Hello traders everywhere! Adam Hewison here, co-founder of MarketClub with your mid-day market update for Thursday, the 21st of March.
March Madness, May Really Be, March Madness
The NCAA basketball "March Madness" season starts today at noon, ET, however the March madness I am referring to has nothing to do with basketball.
The events in Cyprus and the ramifications it could have for the rest of the EU could be chaotic. Suddenly, there are no adults in the room, and once again we are seeing Russia jump into the fray with all kinds of loan deals, gas deals and donkey deals. How does all this Russian input complicate Cyprus? In my opinion, it presents a massive complication as Russia is not part of the EU and yet they are in the thick of things meddling in what is majorly an EU problem. The Russian interest is from all the money that's deposited from Russia in the banks of Cyprus. This saga has a lot more room to play out and if it is not contained, it has the potential to create a real ripple effect through Europe.
The banks in Cyprus are scheduled to reopen this coming Tuesday (subject to change) and we expect there is going to be a run on the banks that will spook everyone. At the moment, nobody trusts anyone on this Mediterranean island right now.
The Fed Stays The Course - For Now
Fed Chairman Bernanke spoke to the press yesterday and as we expected, the Fed remains on the same course and will continue to pump $85 billion into bonds every month. If Chairman Bernanke steps down after his term expires in 2014, he is going to leave one heck of a mess for whoever follows him. I think he understands this, and I see it as a classic "leave it to the next person to clean up". I expect Chairman Bernanke to step down after his term expires. There's a good chance we could have our first female chairperson, Janet Yellen. Maybe she can bring in some common sense to the Fed.
POTENTIAL CHAOS AHEAD
March 27th - Budget Resolution Expires (Kicked down the road until September)
May 19th - Debt Ceiling Suspension Expires
Have a great trading day,