over the last couple of years payrolls have dipped into mid-year after a strong start so this is what Bernanke is referring to and he is therefore likely to want to see us get through the equivalent period with still elevated jobs numbers before he sanctioned a change.
The comments capped a better day for risk assets with the S&P 500 (+0.67%) closing near the session highs, following a stronger day for Eurostoxx (+1.38%). As we look ahead to today, it’s a fairly important day in terms of data headlined by the Euro area’s flash PMIs. Following the disappointment in the core last month, expectations are for only small improvements in this month’s readings. Starting with the manufacturing PMIs, consensus is for only a marginal uptick in France (44.2 vs 43.9 previous), Germany (50.5 vs 50.3 previous) and the Euroarea (48.2 vs 47.9 previous). Similarly, the consensus is looking for a 0.3pt improvement across each of the service PMIs in France (44.0 expected), Germany (55) and the Euroarea (48.2). Although we don’t get the Italian flash PMIs today it'll be interesting to try to imply a guestimate from the overall EU flash as the survey period will include the Italian election. Hard to believe that the election was almost 4 weeks ago now and we're still no nearer to a Government and that markets don't seem to care much.
Ahead of today’s euro PMIs, China has kicked off proceedings in a robust manner overnight with a flash manufacturing PMI reading of 51.7 (vs expectations of 50.8) which is up 1.3pts from the previous month’s print. The surprisingly strong PMI comes after a disappointing month for a number of Chinese-related assets. Iron ore, the Shanghai Composite and copper prices are down 14%, 4% and 8% respectively since mid-February. While there are probably seasonal factors at play following February’s Lunar New Year Holidays we should highlight that the index has now printed above 50.0 for five straight months, with month-on-month increases seen in four out of five of those months.
The stronger Chinese data has buoyed Asian equity markets with most bourses seen around 0.25% to 0.5% higher overnight. In what is becoming a familiar story, the Nikkei (+1.3%) is leading gains helped by chatter that the BoJ’s Kuroda will detail a shift in monetary policy at his first press conference as governor which is scheduled for 6pm Tokyo time today (9am London). Also in Japan, the trade data for February recorded the largest deficit (JPY1.0866trn vs JPY1102trn expected) since the Lehman period – in part driven by the J Curve effect.
The yen is trading marginally weaker against the USD at 95.9 while 10yr JGB yields hit their lowest level in almost a decade.
Returning to the situation in Cyprus, Bloomberg is reporting that President Anastasiades is set to draft a new funding plan following a cabinet meeting yesterday evening. The plan is said to include a revised version of the deposit levy according to the article and follows the stalling of talks between Cypriot Finance Minister Sarris and his counterpart in Moscow yesterday. The Ekathimerini wrote that the possibility of Moscow demanding involvement in the extraction of Cypriot natural gas or a naval or air force base on the island remains an option. Other alternatives appear to be closing though, with Russian lenders VTB and Gazprombank denying they were set to take over Cyprus Popular Bank or were unwilling to buy the bank for a symbolic sum while taking over its capitalization needs (Ekathimerini). Meanwhile the ECB is likely to delay a decision on whether to continue to supply Cypriot banks with liquidity as it awaits clarity on the government’s bailout plans, according to Bloomberg who cite EU officials.
Turning to the day ahead, aside from the all important Euro PMIs there is also an active data docket in the US with February existing home sales, the Philly Fed survey, the flash Markit PMI and weekly jobless claims. In the UK, retail sales for February are scheduled. The Eurogroup’s Dijsselbloem addresses the European Parliament’s Economic and Monetary Affairs panel (8am London) which may make for interesting viewing given the recent events in Cyprus. Spain and France will be holding bond auctions, and party leaders from Italy’s Five Star Movement will be meeting with President Napolitano as part of the latter’s consultations with major parties in the attempt to form a government.
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The music will stop soon. I see no free chairs.
Please let there be just one more ramp. I've got capitalist children that I need to get converted into a marxist college system.
Kaufen Den Verdammten Dip
What?
There, I said it.
Anyway, wouldn't it be a treat if Cyprus tore itself out of the eurostoned and resulted in the triple top?
Question for Cyprus: What sort of "Counterparty Risk" on your bank(s) will you learn about today?
Get in line and find out like everyone else.
It's kinda like trying to get tickets for a Bon Jovi concert....will anything be left by the time we get to the window?
"Whoa, we're halfway there...."
"Take my hand....we'll make it I swear."
"I'm a central banker...in a helicopter I ride...and I'm wanted...
...dead or alive."
"...if Cyprus tore itself out of the eurostoned..." - I'm not that sure. Consider the situation: currently Cyprus is still on the ECB/ELA drip - though they are getting impatient and threathening to cut it
nevertheless, consider the same situation with a Cypriot Pound: most of the assets and liabilities of the two big Cypriot banks (who are in trouble thanks to the Greek affair, who has one original big culprit - the Vampire Squid) would be anyway in big foreign currencies
meanwhile, what would have happened with the Cypriot Pound during the crisis? with all Cypriot banks closed? levitated to heaven? precipitated to hell? yes, cash is an issue on the island, the ATMs trickle only, but it's still usable cash
nope, if I was an elected MP in the Cypriot parliament I would think hard about leaving the eurozone - bluster and anger about all the wheeling and dealing aside - except if the whole affair goes well and I'd have the feeling that the storm is over, for Cyprus, that is
"der Dip" is something you stick your nachos in
we must do more of the same as it is not working- tfrom the higly esteemed and highly educated dr. krugman
and all the dr.'s from the ivy towers of babalon said in unison - moar for the people...
this Cyprus thing strikes me as a contract killing...and i'm talking Government here. the timing is "too perfect" and the result "too precise." obviously i'm speaking from thousands of miles away with no inside info but the whole "you can't do this to our deposits"...well, it just feels like the "heavy hand of Government" or some "working Euro-group" thingy. obviously Cyprus has a friend in the USA should they need "their good offices" but other than filing a claim with the European Court of Justice i really fail to what can happen that is good from here. Spain obviously has been doing this for some time now...was someone impressed and decided "we'll try it on those guys and see if it works"? who knows. either way if i'm right then this bodes VERY ill for "the EuroZONE" to get out of what appears to be a massive double dip recession. obviously if i were the Fed Chairman I would be trying to "connect the dots" publicly to the American people to explain how our two economies are very much inter-related and "we stand ready to help in any way we can...again." interestingly he has not said that though...and given the timing vis a vis the President's visit to Israel this thing really strikes me as a real stink bomb. while the USA and Europe have an enduring defense alignment...something we and only the French and British have been "proactively working to make" going on 12 years now this strikes me as a devastating blow to a system that has kept the peace in Europe going on pretty much 7 decades now. needless to say with all this talk of a "two tiered Europe" and it appears that it's more about "the two headed eagle" actually. i think the President needs to make abundantly clearly to Europe that we're not their interior security force and remind all other sovereigns "over there" that our good offices remain open to them as well. http://www.youtube.com/watch?v=pVa0v0Ay_Pg
disa...
think this way; every time you see the word euro put in the word nazi and you will see a much clearer pic...
war with money and back to the future 30's style...
This Cyprus thing reminds me of letting a small fart out in someone's office or a crowded restaurant to see how bad people react to it. Some may make a funny face, some may throw up, others may enjoy it. After your test fart results are examined (you have until Monday March 25th), you can let loose with the full fart, or hold back until you get to another local.
I recommend either (a) beer and pickled eggs or (b) pork fried rice
Here's an interesting twist.
Should Moscow refuse, the Church of Cyprus has said it would be willing to leap into the void. Cypriot Archbishop Chrysostomos II says he would put all of the church's assets at the country's disposal to help pull it out of crisis.
http://www.spiegel.de/international/europe/ecb-may-cut-emergency-funding...
That should last for all of about,.... 2 seconds.
... Indeed just over 2 days worth of Fed activity would get us to the amount the Cypriots are trying to conjure...
and that says everything which needs be said - about Cyprus. It is now clear that the entire 'Crisis in Cyprus' is an overt attempt to take attention away from where the storm clouds are seriously gathered...
The Italians will not be bought off, bullied, or blackmailed into towing the line this time. The attempts to form a government acceptable to the moneypower will continue to collapse until the clown prince of Italian politics is either anointed, or crucified.
Literally thousands of dedicated CIA\NSA\MI5 servants of Mossad\Mordor are working on finding a 'solution' as we speak. Nazgul alert:
Put the ring back in the bag Beppe...
re Italy: a lot depends - according to the constitution - from the President. knowing the Grillini movement a bit, he'll preach to them that now that they are elected they have to shoulder some responsibility - and they'll be listening, at least
then he will diplomatically point out that the "evil" Berlusconi is already courting the Democratic Left - and Berlusconi is still the nr.1 enemy of the Murdoch Gang and of many US/UK & european interests
I still expect that the Democrats will cobble a "technical" or minority government and limp towards 2014 - but the next big Italian politic event is the election of the President of the Republic (by Senate & Parliament) and there Berlusconi is proposing to have one of his allied parties for that in exchange for support in the Senate
Prior to the bank debacle in Cyprus, a little old woman had been withdrawing all her money every Friday afternoon and then would deposit it all on Monday morning.
Her bank manager had noticed this practice and asked her why she was doing this.
Her reply was that her son who is an economist had told her that bank closures/holidays etc always take place on weekends.
It seemed a very funny practice to the bank manager until the SHTF a few days ago.
Granny, you are the best.
By the way, this story is true.
Around here (Portugal) common sense rules, just not the kind of common sense that TPTB expect. People are in all likelihood withdrawing money (from sustained anecdotal evidence and more) but keeping mum.
At the same time, the central social-socialist parties show their true colours and degree of alienation by inviting the former PM, Socrates, who was the main culprit of debt supernovaflation, to host a weekly talk show in State-sponsored, and taxpayer-rape paid for, TV.
Counting on a second bailout they are. I almost piss myself while writing this.
Jim Reid could rival Marc to Market in saying virtually nothing of utility in 860 words.
puting this in perspective, 8.5b is 1/10 of the money created in one month by the shalom.
wtf is the problem? 3 days of printing = problem solved.
what is all the fuss about?
calling shalom...
boris don't like haircuts...
yeah well "Charlie don't surf" either.
If Heliben sent three days of QE over to Cyprus would that mean the first three day "selloff" in our "markets" since....god i cant remember when. He would be sweating bullets.
I'd say it puts the Fed in perspective quite nicely, as in $85 billion a month is one huge shitload of money to most people on earth which is being printed out of thin air. It's more than the market cap of everyone's beloved Facebook every month. It's more than the market cap of Exxon Mobil or APPL in six months. What everyone should be asking now is, where’s my share of it; what has all of this printing done for me?
Does anyone have a link to the ZH flow-chart showing who owed who what in Europe?
[Edit: Found it! "The World Wide Web of Debt" 20 November 2012. Cyprus doesn't even rate a mention!!!]
money is like bullets in the 21st centruy
used to control people without bloodshed
but the day the pen looses its power, well
let me predict one hell of a mess...
LONDON (Reuters) - AstraZeneca's new chief executive announced another 2,300 job cuts in sales and administration on Thursday as he set out his stall for turning round the struggling drugmaker and returning it to growth.
http://www.reuters.com/article/2013/03/21/us-astrazeneca-strategy-idUSBR...
Don’t believe there will be contagion =
ChairSatan: Subprime is well contained
We, Yuropeans, are le tired. :)