Summary: Daniel Kertcher – Market Update March 2013 Hi, my name is Daniel Kertcher, CEO and Founder of Trading Pursuits. And, welcome to the monthly market report for March 2013. And, before we get started, there’s just a couple of key things I need to share with you. Number one, what we’re talking about today is what we call General Advice. It’s not individual, specific advice. Furthermore, we haven’t taken into consideration your personal financial objectives. This is simply information about the markets on a general basis. Number three, trading involves risk. Should you choose to trade, that is your decision and you take full responsibility for the outcomes. And finally, our company, Trading Pursuits, we hold an Australian financial services license. Okay now, one of the big news items that I wish to discuss today is Cyprus. And, no doubt that you’ve probably heard of Cyprus in the media. Cyprus of course is one of the countries that makes up the Euro. And, unfortunately Greece, Portugal, Spain and Italy and Ireland: it also is in financial difficulty. So in order to receive a bailout from both the European Central Bank and the International Monetary Fund, the IMF- they have to agree to some very strict conditions. One of those conditions being, that they are literally going to deduct from people’s savings accounts with the bank’s money. So, literally charging a tax on people who kept their money in the bank. Now, obviously this has not been very popular among Cyprus’ residents. And as a consequence, there’s been a lot of protesting. However, it’s a key line that the IMF and the ECB want Cyprus to go down in order to get this bailout money, they want and literally go and tax the savers, tax the money in their accounts. Now this of course created a lot of panic, a lot of concern about Cyprus residents, keeping their money in the bank. So to avoid having a bank run, the banks in Cyprus have literally had multiple days of bank holidays. And, they’ve limited their ATM’s to only a few, about Four Hundred Euros at a time, daily maximum. So obviously, you can imagine the frustration felt by these Cyprus residents. Now, what has this done to the market? Well, upon first hearing of this news last week, the DAX Index, this is the German Index – it fell initially. However, you have to remember that most people in the world aren’t even aware of where Cyprus is on the map. And, in the grand scheme of things, it’s actually quite a small amount. They’re looking to raise about 5.6 Billion Euros with this exercise. Now, the Americans put about 5.6 Billion US Dollars or Euro equivalent on to their own national debt in every three hours. So you can appreciate that this is not really a major exercise. It’s a big storm in a tea cup. Obviously for Cyprus residents, it’s a big issue. But from a global point of view, the world is not even noticing. The market has fallen back initially. The S&P 500 for example turned with this news, not because it was Cyprus, more because the media blowing it out of proportions. But also, it could be a harbinger or a sign of what could happen in the future. Now, I don’t suspect that anytime soon we’re going to see the Federal Reserve and America demanding that the banks take money out of people’s bank accounts, or in any other country for that matter. However, it’s absolutely amazing and shocking frankly, to think that any country in the world would actually do this. So this is creating a great deal of uncertainty in the market. And when there’s a lot of uncertainty in the market, investors tend to panic and pull their funds out. So, we’ve seen a drop in the S&P 500 as well. Here we have US Government Bonds. Now US Government Bonds are seen as a safe haven in the market. So again, when there’s a lot of uncertainty in the market, Bonds tend to shoot up in price. And, you can see that that’s exactly what’s happened recently with this news about this Cyprus bank rating. Also th[...]
