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Euro Official On Cyprus: “Markets Believe We Will Find A Solution, This Might Not Be The Case”

21 Mar

BFvAB8iCIAA23X2.jpg largeWhile the market levitation courtesy of the Fed, BIS and BOJ continues unabated to give the impression that all is well, allowing empty momentum-chasing chatterboxes to say that Cyprus is not a big deal because… well, look at the market (and real traders the chance to quietly dump existing risk positions), the artificial, centrally-planned calm during the storm may be ending. The reason comes from none other than the Eurogroup, whose deputy finance ministers held a conference call last night, and whose transcript has been seen by Reuters.

Here are the highlights.

 Euro zone finance officials acknowledged being “in a mess” over Cyprus during a conference call on Wednesday and discussed imposing capital controls to insulate the region from a possible collapse of the Cypriot economy.

Not very confidence boosting. But then again, with confidence in Cyprus now gone, the time for damage control is long gone. Sure enough, it just goes from bad to worse:

“The (Cypriot) parliament is obviously too emotional and will not decide on anything, if Cyprus does not even feel that they can attend the call it is a big problem for us,” the French representative said, according to the notes seen by Reuters.

“We have never seen this.”

“Ring-fencing” is back, and so are Lehman references.

The official also referred to the need to resolve Cyprus’s two biggest banks, both of which are close to collapse, and mentioned the possibility of Cyprus leaving the euro zone.
In the event of an exit, the official said steps needed to be taken to “ring-fence” the rest of the euro zone from the impact and to ensure there was no contagion to Greece.

Bad news for locals: your economy is done, so may as well drag the entire Eurozone down with you:

    “The economy is going to tank in Cyprus no matter what,” the notes quoted him as saying. “Restrictions on capital will probably be imposed,” he said, adding that further conference calls would be organised in the coming days.

And the punchline:

    “Markets believe that we will find a solution and that we will provide more money and this might not be the case,” one of the participants on the call said

Hint to those confused: the market is not at all ignoring Cyprus. The central banks manipulating the market are doing their best to make it seem the market is not affected by a development which not even politicians have any idea how to negate as everything is now in unchartered territory. Of course, if and when control of the market is lost, that’s when things get really interest.





EU budget rejected by European Parliament

13 Mar

E.U. budgetEuropean Parliament rejects the conclusions of the European Council (heads of State or Government of the EU) from 8 February when it was established the multiannual financial budget for 2014-2020, which could overturn the compromise reached in February regarding the distribution of EU funds.
Today the P
arliament voted by a large majority (506 votes for and 161 against) a resolution rejecting the conclusions of the Summit in February, indicating that most of the voters disagree with the 2014-2020 multi-annual budget  wich must be agreed by Parliament in Strasbourg to take effect. If a solution is not reached until the end of the year, it will be established the 2013 EU budget, which complicates things as multiannual financial budget 2014-2020 is different from the financial year 2007-2014.
Moreover, the rejection by Parliament of the MFB (multiannual financial budget) was anticipated early in February by Martin Schulz, President of the European Parliament.
Parliament is unhappy that the EU budget has been reduced with 960 billion in seven years for the first time in EU history. If there will not be a compromise and the Parliament will oppose they will reach a deadlock. The budget will be approved each year which will generate tensions everytime between EU members, some will complain that they received too little while others that have contributed with to much.

Unemployment rate falls to lowest level since 2008

8 Mar

U.S. employers ramped up their hiring in February, helping the unemployment rate to fall to its lowest level since December 2008.

The U.S. economy added 236,000 jobs in February, according to a Labor Department report released Friday. That’s much stronger growth than in January, when employers hired a revised 119,000 workers.

The unemployment rate fell to 7.7% last month, the lowest since December 2008, from 7.9% in January, figures showed.

Employment increased in professional and business services, construction and health care.

Employment growth has risen by an average of 195,000 a month in the last three months, figures show. Analysts had forecast a rise of 165,000 jobs for February.

Professional and business services added 73,000 jobs last month, while the construction industry hired 48,000 employees. The health care industry added 32,000 jobs and the retail sector added 24,000 new staff.

Following the release of the jobs figures, stocks on Wall Street opened higher with the Dow Jones index up 62.23 points at 14,391.72 . The dollar also gained against the euro and the yen.


Historic day, Dow surges to record highs

5 Mar

Service sector grows at fastest pace in a year

 The pace of growth in the vast U.S. services sector accelerated to its fastest pace in a year in February, helped by a rise in new orders and demand for exports, an industry report showed on Tuesday.

The Institute for Supply Management said its services index rose to 56 from 55.2 in January, exceeding economists’ forecasts for 55. It was the highest level since February 2012.

A reading above 50 indicates expansion in the sector.

The new orders index jumped to 58.2 from 54.4, while orders for exports rose to their highest level since May 2007 with that gauge at 60.5, up from January’s 55.5.

PMI services

After hitting an intraday record at the open on Tuesday, the Dow Jones Industrial Average extended gains after the service sector data.

If the Dow ends the day at these levels, it will also set a new record closing high, above 2007’s 14,164.53.

Shortly after the opening bell, the Dow rose above 14,198.10, the intraday all-time high reached in October 2007, when the world was heading toward the financial crisis.

Analysts said Tuesday’s advance was due less to one specific catalyst and more to the same factors that have been driving the rally this year, namely attractive valuations and liquidity from loose monetary policy around the world.

The Dow Jones industrial average was up 129.77 points, or 0.92 percent, at 14,257.59. The Standard & Poor’s 500 Index was up 13.72 points, or 0.90 percent, at 1,538.92. The Nasdaq Composite Index was up 33.12 points, or 1.04 percent, at 3,215.15.

Inflation poses no problems in the Eurozone

28 Feb

Ben Bernanke clarified his position as a response to the insistence of some Congressman (mostly Republicans): a strategy for normalizing monetary policy (printing press is not exactly the usual procedure) is not in the eyes of officials. Furthermore, when it will be decide to raise interest rates or extract liquidity, the announcement will be made in advance. ECB President Mario Draghi did not want to create a dissonance, and in a speech on Wednesday said that there is no rush to withdraw monetary stimulus. One of the arguments the low inflation rate which is gonna fall below target is supported by recent data: Eurozone consumer prices rose 2% in the last year, and without food and energy, alcohol and tobacco, their level is about  1.3% higher.

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