Deposits May Be at Risk

Published by City Blaster on Fri, 05/04/2013 - 10:07 in
miguel relvas

Daily Market Commentary for April 5: While the ECB added nothing to its current monetary policy, PMI data shows a sinking Europe, which now includes Germany. Will we be able to recover from this dormant state? Sure we will. I just don’t know when.

The European economy continues to sink. A few days ago we saw the unemployment rate hit 12% and countries like Spain and Greece contribute to the average with a number that is more than double that average.

The top concern at the moment is around deposit safeness. Many of you still don’t now about it, but you’re at risk. The European bailout system is now dead and the new bail-in system promises to confiscate your deposited money as did in Cyprus. When a precedent is open, don’t believe on it being just a unique and isolated case. With the Spanish banking sector already bankrupted due to the housing bubble, I do believe money held at some banks may be at risk now. Don’t trust authorities and politicians too. The Central Bank of Cyprus reinstated confidence on depositors in February when they most likely knew people would lose their money partially.

If you have money then a “safe” bet may be to buy the pair USD/JPY. Mr. Kuruda, the new Bank of Japan governor promised a new monetary easing policy that just can’t fail at devaluing the yen. With the bank balance sheet expected to double until 2014, with a plan to buy 7.5 trillion yen per month in bonds, with a plan to target money circulating instead of the cash rate, the bubble will be the largest ever. It would be just bad luck if Mr. Kuruda wasn’t able to put inflation back on track, so entering the USD/JPY for a free ride until at least 100.00 seems to be the bet of the week.

Today we will have the non-farm payrolls report released in the U.S.. By looking at the ADP report issued Wednesday, the idea is that this time we may see a number just short of 200,000. That would be a blow with immediate effects on the USD (negative) and on gold (positive) but with retail investors in for whatever it takes, I’m sure the market will be able to recover from any losses. If the report surprises positively, then gold will be in trouble again, a lot of trouble I would say.

And that’s all for now folks. Just have a great weekend and try one of those finest Portuguese wines while you watch the country’s government fall. The number two, Miguel Relvas has just resigned, and there’s more to happen with the Constitutional Court possibly considering part of the austerity applied in the country as illegal.