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Notable earnings after Wednesday’s close: $GES, $JBL, $ORCL, $PSU, $SVM
Notable earnings before Wednesday’s open: $FDX, $GIS, $LEN
<ritholtz>Cyprus – A Total Fiasco
Posted By Kiron Sarkar On March 19, 2013 @ 4:00 pm
Kiron Sarkar’s his newsletter can be subscribed to here sarkargm.com [1]. This is a free excerpt . . .
~~~
I summarise below (in note form), the current situation in Cyprus.
Background:
• Cypriot banks are some 8 times larger than the country’s GDP.
• Cyprus is one of the 17 members of the EZ. Its small – just 0.2% of EZ GDP, with a population of around 1.1 mn people.
• A number of the country’s banks are insolvent, in particular as they invested in Greece/Greek sovereign debt.
• Cyprus requested a bailout from the EZ, having previously received a Euro 2.5bn loan from Russia, which has kept the country afloat for some 2 years to date. Cyprus is negotiating with the Russians to reduce the interest rate on this loan and to extend its maturity.
• The country needs funds by May this year, or it will become bankrupt.
• Allegedly, a number of Russians, Ukrainians etc have laundered money, using Cypriot banks.
• Russians and others do use Cyprus due to its low tax rates and allegedly “lax” money laundering measures. Once the money is parked in Cyprus, individuals invest in Russia, with “clean” money. Russian banks have apparently lent some E40bn to Russian companies domiciled in Cyprus, though their principal activities remain in Russia.
• The EZ (Germany in particular) refused to negotiate with the former (Communist) regime in Cyprus.
• The newly elected Cypriot President (Mr Anastasiades), a Conservative, met with EZ heads of State and finance ministers on Thursday/Friday last week.
• He requested a bailout.
• A number of EZ countries, lead by Germany, though including Finland (in particular), together with Slovakia and (partly) Holland stated that Cyprus would have to contribute to the bailout.
• Germany was concerned that Cyprus would default on the EZ contributions in due course – they believe that Greece will. The German’s are increasingly wary of the cost of bailouts of EZ countries. Essentially, countries, including Germany and, in particular, Finland wanted Cyprus to contribute to their rescue for domestic political considerations.
• The maximum amount offered by the EZ (with, potentially, some contribution from the IMF) was E10bn.
• The IMF insisted that if they were to contribute, Cypriot debt needed to sustainable – that required around E6/E7bn more than the E10bn proposed by the EZ (effectively in the form of equity, rather than debt), making the total package E16/E17bn.
• The real crunch came when the ECB stated that they would not extend support to Cypriot banks, as they were deemed insolvent. This forced the Cypriot President to accept the bailout proposed by the EZ and to charge depositors a “levy”.
• Imposing a “levy” (in effect a tax) was the only way Cyprus believed that they could raise the extra E6/E7bn, demanded by the EZ. The current proposals will raise E5.8bn.
• Junior bondholders are to face a haircut, though senior bondholders (around E2bn) will not be affected !!!.
• The Cypriot President wants Cyprus’s banking sector to continue post the bail out and, as a result, does not want to impose material haircuts (over 10%) on large depositors. In addition, he believed that if everyone (including small depositors) shared the pain, it would be less damaging to the Cypriot banking sector, in the future. There were suggestions (allegedly) by some EZ countries, the EU, ECB and the IMF, that the Cypriot President apply the “Levy” on deposits above E100k. They proposed a rate of 15.6% on all deposits above E100k. However, they left the decision to the Cypriots. Amazing !!!
• As a result, an “agreement” was reached over last weekend, whereby ALL depositors in Cypriot banks would face a levy, which increased in percentage terms on larger deposits.
• Cyprus has an E100k bank deposit guarantee scheme, though no funds to back it up.
• The “levy” or tax does not (technically !!!) fall foul of the EZ deposit guarantee scheme, though there is no EZ wide deposit insurance scheme in place – the “guarantee” is the responsibility of individual EZ countries. Germany will not agree to an EZ wide deposit guarantee scheme or banking union at this time.
• Germany is keen to reduce the size of the Cypriot banking sector, quite rightly.
Politics
• The Cypriot President’s Party (Disy) has only 19 seats out of the 56 member Parliament. Its coalition partner has indicated that it will vote against the “levy”. The other 4 parties are also opposed to the current proposals.
• Mrs Merkel needs the approval of her Parliament in respect of any bailout of Cyprus – which she cannot be assured of. In addition, she does not want to be accused of bailing out alleged “Russian money launderers” ahead of her September general elections. Furthermore, there is increasing bailout fatigue in Germany.
• As a result, Mrs Merkel wanted Cyprus to share in the burden, inspite of the overall sums being relatively small.
• The main German opposition (the SPD) have traditionally been more EZ friendly than Mrs Merkel’s CDU/FPD. Indeed, Mrs Merkel has had to rely on SPD support to pass legislation to bail out other EZ countries for example, as members of her own coalition opposed such measures. For political purposes (ahead of the September general elections), the SPD does not want to be seen to be too generous to Cyprus and the peripheral EZ countries, as it will lose them votes. The alleged money laundering charges has helped the SPD’s argue its case to be tougher on Cyprus. Indeed, the SPD have demanded an increase in Cypriot corporation tax and other fiscal measures, including a financial transaction tax.
• In particular, the Finns, for quite some time (domestic politics, once again), have increasingly opposed bailouts, as have the Slovaks, with the Dutch becoming increasingly sceptical.
Russia is furious. They were not consulted. They deem the levy unfair or worse. The Cypriot authorities (and the EZ) are to discuss the situation with Russia. The Russians have threatened that they will not amend the terms of the existing E2.5bn loan.
• The relative insignificant amount of funds required to bail out Cyprus is not the issue. Its the domestic political considerations, as far as Mrs Merkel and other EZ leaders are concerned, which are paramount.
Current situation:
• Cypriot authorities have advised their banks to remain closed until Thursday. The Cypriot Parliament are to debate a proposal, which would charge depositors a “levy”. The original proposals have been amended, such that depositors with E20k will not be subject to a levy, though the levy on sums above E500k will be increased. The Cypriot President is wary of raising too high a levy on large deposits, though there were some discussions that the “levy” is raised (possibly to 15%) on deposits above E500k. The numbers are changing all the time.
• The current view is that the Cypriot Parliament will not approve the proposed “levy” on depositors, even in its revised form. The clock is ticking. Banks cannot continue to be closed. Some deal is necessary this week.
• Press reports suggest that the Cypriot finance minister has offered to resign, though this has been denied.
• The ruling party has announced that it may (will?) abstain from voting on the proposed levy.
• If depositors are charged a “levy”, inspite of being technically legal, what’s the worth of a deposit guarantee scheme, in particular by financially weaker EZ countries.
• The threat of contagion spreading to say Spain and Italy is high. Spain, for example, cannot afford to pay out on “guaranteed deposits”.
• Why wont depositors withdraw funds from banks in the peripheral and weaker EZ countries?. Money was returning to a number of peripheral EZ countries – this trend will reverse. Banks in a number of the peripheral EZ countries will have to rely on ECB liquidity, once again. Target 2 imbalances will rise.
• Whilst talked about, it is unlikely that Russia will impose any trade sanctions (involving energy) on the EZ.
• Cyprus allegedly has significant reserves of offshore gas. Russia is deeply interested in these reserves. Gazprom has suggested that they will bailout Cyprus if they are, in effect, granted exclusive rights in respect of the offshore gas. Whilst possible, such a scheme looks unlikely at present. The Cypriot politicians/officials are to meet with Russian officials shortly.
• To date, the market reaction has been muted, admittedly – a surprise. This lack of concern will embolden Germany (and Finland and Slovakia) to continue to take a tough line. However, does such a deal raise the risk of contagion spreading to other EZ countries. I very much believe that it does.
• Cyprus could default, though its bonds are bound by UK law, making a restructuring problematic. Furthermore, the prospective currency would be much weaker than the Euro as they would have to exit the EZ and forego ECB support. Not attractive, at all.
• The EZ claims that this is a “special case”, a view which is complete nonsense. There have been too many special cases.
• The contagion risks to peripheral EZ countries (Spain and Italy) are extremely high. The Euro looks vulnerable.
• The risks to a number of EZ peripheral countries, in particular of the Cypriot proposals to tax allegedly “guaranteed deposits” (of up to E100k), are a huge mistake in my humble opinion.
Kiron Sarkar
~~~
Kiron’s daily newsletter can be accessed on his website www.sarkargm.com [1]
19th March 2013
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Article printed from The Big Picture: http://www.ritholtz.com/blog
URL to article: http://www.ritholtz.com/blog/2013/03/cyprus-total-fiasco/
URLs in this post:
[1] sarkargm.com: http://www.sarkargm.com/idevaffiliate/idevaffiliate.php?id=3
Europe Weighs Cyprus’s Fate After Lawmakers Reject Deal
By Patrick Donahue and Jeff Black - Mar 20, 2013
European policy makers must weigh how far to push Cyprus after lawmakers in the Mediterranean nation rejected an unprecedented levy on bank deposits, throwing into limbo a rescue package designed to keep it in the euro.
Luxembourg Finance Minister Luc Frieden called for the 17 euro-area finance ministers to reconvene “as soon as possible” to cobble together a new package. The European Central Bank, whose Governing Council meets today in Frankfurt, will also have to decide whether to give Cyprus more time or consider cutting off liquidity to the country’s banks.
“This is not a good result -- neither for Cyprus, nor for the euro zone, and we have to look together for alternatives to the negotiated package,” Frieden said yesterday in a phone interview from Frankfurt. He called the vote “very sad news,” though said the decision by its parliament must be respected.
Cyprus’s rejection came after days of recrimination sparked by European plans to force depositors in the country to shoulder part of the bailout with their savings. Cypriot President Nicos Anastasiades returned from marathon talks on March 16 saying the alternative would be the “indescribable misery” of the ECB cutting off funding to one of its banks.
“What matters now is to undertake all necessary measures to ensure the stability of the euro zone,” Frieden said.
Bank Holiday
Officials from the so-called troika of the ECB, the International Monetary Fund and the European Commission are in Cyprus discussing further capital controls and the possible extension of a bank holiday through to the end of the week, a European official familiar with the talks said on condition of anonymity because the discussions are confidential.
Stocks dropped and the euro fell to almost a four-month low against the dollar at the prospect of impasse in Cyprus. While the country accounts for less than half a percent of the euro economy, the fight over the bank tax risks triggering new turmoil in the financial crisis that began in 2009 in Greece.
Cyprus “has some symbolism impact on Europe, but it’s not a really major economic issue,” Laurence D. Fink, the chief executive officer of BlackRock Inc. (BLK), the world’s largest asset manager, said in a Bloomberg Television interview in Hong Kong today. “It does remind us of the frailty of Europe. It does remind us that the European fix will be multiple years.”
Protesters cheered outside the parliament in the Cypriot capital, Nicosia, as lawmakers voted against the proposal by 36 to none in favor. There were 19 abstentions. Hammered out by euro-area finance chiefs last weekend, the deal sought to raise 5.8 billion euros ($7.5 billion) by drawing funds from Cyprus bank accounts in return for 10 billion euros in external aid.
Schaeuble ‘Regret’
While he “regrets” the result of the parliamentary vote, Cyprus is a “unique case” and sets no precedent for deposits elsewhere, German Finance Minister Wolfgang Schaeuble said in a statement. “We’ve taken adequate precautions to ensure that today’s decision in Cyprus will have no negative effect on the rest of the euro zone,” he said. The offer made by the group of finance ministers “remains on the table,” he said.
Dutch Finance Minister Jeroen Dijsselbloem, who chairs the meetings of finance ministers, echoed those comments, saying in a text message that the euro group “stands ready to assist Cyprus in its reform efforts.”
Junk Status
Anastasiades is due to meet with political party leaders in Nicosia at 9 a.m. today, his office said before the vote. Cyprus’s banks and stock exchange will remain closed.
The ECB’s support for Cyprus’s banks could now come into focus. Cypriot government bonds became ineligible as collateral in refinancing operations in June last year, after all three major ratings agencies had downgraded Cyprus to junk status.
That forced Cypriot banks to turn to so-called Emergency Liquidity Assistance from the Central Bank of Cyprus. Under ELA, the national central bank may continue to lend to commercial banks at a higher interest rate and only with the permission of the ECB’s Governing Council.
Should the ECB consider the situation untenable, it could refuse to sanction the provision of further liquidity. The central bank said in a statement after yesterday’s vote that it would continue to provide funding as needed “within the existing rules.”
Deposit Levy
The deposit levy, championed by Germany and pulled together in a 10-hour negotiation session in Brussels, drew worldwide criticism that it broke a taboo over the safety of bank-deposit savings and risked launching a bank run in other European countries. Cypriots awoke March 16 to find bank transfers blocked, prompting images of long lines at ATMs.
“It seems at this moment there is no third way,” Averof Neophytou, vice-president of Anastasiades’s Disy party, told the chamber before the vote in which his party abstained. “But we must try to find a different path.”
Outside, the parliament was surrounded by demonstrators singing the national anthem and chanting “this will not pass.” The crowd cheered their approval when the results of the vote came through. Euro-area finance chiefs had urged Cyprus on the eve of the vote to spare small-scale savers, as they maintained the size of their total demand on account holders.
Anastasiades spoke by phone with Merkel yesterday for the second time in as many days, German government chief spokesman Steffen Seibert said in a text message, declining to give details of the conversation. Seibert didn’t respond to messages seeking comment on the vote.
More Talks
“This is not the end of the process, but instead kicks off a further round of negotiation with Moscow and Berlin,” Alexander White, a European political analyst at JPMorgan Chase & Co. in London, said in a note. “The Cypriot authorities wanted to conduct the vote so that they could reaffirm the extent of their difficulties to the Europeans.”
Cypriot Finance Minister Michael Sarris missed the ballot as he flew to Moscow to hold talks about financial assistance. Russian companies and individuals have $31 billion of deposits in Cyprus, according to Moody’s. Russian President Vladimir Putin called the tax “unfair, unprofessional and dangerous,” according to a statement posted on the Kremlin website.
“Cyprus has rebuffed the outstretched hand” of its partners, Hans Michelbach, a German lawmaker from Merkel’s Christian Democratic bloc and its ranking member on parliament’s finance committee, said in an e-mailed statement. The vote is “an act of collective unreason” and “the people of Cyprus must now pay a high price.”
To contact the reporters on this story: Patrick Donahue in Berlin at pdonahue1@bloomberg.net; Jeff Black in Frankfurt at jblack25@bloomberg.net
To contact the editors responsible for this story: James Hertling at jhertling@bloomberg.net; Craig Stirling at cstirling1@bloomberg.net
ugh! Just read that morons comments. really, these people are just TOO damn pathetic, but they get voted in year after year.
The numbers were OK, and the housing sector and housing stocks all seemed to hit new highs, but faded. (KBH a prime example) Fade from these levels?
Hello Glooms. How are you? Does DA still have you working the Bingo circuit as his trophy gigolo? I hope those bingo ladies aren't treating you to rough.
Catching up on yesterdays action, the damn BTFDers are still out in force. It will take a LOT to drop this market in any real big way, gloomers like us need to be patient.
I was looking at some TZA calls, but went with SLV, and of course, the TZA moved nice. Still think SLV has a nice pop in it, it also popped yesterday, but it didn't hold.
I pretty much made 1 quick trade when the market opened, got some SLV $28.50 Apr Calls for .44 After that, had to go to a BN function that one of the companies was throwing, got back to room, and fell asleep again.
(Plus, really can't day trade out here, the internet in the rooms are SLOW as heck, it can take a few minutes to make one damn trade!)
Hmmmm....if I had a choice, I would go with the.....BEER! Women will just drive you crazy, beer will make you happy.
LOL, no complaints from you I am sure!
But still, I always said with this company.....friggin' YOGA PANTS! Looks like it is becoming a fading fad, would look to fade this company in the longer run, yoga is like the hula hoop, Jane Fonda, etc.... Out here, the new big thing is something called Crossfit. NOT for the older group like me, I am fine with some weights and running, don't need all that crazy stuff they do.
Off to run some errands, meetings with staff, and dinner. Should be back by open, but there seems to always be SOMETHING lately. Stay safe with your money Lottos, it is crazy out there!
Probably right. If the Cyprus thing just caused a little momentary blip, not really much that can crack this market. (Well, the POMO can stop, but that is about it.)
LOL, I didn't tell you yet, but I will DRINK that 9.5% of the beer I confiscate, all in the name of fairness! Why should YOU be the only one enjoying all those good beers?
I will be confiscating some of the women as well.
Sorry Den, it is only FAIR.
WTI Crude Trades Near Month’s High; U.S. Supplies Seen Rising
By Grant Smith and Ben Sharples - Mar 19, 2013
West Texas Intermediate traded near a one-month high as tension eased over a bank tax in Cyprus that threatens to worsen Europe’s debt crisis. A report today may show U.S. crude supplies rose to the most since June.
Futures were little changed in New York. Prices rebounded yesterday, from an intraday drop of as much as 1.8 percent, after European policy makers signaled flexibility on a savings levy linked to a bailout for Cyprus. U.S. crude supplies probably rose for a ninth week, the longest run of increases since May, a Bloomberg News survey showed before an Energy Department report tomorrow. Crude at about $100 a barrel is “reasonable” and won’t choke global economic growth, Saudi Arabian Oil Minister Ali Al-Naimi said yesterday.
“The number one story in the markets is still about an island in the Mediterranean with approximately 1 million inhabitants,” said Michael Poulsen, an analyst at Global Risk Management in Middelfart, Denmark, adding that oil prices are likely to remain “fairly balanced.”
WTI for April delivery, which expires tomorrow, was at $93.64 a barrel, down 10 cents, in electronic trading on the New York Mercantile Exchange at 9:40 a.m. London time. The more- active May future slipped 10 cents to $94.01. The volume of all futures traded was 15 percent above the 100-day average. The front-month contract climbed 29 cents to $93.74 yesterday, the highest close since Feb. 20.
Price Rebound
Brent for May settlement slid 77 cents to $108.74 a barrel on the London-based ICE Futures Europe exchange. Volumes were 19 percent below the 100-day average. The European benchmark grade was at a premium of $14.76 to WTI futures for the same month. It closed at $15.40 yesterday, the narrowest differential since Jan. 17.
Crude in New York has technical resistance along its middle Bollinger Band, around $93.80 a barrel today, according to data compiled by Bloomberg. Futures have halted intraday advances near this indicator the past two days, showing it’s where sell orders may be clustered. A breach of chart resistance at settlement signals further price increases may be sustained.
“Saudi Arabia does not set the price” of oil, Al-Naimi said in speech in Hong Kong. “The market sets the price. That said, I’m sure current levels will not deter further economic growth in Asia.”
Angry Cypriots
Oil recovered yesterday as European officials said Cyprus can ease the terms of the levy on bank deposits that seeks to raise 5.8 billion euros ($7.5 billion) as part of a rescue package. Local outrage over the tax threatens to derail the nation’s bailout and extend a European recession.
U.S. crude inventories climbed by 2 million barrels to 386 million in the seven days ended March 15, according to the median estimate of seven analysts in the Bloomberg survey. Gasoline stockpiles probably fell by 2 million barrels, the survey shows. Supplies of distillate fuel, a category that includes heating oil and diesel, probably fell 1 million barrels to 119 million, the lowest level this year.
“We’re seeing supply in the U.S. increasing but we haven’t seen any real positive move in demand,” said David Lennox, an analyst at Fat Prophets in Sydney. “There hasn’t been any significant change in the driving factors for the oil market.”
The industry-funded American Petroleum Institute is scheduled to release separate inventory data today. The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Information Administration, the Energy Department’s statistics unit, for its weekly survey.
Retail gasoline prices in the U.S. slid to an average $3.696 a gallon, a one-month low, according to data on the EIA’s website yesterday. That compares with $3.71 a week earlier.
To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net Grant Smith in London at gsmith52@bloomberg.net;
To contact the editor responsible for this story: Raj Rajendran at rrajendran4@bloomberg.net
FOMC meeting starts today >> The Fib Doctor's Morning Market News 3/19/2013 - http://stks.co/p5uu
Futures are just a tinge red this early morning, but anything can happen the way this market is going. Probably more of the same as yesterday, with a slow move up, and then some selling near the end as the vote is tonight in Cyprus.
U.K. Gilts Rise a Fourth Day as Cyprus Boosts Demand for Safety
By Lukanyo Mnyanda - Mar 19, 2013
U.K. gilts advanced for a fourth day as the European Union’s insistence that Cyprus raises cash from bank depositors threatened to deepen the euro region’s sovereign-debt crisis, boosting demand for safer assets.
The 10-year gilt yield was set for the longest run of declines in two months. Finance chiefs from the 17 euro countries kept the pressure on Cyprus, telling the country yesterday to raise 5.8 billion euros ($7.5 billion) from bank depositors to unlock emergency loans. The pound was 0.6 percent from its strongest level in five weeks against the euro before a report that economists said will show Britain’s inflation accelerated in February to the fastest since May.
“It’s the Cyprus stuff that people are looking at,” said Sam Hill, a fixed-income strategist at Royal Bank of Canada in London. “Whilst there have been points where the gilt market’s safe-haven status has been more open to question than in the past, that was in the absence of a flare up in euro-area risks. There’s an acceptance that there’s still merit in resorting to gilts at times of difficulty.”
The 10-year gilt yield fell one basis point, or 0.01 percentage point, to 1.89 percent at 9:16 a.m. London time, headed for the longest run of declines since the period through Jan. 16. The 1.75 percent bond maturing in September 2022 gained 0.085, or 85 pence per 1,000-pound ($1,508) face amount, to 98.83. The rate dropped to 1.86 percent yesterday, the lowest since Dec. 31.
The pound depreciated 0.2 percent to $1.5078 and was little changed at 85.82 pence per euro, after reaching 85.31 pence yesterday, the strongest level since Feb. 11.
Inflation Quickens
U.K. consumer prices rose 2.8 percent from a year earlier last month, up from 2.7 percent in January, the Office for National Statistics in London will say today, according to the median prediction of 35 analysts surveyed by Bloomberg.
The pound has advanced 1.5 percent in the past week, the best performer among 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Indexes. The euro fell 0.6 percent and the dollar gained 0.2 percent.
Sterling has weakened 7.2 percent against the greenback this year amid speculation the Bank of England will boost its asset-purchase program to revive the economy and counter the impact of Chancellor of the Exchequer George Osborne’s austerity program. The central bank last increased the target in July, boosting it by 50 billion pounds to 375 billion pounds.
Osborne is due to present his annual budget tomorrow.
U.K. government bonds earned 0.6 percent this month through yesterday, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies.
To contact the reporter on this story: Lukanyo Mnyanda in Edinburgh at lmnyanda@bloomberg.net
Hey Den!! If I were in charge, I would take 9.5% of the beer from Belgium, and make them do it MONTHLY.
Roger that N4, have a good night.
And the NEXT time you post about getting old at...28, I will have Gloomy Butt come find you and BEAT you with his cane!
Here is an opposite stock ready to short; CZR. They are in debt almost as bad as Cyprus! All the online gaming in the world won't fill that debt hole, and their last report was brutal, with a lousy forward looking statement to boot. Yet, here it is at all time highs. Nice gap at the $15 range, where I would get Puts.
NOTE: The short float is big here, at 24%. I would THINK a lot of shorts got squeezed out this past week, and it is lower now. Sometimes crap floats to the top due to the squeeze, but eventually it flushes.
Gold Trades Near Two-Week High Above $1,600 Before Fed Meeting
By Glenys Sim - Mar 19, 2013
Gold held above $1,600 an ounce, trading near the highest level this month, before the U.S. Federal Reserve begins a two-day policy meeting. Silver advanced for a second day.
Gold for immediate delivery traded at $1,606.87 an ounce at 12:37 p.m. in Singapore from $1,605.63 yesterday. The metal jumped to $1,611.33 yesterday, the most expensive since Feb. 27, as a levy on bank deposits in Cyprus boosted haven buying.
Gold has lost 4.1 percent this year as Federal Reserve policy makers remain divided on the pace of stimulus that helped the metal to rally. Bullion last week had the first back-to-back weekly gain since January as data showed U.S. consumer prices rose more than projected in February and inflation reached a 10- month high in China.
“The optimism and positive perception of the U.S. economy has likely decreased the appeal of gold as a safe haven asset and reduced expectations of the extent and length of quantitative easing,” Lachlan Shaw, senior analyst at Commonwealth Bank of Australia, wrote in an e-mail. “As the market perceives increased uncertainty on U.S. Fed policy, volatility in gold prices may rise.”
Gold for April delivery traded at $1,605.40 an ounce from $1,604.60 on the Comex in New York yesterday. The most-active contract surged to $1,610.40 yesterday, the highest price since Feb. 27. Cypriot lawmakers are due to vote today, following a two-day delay, on how to spread the burden of a levy on bank depositors to help fund the nation’s bailout.
Spot platinum added 0.1 percent to $1,581.25 an ounce after five days of losses, the worst streak this year. One ounce of platinum bought 0.9845 ounce of gold today, after trading at the biggest discount to bullion in two months, data compiled by Bloomberg show. Metal held by exchange-traded products expanded to an all-time high of 51.8324 metric tons yesterday, data compiled by Bloomberg show.
Cash silver rose 0.4 percent to $28.99 an ounce. Silver assets in exchange-traded products climbed to a record 19,738.209 tons yesterday, data compiled by Bloomberg show. Palladium gained 0.2 percent to $764.75 an ounce.
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
Notable earnings after Tuesday’s close: $ADBE, $CTAS, $FRAN, $TRQ, $WSM
Notable earnings before Tuesday’s open: $DSW, $FDS, $RNF, $SVNT, $WAC
Tuesday's economic calendar:
FOMC meeting begins 7:45
ICSC Retail Store Sales
8:30 Housing Starts
8:55 Redbook Chain Store Sales
What today's low volume selloff says about this market and where it is headed: http://stks.co/s5lq
Oh, so THAT is how he does it!
Are you still overclocking your chips? Love my new HP, getting USED to Windows 8, but I still think it sucks.
BlackBerry is a coin flip. Lots of different opinions and analysis out there, but the phone does look good, and I really think they can pull a nice rebound. They will NEVER be as big as they were, but a solid number 3 is still a lot of money. Professionals like the BBRY for the simple Keyboard for work e-mail. A smartphone is nice for sending tets like 'I luv u' but crappy for a professional reply to a sales question or something.
My dopey opinion. Liking some lotto calls for maybe $20, and some $16s for next week if it stays in this $15 area.
Workers Saving Too Little to Retire
By KELLY GREENE and VIPAL MONGA
Workers and employers in the U.S. are bracing for a retirement crisis, even as the stock market sits near highs and the economy shows signs of improvement.
New data show that powerful financial and demographic forces are combining to squeeze individuals and companies that are trying to save for the future and make their money last.
The survey also found that 28% of Americans have no confidence they will have enough money to retire comfortably—the highest level in the study's 23-year history.
The same forces are weighing on corporate balance sheets. Based on another recent report, the Society of Actuaries said that rising life expectancies could add as much as $97 billion to corporate pension liabilities in coming years, an increase of up to 5%.
While Americans are living longer, the extended life spans will make it tougher for workers trying to stretch retirement savings and put additional strains on pension plans.
Scott Ghelfi, 49 years old, a small-business owner in Falmouth, Mass., and his wife own two candy stores and a children's clothing shop. He said they didn't make their normal $24,000 contribution to their retirement plan two years ago because they couldn't afford to take the money out of the businesses.
MORE - http://online.wsj.com/article/SB10001424127887323639604578368823406398606.html?mod=pls_whats_news_us_business_f
JE, a growing energy company that gives a nice monthly divi, getting pummeled recently after cutting the divi from about a dime to about 8 cents. PE is stupid at about 3. I guess if they LOST money hand over fist like WDAY or CRM, they would be valued more. Worth doing some DD on, they are in NatGas, energy delivery, solar (green energy) etc...
This is one to buy and hold for retirement.
Eurozone's risky strategy in Cyprus - opinion
By Douglas J. Elliott @CNNMoneyMarch 19, 2013
Sometimes the eurozone reminds me of someone addicted to Russian Roulette.
They take out a revolver, load a bullet into one chamber, spin it, aim for their head, and pull the trigger. It doesn't fire, so they celebrate for a while, and then decide to try it again ... with the same result.
After repeating this a few times, they become convinced that it will never fire.
(This is not intended as an assertion of American superiority, since our politicians seem prone to similar behavior with our budget problems.)
The eurozone's latest gamble is on Cyprus.
They have chosen to call into question the security of bank deposits in the eurozone, including insured deposits, rather than take a more politically difficult, but safer, step.
European leaders hope to minimize the damage by convincing depositors in other troubled nations that actions taken in Cyprus would never be applied elsewhere.
Cyprus truly is unique in important ways, but depositors and citizens elsewhere will note that the eurozone's leaders have now shown a legally easy way to destroy the value of deposit guaranty insurance, along with a willingness to use that approach under at least some circumstances.
Related: 5 reasons the Cyprus bailout matters
This is a foolish thing to do, because there are more bank deposits in the eurozone than government debt, meaning that the potential problems of contagion are very large. There may not be any bank runs in other nations in the near term, but I fear this action will have a large effect in any future bank crisis.
The eurozone's leaders believed, perhaps accurately, that there were no politically feasible alternatives.
The best solution would have been a eurozone rescue on fairly lenient terms, as at least an interim solution. The country is very small; its economy is only about 0.5% of the total eurozone. A pragmatic rescue would have paid dividends in increasing the euro area's stability at a critical time when problems in Greece, Italy, Spain and elsewhere are worsened by political constraints created by the run-up to Germany's September federal elections.
Unfortunately, the Cypriot banking system is too closely associated in the minds of Germans and others with Russian oligarchs and mobsters using the island for tax evasion and money laundering.
So, it appears the eurozone's leaders believed there could be no rescue without sharing the pain with Cyprus or Russia. The Russians appear likely to help, but not in a big enough and public enough way to solve the eurozone's political problem.
Related: Cyprus shuts banks as bailout backfires
Imposing losses on the holders of Cypriot government bonds would have achieved the political purpose, but doing this earlier in Greece was disastrous and the eurozone's leaders have rightly sworn that this will not happen again during the current crisis. For their part, holders of bank bonds will almost certainly take losses, but there happen to not be a lot of Cypriot bank bonds, so more money was needed.
That left the depositors to make sacrifices.
Eurozone leaders were well aware that forcing losses on depositors of struggling banks would increase the risk of bank runs in other troubled countries if the public started to lose confidence in their finances.
Yet they saw no other politically feasible solution, so they tried to be clever. They chose to impose a uniform tax on depositors of all banks, rather than a haircut related to the size of each bank's losses.
Presumably, that was to avoid the precedent of depositor losses by framing the action as a one-off wealth tax, but it is hard to believe anyone but lawyers will make the distinction in applying the lesson to other situations.
There is a grave risk that this action will eventually lead to serious bank runs in other parts of the eurozone.
A depositor in a weak country with a troubled banking system would have to seriously consider moving their funds to a stronger country, which is easy to do within the eurozone, or out of bank deposits altogether, which is even easier.
European leaders can repeat until they are blue in the face that the unique circumstances of Cyprus are the only reason they went this way, but many depositors will focus on the fact that even insured deposits are being hit. Nor is the relative health of one's bank relevant to the loss, so it will not necessarily be better to hold deposits in a safe bank.
The eurozone keeps gambling on risky, politically expedient solutions to deal with the problems that are directly in front of it.
Sometimes this has worked and sometimes, as with the Greek bond haircut, the longer-term consequences are disastrous. The eurozone may get lucky this time, either because the euro crisis is near its end or because there will be no further bank panics.
However, I fear neither of those fortunate situations will prove to be true.
Douglas J. Elliott, who worked as an investment banker for two decades, is a fellow at the Brookings Institution.
Hello DA. Took a nap when I got back to my room last night after dinner, MISSED THE WHOLE DAMN MARKET DAY! And it looks like it was exciting.
BBRY: Nice chart here from BencBanks on ST. This sucker is shorted like there is no tomorrow. They will come out with official report next week. Lots of good news dripping out, but the question remains, WILL IT MAKE A COMEBACK?
Right now, BBRY is number 4 in the smartphone market, behind Windows that overtook them last year. I would think that BBRY can come back to that spot, sell a LOT of phones again, and be the leader in the Enterprise. This company is not ready to die yet. Worth some lotto Calls for April.
FOMC tomorrow. Here's a look at the full schedule and members involved http://stks.co/iOyf
<mish>Cyprus Banks Closed Until Thursday; "Solution is Feasible, Can Be Extrapolated to Spain", Says Spanish Economist; Lies of the Day
Direct robbery of Spanish citizens would net Spain about €120 Billion according to economist Niño Becerra who says "Cyprus Solution is Feasible, Can Be Extrapolated to Spain"
Santiago Niño Becerra, Professor of Economics at the University Ramon Llull in Barcelona, says a tax as imposed on Cyprus in exchange for bailout, would be possible and that "it is very clean, unlike a freeze all balances, which would be a mess."
Through his twitter account, Niño Becerra says it would be more painful for Cypriots if "the bailout were to occur in the form of public debt."
The Spanish government was quick yesterday to claim the Cyprus solution was not applicable to other countries. Niño Becerra disagrees: "I'm not saying this will happen, only that it is feasible, it is possible and if extrapolated to Spain, would be very clean."
Becerra estimated savings using Spanish a "tax" of 10% would raise €120 Billion. A 5% tax would raise €60 Billion, which, added to the €40 Billion commitment would be the amount regulators said a year ago that they may need for Spanish banks.
Direct theft is now considered a "feasible" option for Spain. Lovely.
Cyprus Banks Closed Until Thursday
While pondering that thought, note that Cyprus banks will stay closed until Thursday
The Cypriot central bank has announced that the country's banks will stay closed until later this week as fears mount of a bank run.
The country's banks were closed for a scheduled Bank Holiday on Monday, something that allowed Cyprus to try to implement a levy on savers' deposits. That move triggered unease among depositors in Cyprus, where cash machines soon ran out of funds.
This is the first time the 17-nation eurozone has seen a country dip into people's savings to finance a bailout.
Meanwhile, an emergency session of the Cypriot parliament has been postponed until Tuesday. Also, Germany must approve the plan, but is not due to vote until next month.
Following eurozone finance ministers' negotiations last week, Cyprus became the fifth euro-area country to get a bailout to save its banks, which suffered significant losses because of their exposure to Greek debt.
"When It Becomes Serious You Have to Lie"
Recall the statement by Jean-Claude Juncker, Luxembourg PM and Head Euro-Zone Finance Minister "When it becomes serious, you have to lie"
So, why did Cypriot banks hold so many Greek bonds? They were stupid enough to believe lies by former ECB president Jean-Claude Trichet who insisted there would be no Greek bond haircuts.
Why was this move a shock to Cypriot citizens? They were stupid enough to believe lies by candidate (now president) Nicos Anastasiades when he said there would be no tax on deposits.
Lies of the Day
Today's lie of the day is by Chancellor Angela Merkel who says don't worry, Cyprus is a "Special Case".
How long will citizens of Spain, Portugal, and Italy believe that lie?
The answer is hard to say. People seem willing to believe what they want to hear, even when dealing with known liars.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Aside From Cyprus, Markets Await German Zew, UK CPI, US Housing Data: What To Expect? http://stks.co/q5qj
The whole of EUROPE is still a mess, looks like we are heading back to last year and the Greek fiasco.
Euro Could Recover On Positive News Out Of Cyprus But It's Not Over Till It's Over - Citi http://stks.co/eNvw