Hello traders everywhere! Adam Hewison here, co-founder of MarketClub with your mid-day market update for Wednesday, the 20th of March.
Cyprus, The Mouse That Roared
On Monday, I appeared on CNBC Asia's "Cash Flow" program and discussed Cyprus as being the "mouse that roared." Cyprus geographically is a very small country and represents only .5% of GDP for the EU. However, the ramifications and the notoriety of what this small island country is/was trying to do by seizing savers bank accounts is a psychological bombshell that was heard around the world, especially in Europe. That leads us to Russia, which has a great deal of its money on deposit in Cyprus. It is also rumored that some of the largest deposited funds belong to the Russian mafia. If that is the case, we would not expect to see the proposed disastrous idea of stealing savings from individuals and companies get passed.
The key takeaway in my mind is the psychological damage that has been inflicted on the European psyche. When the banks reopen in Cyprus on Friday, we would expect it will be a rush to withdraw funds, and that could be the next shoe to drop in Europe.
If someone takes their money out of the bank, what are they going to do with it?
1. Put it under the mattress?
2. Buy gold, which pays no dividends whatsoever and is heavy?
3. Buy solid dividend paying US stocks and keep their money outside of Europe?
My guess is it could be the latter, providing the Fed continues to act as the market's biggest supporter.
The Fed Reports Today At 2PM
At 2PM today, Fed Chairman Bernanke speaks and hopefully gives us an indication of what the future course of action is going to be for the Fed. I expect steady Ben will remain on course with no changes, and that the Fed will continue to pump $85 billion into bonds every month. Do you think Chairman Bernanke will mention Cyprus?
A Nail In The Euro Coffin
Late yesterday, we received a new red monthly Trade Triangle signal in the Euro/Dollar relationship, indicating that the Euro is headed lower. All three of our Trade Triangles are now red, indicating that the major trend has turned negative against the Euro.
Big Shake Up Coming At Hewlett-Packard
Today, Hewlett-Packard (HPQ) is holding a shareholders meeting and there is a strong suggestion from CalPERS, the California Public Employees' Retirement System, that they want to replace at least five of the directors on the board. These very same directors are the ones that made three disastrous acquisitions, the last of which was Autonomy, which they just wrote off the tune of $9 billion. Today we will take a look at what the stock is doing.
Two Stocks on the Move Today Based on Our Trade Triangle Technology:
DEAN FOODS (DF)
NEW MOUNTIAN FINANCE (NMFC)
POTENTIAL CHAOS AHEAD
March 27th - Budget Resolution Expires
May 19th - Debt Ceiling Suspension Expires
Have a great trading day,
Adam Hewison
President, INO.com
Co-Creator, MarketClub
the mouse that roared..... and Goliath that screamed foul. A little clue about the money trail in these "wunderbar" democracies.
The big fear is that the citizens will lose faith in their banks. Imagine such an unfounded fear! With the crooks in charge, printing money like toilet paper, who would worry about money and banks? hahaha nothing like a little bank holiday to get your attention, right?
Europe can't be managed the way the US is by the Fed and Treasury Depts (with the help of JPM and GS, of course), despite the fact that the Treasury/Fed is literally pumping trillions of US dollars into the swap machinery over there, in an increasingly desperate effort to forestall utter collapse. But wait, Italy just kicked out the GS preppie unelected Monti and appointed . . . a comedian! ha ha ha the joke is on the Boyz a the Banks this time. Good luck stopping the soon to come defaults. Stand by for OPEC to announce that they are now taking other currencies besides the US dollar for oil, too.
I hear there is a new version of the US $100 bill being circulated outside the US. Wondering now if this is in preparation for the coming devaluation of US currency. A separate $100 bill would facilitate allowing US dollar deposits outside the US to maintain a difference exchange rate. Only the good ole US public will get the full devaluation? Stay tuned.
I picked option 1. I went Monday morning and removed all my money from the banks... Ill use a safe from here on out... Between monthly "maintenance" fees, overdraft charges, the banks being closed all the time, and the zero interest rates, what benefit is there?
Thus far I have actually gained interest on my money in the safe because the 6.95 didn't come out of my account this month!
Im glad the cyprus event took place though, it showed the entire world that these people are criminals, thieves, just a bunch of nut bags who need to be put in prison...
I WILL NOT accept a digital currency run by these terrorists. I WILL fight to my death to avoid it... but thats all conspiracy theory so.... *smirks*
If you had the chance to remove your money on Monday, keeping it under the mattress is an intermediary solution, but it won't make the money storage safer.
Probably they will install a special tax, based on a fixed rate on your whole properties, calculated at a day before they have announced the "seizure". So it won't help, that you have removed your money from the account.