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Street Just Yawns at Europe’s Latest Crisis

By Rick Ackerman Posted on March 19, 2013, 1:10 am EDT Last Updated March 19, 2013, 6:36 pm EDT

Goldman Sachs called the Cyprus bank bailout a big deal, according to someone who posted in the Rick’s Picks chat room yesterday morning. Whether true or not, as far as Wall Street is concerned the bailout and the punitive measures it will bring against depositors barely even merited a yawn.  The Dow Industrials fell a meaningless 62 points yesterday in response to the news. The close was up sharply from overnight lows that equated to a 180-point drop in the blue chip average. We were braced for a 250-point plunge ourselves, but buyers came after index futures so aggressively early Monday morning that it seemed a foregone conclusion that they were treating Cyprus’ banking problems not as a crisis, but as an opportunity to gorge themselves on stocks at temporarily reduced prices.

We editorialized yesterday about how the bailout, by slapping a tax of 6% to 10% on depositors, was setting a bad precedent that could send European deposits scurrying for the ostensible safety of U.S. Treasurys and even gold. Both got a small pop, but certainly not enough of one to suggest investors are the least bit spooked. T-Bond futures rallied about three-quarters of a point while Comex April Gold rose $12.  It wasn’t urgent buying that pushed bullion higher, but rather the vague feeling that the crime syndicate that holds gold prices down had simply pulled their offers and were allowing quotes to drift, unmolested, as high as the news was going to take them.

Old News

Meanwhile, the airwaves were filled with reports critical of Europe’s (i.e., Germany’s) decision to squeeze $7.8 billion from depositors to unlock emergency loans. A Washington Post story, Markets Drop Amid Euro-Crisis Fears over Cyprus Bailout, led Google’s news page for a couple of hours, but it was already yesterday’s news when the NYSE opened for business Monday morning; for in fact, U.S. stocks were not falling most of the day, but rallying back to unchanged. Although the blithe pitch of the rally proved unsustainable, the Dow surely would have surrendered more than 62 points of it if had there been any real concerns on Wall Street. NCBC trotted out the Fed’s gray eminence, Alan Greenspan, to cast his radiance on the current scene.  Without using the phrase “irrational exuberance,” Greenspan said the market’s ebullience in recent weeks was fueled by diminished concerns about euro-zone and other tail risks. All is right with the world, it would seem.

  • Tech-trac March 20, 2013, 4:02 pm

    When it comes to Yawns, check out this Yawning gap:
    http://stockcharts.com/h-sc/ui?s=HYG:LQD&p=D&yr=1&mn=3&dy=0&id=p73067932381:
    talk about RISK-ON!

  • Marc Authier March 20, 2013, 7:25 am

    They shouldnt. I think that Cyprus crisis has sent a clear message to those living in Spain and Italy and also even USA. Dont keep money at the bank. They will steal it all.

  • BigTom March 20, 2013, 2:54 am

    Gary – I don’t think this Cyprus bank thing was nixed(if it goes thru) because it was a foolish idea. I think ‘they’ thought it was a very good idea. The only trouble was probably a russian mafia threat of an actual death experience by a humiliating staged suicide if such a banking fiasco did proceed as publicized. I do not believe the turds just woke up with a sudden, ‘gee whiz, golly, was that a bad idea!’ Nope, don’t think it went down that way at all…..

  • Chris T. March 19, 2013, 9:58 pm

    gee, didn’t a bunch of FOREIGN banks just get to pony up for the so-called fixing of LIBOR?

    How’s that for equal justice for all (bankers)?
    Just goes to show, that even those who THINK they can swim with the great-grand-daddy sharks of Wall Streets are just small fry when it really matters.

    low VIX with no reason to expect anything bad on the horizon, such a brave new economy

  • KeivnR March 19, 2013, 9:03 pm

    Nothing to see here, these are not the droids you are looking for. Move along….

    I wonder how Putin and his boys will take the 10% charitable donation?

    Until the Crimex is broken, nothing will change in the gold market (IMHO of course).

    Oh the games we play

  • BigTom March 19, 2013, 8:37 pm

    Speaking of rabbit holes, here a good one…..
    “JPMorgan wins dismissal of silver price-fixing lawsuit”
    http://www.reuters.com/article/2013/03/18/us-jpmorgan-silver-lawsuit-idUSBRE92H10520130318

  • BigTom March 19, 2013, 8:21 pm

    ‘Greenspan said the market’s ebullience….’ LOLOL sheesh! All on low VIX! The rabbit hole gets bigger and darker in all matters, not just financial…..Where’s Alice?
    The HUI was even down yesterday and at the moment up a measly .52 today!

  • Chris T. March 19, 2013, 6:43 pm

    Hadn’t seen any absolute numbers as to how much that “tax” was going to “net”.
    Rick has it at 7.8 billion.

    So, why not just “give” the difference of about 5.2 to the Cypriot banks, and tell them to find the rest elsewhere?
    No need to then make it look like a tax at all, and certainly not one being imposed from outside (very unpopular).
    Unlike above, doubt that it was the German side doing this, at least not alone.

    The answer to the question above must be to intentionally produce a bank-run in Cyprus.
    Because that, even after any sort of agreement reached, or not, is the only logical course of action for all affected account holders, once they can.

    If people have any sense left at all, they would even do so with the after-tax sums left, anything else is just stupid and there unfortunately are plenty of stupid people).

    Why would these Eurocrats want to provoke such a thing?
    Most likely as a warning sign to the other big-kahunas on the bloc, the real PIGS.
    In their hubris they think they can manage this when using a tiny little community as the signal giver.

    As if they really care about 8 billion here or there, its not even peanuts, its just so much of a rounding error in these days of trillion dollar print and give-outs.

    BTW, Mr. North most likely has this one peggeg right.

  • Rich March 19, 2013, 4:13 pm

    This baby whale sold to close half the VXX Apr 21 calls entered Friday at a nice profit and bought UAL Apr 31 puts at 0.76…

  • Sigmund Fraud March 19, 2013, 11:27 am

    Jim Sinclair in his latest interview at King World News says it is a big deal.

  • wayne siggard March 19, 2013, 8:15 am

    Willie Sutton said he robbed banks because that’s where the money is. Willie La Garde and Angela Merkel (Thelma and Louise) like banks too, only they only took 10%. Oh, wait. That’s all the real money there is in the bank anyway, the rest being invested in loans or derivatives. All the cash is gone. Wait, again. Didn’t anyone tell them you don’t steal from the mob?
    Where else is the money? Kirchner found out in Argentina. Obama found out in Chrysler and GM. Private gold? FDR had the answer on that one. Pension funds, IRAs, 401Ks, stocks, real property, art, collectibles, antiques? Come on, you cheapskates. Just one time for only 10%, and you can fund the deficit for next year, and it will only be one time; just like Reagan’s amnesty. Just like Reagan’s tax increase. Oh, wait again, tax increase first, spending cuts later. Well, come on, the government really needed those funds, and Boehner agrees with Obama. We don’t really have an immediate spending debt problem.
    Want to bet they have an immediate need to get a hold of your funds? If the Euro doesn’t crash from Cyprus, tallyho!

  • rodney boyer March 19, 2013, 6:24 am

    I am very disappointed that your website cannot keep up to date with economic developments.

    &&&&

    May the Lord give you the strength to bear this disappointment, Rodney. Meanwhile, you might try ZeroHedge, which is never more than minutes behind the news. RA

  • bc March 19, 2013, 3:29 am

    They kick the hornets nest and nothing happens. As long as Cypriot banks stay closed maybe nothing will. But when they open it will be get back Jack! Half from fear half from anger depositors will empty their accounts in a New York minute. The knock on effects will be impossible to ignore. Expect Putin to kick them in the balls once they are down too. What were they thinking?
    No back peddling now. It won’t work.

    • mario cavolo March 19, 2013, 10:44 pm

      But JJ, as you say, THAT”S the problem. The oligarchs are in control and make the rules. They can make up and announce any new rule any time they want. The democratic process to make these processes reasonable and responsible are 90% corrupted.

      Eg., they could easily open the bank doors but announce a limit on withdrawals, or some other this or that to “maintain stability” screwing the masses while the rich keep enjoying their circle jerk…

      Pffft! Cheers, Mario

  • gary leibowitz March 19, 2013, 2:07 am

    The market knew nothing would come of this ridiculous scheme. It is as preposterous as the movie ARGO being depicted as a true story. Who ever thought of this arrangement must have used it as a warning to all the struggling nations. The old argument concerning the EU crisis had more bite than this one. It will not be enacted, guaranteed.

    Hardships are happening around the world. African nations experienced famine, genocide, feudal military takeovers for a hundred years. We have a great capacity to shut out what we don’t want to hear, as long as it doesn’t affect us personally.

    The reason why the news caught all of 30 minutes at the market open was because we are now entering the last and final stage of the game. Extremely low VIX combined with a 10 percent move up, with giddy financial newscasters declaring “all is clear”. If this aint a sign of a final blow-off I don’t know what is. I do believe this crowd at Rick’s will get something to talk about, finally. The move was so dramatic that we hit historic numbers on consecutive up days. We also shot up with extremely short lived and shallow corrections.

    If complacency isn’t at an all time high soon than I don’t know what will provide it. As you can tell I am getting excited that the ending phase seems to be here. All the prerequisites are there. The technicals are screeming that we have another move before it ends. I suspect the end of this month will provide the impetus (last decent correction) to commit all the sideliners out there, and they are a large lot.

    BTW, whatever happened to that whale that took a big position on the VIX? I suspect he/she lost big time.

    • VegasBob March 19, 2013, 2:34 am

      If you go back to the Bear Stearns debacle, the S&P 500 went from 1276 on March 17, 2008 when JP Morgan offered to bail them out at $2 a share, to 1426 on May 19, 2008, and closed at 1400 on May 30, 2008 when JP Morgan finalized the bailout deal at $10 a share. It was pretty much downhill from there.

      The point is that the stock market has a long history of ignoring the pin that pricks the bubble until the whooshing air escaping from the bubble cannot be ignored any more.

      Too many stock market investors suffer from collective amnesia. They believe self-serving Wall Street propaganda that is disguised as fact, and they actually believe arrant nonsense such as “It’s different this time,” or that somehow they will be smart enough to beat the crowd to the exit door.

      Any number of events can and likely will occur at some point to stick a pin in this demonic bubble, and it will only take one pin. The trick is to be well-protected or even out of the market when the bubble inevitably bursts.

    • gary leibowitz March 19, 2013, 3:30 am

      Regarding my “guarantee” that Cyprus will not try implementing this idiotic depositor tax, I must take it back. All bets are off.

    • mario cavolo March 19, 2013, 10:40 pm

      All I want to is put $1000 in my forex account, sell a few lots of 10/1x S&P index and crude oil and have the balls to completely ignore it and never check on it til September/October to find the balance at 5000. I am a genius amazing short term trader, the best on the planet. I can name dozens of amazing position calls where I KNEW I was right and I was right! For example, a few weeks back I KNEW GDP/USD was going to tank and it did. Oh, sorry did I mention it happened three days after I was already out of the trade? I KNEW crude was going to start coming down and it has, but eight weeks later…

      And on to today’s subject, I KNEW that our world “leaders” would give me another reason to puke, that the Cyprus depositor tax would be reverse by some “other” leader/org. Now they’ll discuss it for a few more weeks or months, make some other bogus annoucement, reverse that one two weeks later.

      It is accurate to say that we are sheep to the ruling elite, the oligarchs who are engaged in the world of masturbating each other to accomplish nothing more than to preserve their potency and pleasure and keep the circle jerk going along like ring-around-the-rosy.

      We are the audience watching the show like helpless voyeurs who didn’t ask to become voyeurs of this absurd peepshow they call leaders running things, and slaving to provide them tissues.

      Cheers, Mario

    • gary leibowitz March 19, 2013, 10:57 pm

      Actually Mario the idea has a certain justice to it. The assumed hidden cash mosty from the Russian Mafia should pay a premium for that privilege. The general concept is nice, except the haven’t figured a way to exclude everyone else from the tax. No, the final decision will be to nix this as a foolish idea that shouldn’t have seen the light of day.


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