22 Mar 2013
• All markets were generally negatively impacted by the Cyprian bailout concerns this week. Some very smart person (country) in the European Commission (Germany) decided it would be good idea to impose a levy (tax) on bank deposits.
• Now, whilst the concept of levy on bank deposits was logical given the Cyprian banking sector is 5 times larger than the size of the whole Cyprian economy (which is broke), imposing a levy on small depositors (those under $100k) is a big no no.
• Now the European Central Bank has said it will cut off emergency funding to Cyprus on Monday if the country cannot reach a bailout agreement with its funders. Further market volatility to come.
• The Australian market corrected (fell) this week after a strong couple of months. The correction was largely welcomed given stock prices had run a little ahead of themselves.
• The US market’s winning streak ended at 10 sessions – its best run since 1996.
• In contrast, the US market actually firmed in the 2nd half of this week after the US Federal Reserve announced they will continue with the current stimulus programs even in light of improving US data.
• Coca-Cola Amatil announced that its long standing CEO Terry Davis will step down next year after more than 12 years in charge. The market saw this as negative given he is highly respected.
• In the minutes of the Reserve Bank of Australia’s March board meeting, the RBA said low interest rates are providing some boost to the non-mining sectors but conceded that further rates cuts may be needed.
• In contrast to last week’s very surprising employment numbers, job advertisements on the internet fell by 4.3% in February.
• Australia’s manufacturing sector continues to hurt with data showing the sector had slumped to its weakest level in nearly 3 years and is now contracting. Interest rate cuts haven’t helped as the Aussie dollar has remained high.
• Unsurprisingly, the Cyprian parliament voted down the levy on bank deposits and it’s now back to the negotiating table with European Commission, the IMF, and the European Central Bank (and Germany of course).
• The US housing recovery continues with housing starts up yet again and building permits at their highest level since June 2008.
• Yesterday saw another black mark against the federal Labor party with a leadership contest announced…..no-one thought to actually contest it, so the incumbents remain in power by default.
• This followed a disastrous week for the party after their rushed (understatement of the year) media law changes failed to gain support in the lower house.
• China’s new premier has vowed to roll out economic reforms (liberalising of interest rates, exchange rates, opening the services sector and making the government more transparent) whilst cracking down on corruption. All a positive for the rest of the world given China is now the world’s 2nd largest economy.
• The Italian parliament reconvened for the first time since the election. Given no agreement has been reached as to who will lead the country, the Cyprian debacle was a welcome distraction.
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