March 18th, 2013
in Gary's blogging
Opening Market Commentary For 03-18-2013
At 7 am the futures were down more than the usual 'tad'. The DOW was off 92, the SP500 off 12 and the NASDAQ down 20 all because of the flap going on in Cyprus. I do not mean to marginalize the Cyprus issue, but the seizure of private property is what this is all about. The European Union, the ECB and the IMF are the villains here and let's be clear, this is all about regimes overstepping their moral obligations to the people.
The markets opened sharply down about 1% in the first few minutes on somewhat moderate volume followed by the BTFD 'dippers' halting the steep decline. By 10 am the averages started posting a decent recovery on moderate volume but still below (-0.75%) Friday's closing numbers.
First it is the 'distribution of wealth' soft-talk and now the notion that our governments are going to actually walk in and blatantly take our private property without empowerment from the people is a scary proposition and it is appearing to be getting worse.
"The moment the idea is admitted into society that property is not as sacred as the law of God, and that there is not a force of law and public justice to protect it, anarchy and tyranny commence." -John Adams
"Every collectivist revolution rides in on a Trojan horse of ‘emergency’. It was the tactic of Lenin, Hitler, and Mussolini. In the collectivist sweep over a dozen minor countries of Europe, it was the cry of men striving to get on horseback. And ‘emergency’ became the justification of the subsequent steps. This technique of creating emergency is the greatest achievement that demagoguery attains." -Herbert Hoover
Let's get some things straight and look what has happened directly in the face.
There was no tax on the bank accounts in Cyprus. There still is no tax; the Cyprus Parliament has not passed it and will not vote on it until tomorrow so whatever action takes place it is retroactive.
Next, this was not enacted by Cyprus. The people from Nicosia did not go to the Summit and ask to have the bank accounts in their country minimized to help pay the bills.
Far from it; the nations of Europe, Germany, France, the Netherlands and the rest, demanded that this take place, a "fait accompli," the President of Cyprus said and Europe annexes Cyprus.
Let's be quite clear; the European Union has confiscated the private property of the citizens in Cyprus without debate, legislation or Parliamentary agreement.
Pay attention please. The European Union and the European Central Bank and the IMF have just advocated the confiscation of private property for their own indulgence.
The DOW at 10:15 is at 14463 down 51 or -0.35%.
The SP500 is at 1550 down 10 or -0.36%.
SPY is at 154.78 down 1 or -0.68%.
The $RUT is at 945.53 down 7 or -0.75%.
NASDAQ is at 3227 down 21 or -0.66%.
The longer trend is up, the past months trend is bullish, the past 5 sessions have been bullish to neutral and the current bias is down.
WTI oil is trading between 93.40 and 91.78 today. The session bias is bearish and is currently trading up at 92.36.
Brent crude is trading between 108.90 and 107.32 today. The session bias is bearish and is currently trading up at 107.96.
Gold rose from 1591.00 earlier to 1610.80 and is currently trading up at 1609.27.
Dr. Copper is at 3.44 down from 3.51 earlier.
The US dollar is trading between 82.33 and 83.10 and is currently trading down at 82.98, the bias is currently bullish. There is a gap from this morning at 82.35 which will probably be closed when the indices rise and recover. BUT, watch out after that technically is finished.
I am sure the 'noise' from this morning Cyprus fallout will subside over the next few trading sessions, but be assured this may be only the first act of a tragic end to the Euro as we know it today. Never the less, a lot of Innocent folk are going to be hurt regardless which way this bastardization of government regulations goes goes.
The Cyprus bailout package tax on bank deposits is a deeply dangerous policy that creates a new situation, more perilous than ever.
It is a radical change that potentially undermines a perfectly reasonable deposit guarantee and the euro itself.
Historians will one day explore the dark political motives behind this move. Meanwhile, we can only hope that the bad equilibrium that has just been created will not be chosen by anguished depositors in Spain and Italy. The really worrisome scenario is that the Cypriot bailout becomes euro-systemic – in which case the collapse of the Cypriot economy will be a sideshow.
This will happen when and if depositors in troubled countries, say Italy or Spain, take notice of how fellow depositors were treated in Cyprus.
All the ingredients of a self-fulfilling crisis are now in place: It will be individually rational to withdraw deposits from local banks to avoid the remote probability of a confiscatory tax.
As depositors learn what others do and proceed to withdraw funds, a bank run will occur. The banking system will collapse, requiring a Cyprus-style programme that will tax whatever is left in deposits, thus justifying the withdrawals. This would probably be the end of the euro.
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Written by Gary
<p><strong><span style="font-family: arial,helvetica,sans-serif;"><span style="font-size: medium;">Written by <a rel="”author”" href="/files/gary.htm">Gary</a></span></span></strong></p>
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