Getting shafted in Cyprus … Who’s next?
PETROS KARADJIAS / THE ASSOCIATED PRESS
Cypriots line up to use an ATM machine outside of a Laiki Bank branch in Larnaca, Cyprus, on Saturday 16 March 2013. But there is no cash available for withdrawal.
Asianmacro do not normally work (as in reading or performing any analysis on the financial markets) on weekends. Not because he is observing Sabbath but with young school going children with weekend activities, it has become his fatherly duties to become the ”Soccer Dad” on weekends! (*Sigh, that means any real ‘work’ starts only when the kids are in bed from 10 p.m. onward on Sunday evenings!)
However, politicians, governments and central bankers like to use weekends to spring their surprises onto the markets. Because this is when markets are closed and also people are supposedly having their rest and that is when they can mess around freely with less interference (if any)!
So it comes as no surprise when the supposed Cyprus bailout package was announced over this weekend that included an absolutely from-the-rear kick-in-the-ass to that country’s savers and depositors when a tax was imposed. http://www.bbc.co.uk/news/business-21812853. Already rationale is being given on why the rescue is necessary and that most of the ”savers” that will be taxed are actually non-resident Russian money (*Hint: Read as Russian mob and wealthy Oligarchs) rather than the citizens of Cyprus, if you choose to buy this story anyway.
However, this is besides the point as what about Spain? Or can Italy be next or France? Asianmacro will leave it to all the investment banks’ strategists that must be busy preparing their various pieces on what’s next and recommended trades to put on or hedges etc. My simplest take will be, have you noticed all the various FX platform and punting shops that have sprouted using Cyprus as their base to operate out from. Some examples are:
http://www.ironfx.com/en/about …. the list goes on
There are close to 100 FX shops operating out of Cyprus as it is a lightly regulated place. The last example of an FX shop above, Iron FX launched their FX trading competition http://youtu.be/PsuDhyytzOA in February with fancy prizes that I am not sure will be given out or claimed in the near future. I am also sure that many retail investors globally are using Cyprus based FX shops and they sure as hell better be worried what will happen to their deposits placed with these firms! That is if they are even aware that their FX shop is Cyprus domiciled and registered which many don’t even read the fineprint when they sign up online or in person in opening those accounts with a representative. This is going to get diabolically and wickedly interesting!
If there is a catalyst for a EUR/USD move lower … this will be it. SELL SELL SELL!
*Asianmacro is a beach bum managing his own wealth. Besides deciding what to have for lunch (or hitting the gym sometimes), he is mostly found listening to loud music while trading and investing for himself. While every care has been taken in preparing the information in and/or materials, such information and materials are provided “as is” without warranty of any kind, either express or implied. In particular, no warranty regarding accuracy or fitness for a purpose is given in connection with such information and materials. The opinions expressed do not constitute investment advice and independent advice should be sought where appropriate. In no event will Asianmacro be liable to you for any direct or indirect or any other damages of any kind arising from or in connection with your reliance on any information in and/or materials attached herewith. Asianmacro may already have or intend to have a trading or investment position in the financial instruments or products referred to in this communication. This is not intended as an offer or solicitation for the purchase or sale of any financial instrument and Asianmacro may also have interests different from or adverse to your interests.