Tonight’s Agenda
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Transcript of Tonight’s Agenda
THERE ARE NO WARRANTIES, EXPRESSED OR IMPLIED, AS TO ACCURACY, COMPLETENESS, OR RESULTS OBTAINED FROM ANY INFORMATION DISCUSSED DURING HAWKTRADE MEETINGS. Past performance does not guarantee future results. Investment returns and principal value will fluctuate, so that investors' shares, when sold, may be worth more or less than their original cost. Investing in any financial instruments does not guarantee that an investor will make money, avoid losing capital, or indicate that the investment is risk-free. There are no absolute guarantees in investing. HAWKTRADE and its members do not bear any responsibility for losses or gains made by members trading on their personal accounts based on analysis from HAWKTRADE meetings.
Tonight’s Agenda
ElectionsAnnouncementsCyprus BailoutBOJ – Monetary PolicyQ1 Rally Yearend expectationsJobs Report2Q Earnings Kick-off
Election - President
Platform of Brad & Kyle
A seamless continuation of the current leadership
More outside events, like Airliner and Tippie Build
End of meeting Q&ALearn how the history of the
markets affects today’s markets We appreciate your time and hope
you will vote for us!
Election – Vice President
Election – Dir. of Group Simulations
Election – Dir. of Marketing
Election – Dir. of Finance
Election – Dir. of Volunteering
Election – Dir. of Technology
Announcements
Peter Schiffe April 27th – W10 – 6:30-7:30PM
Tippie Build – look for emails
Market Researchers – stick around after
HFT – Quantitative Trading
Why did Cyprus Need a Bailout?
As always, Greece is the problemCyprus banks invested heavily in
Greek debtTwo biggest banks invested 160%
of Cyprus GDP into Greek debtThe value of the Greek debt owed
decreased by 75%, the Cyprus banks where hit hard
Beginnings of Cyprus Problem
March 16 – Cyprus turns to the Eurozone for €10 billion (~$13 billion USD) in bailout money
Part of the deal was that savers in Cyprus banks could lose up to 10% of assets which was estimated at € 6 billion (~$8 billion USD)
March 17 – Banks in Cyprus close among fears of a massive bank run
March 18 – Politicians meet to lower the “levy” on small savers to 3%
Cyprus
Cyprus dropped bank levy and proposed setting up an ‘investment solidarity fund’
European Central Bank warned it would cut off emergency liquidity assistance unless an EU-IMF program was in place
Thurs., March 21
Thurs., March 21
7 bills were submitted to Parliament “relating to the reorganization and recovery of the Cypriot banking system”
Cyprus – Looking Ahead
Cyprus Popular Bank (also known as Laiki, the second largest bank) will be shut down
The Bank of Cyprus (the largest) will remain, but uninsured deposits (over €100,000) will be partially seized to help pay down debts
Wealthy Cypriots and Russians will suffer the worst losses
Cyprus will remain a member of the European Union
Cyprus – Looking Ahead Currency Controls to prevent bank
runs Transfer limits to other accounts:
▪ Firms: €10,000 (~$13,000 USD) per month▪ Individuals: €2,000 (~$2,600 USD) per month
Other Restrictions €300 per day cash withdrawal limit from
banks Vetting process for payments of more
than €25,000 per day
Bank of Japan (BOJ) BOJ Equivalent to the US’ Federal
Reserve
Very high debt/GDP – well over 2
Struggled with stagnation for decades
Investor sentiment has been low for decades
BOJ attempted a 2% YOY CPI target
BOJ – Monetary Policy Thursday – BOJ announced new
quantitative easing
Pump $1.4 trillion in less than two years
GDP normalized $3.5 trillion stimulus in US
“Makes Bernanke look libertarian”
BOJ – Monetary Policy$600 Billion
BOJ – Market Movement Nikkei stock index jumped 2.2%
Toyota Motor rose 4.6% (on US exchange)
Yen fell: 3% against the USD 4% against the Euro
10-Year govt. bond yield hit a record low
Quarter 1 S&P 500 index surpassed all-time high 0f
1,565.15 DJIA passed its all-time high on March 5 Currently is 1,553.28
10% Q1 Gain
Quarter 1 Rally
Economic data exceeded expectations leading to increased investor confidence
Durable goods orders, employment and home prices data were strong
Corporate earnings exceeded expectations
Federal Reserve monetary policy rallied stocks
Federal Reserve Monetary Policy Federal Reserve is
purchasing $85 billion of securities and Treasury debt each month
Known as quantitative easing (QE)
Primary goal is to reduce unemployment rate of 7.7%
Increased money supply has resulted in low interest rates
Fixed Income Outlook
Low interest rates pushing investors toward the stock market
Fed’s policy significantly impacted these rates
Interest rates expected to rise in the relative near future
Expect bond prices to decrease as interest rates slowly begin to rise
Markets have up/down week but major averages still up
huge YTDDown 0.07% for the week
Year Expectations
Earnings season will impact markets Less concern related to Europe’s debt
crisis Investors expected to continue to enter
the market S&P 500 averages an 8% decrease in the
months before the Fed tightens policy Following Q1 rallies, historically, the
market has done well for the rest of the year
Jobs Report- Beyond the Headlines
Besides the “unemployment Rate” and number of jobs created, here's what to look for to better understand the report and make
investment decisions from it.
1. Part-time workers Two 20hr part time jobs = one full time 40hr job but would be 2
net jobs created.
2. Seasonal hires Employees hired for holidays/special events aren’t real economic
jobs.
3. Labor force participation rate Measures how many people are able to work but have stopped
looking and are no longer counted in the labor force.
If the Labor Participation rate was the same as 2007 the unemployment rate would be 11%!!
Santelli vs. Liesman
Round 37- Who's to blame for the bad jobs numbers????
Video Context
President released details for his upcoming budget release (WED) that includes Entitlement tweaks of 1.8 T in budget cuts over next 10 yrs. But only w/ 600 Billion in tax hikes
Bad jobs numbers being blamed on sequestration & 2% payroll tax hike by democrats. Republicans site poor policy.
Question is whether all this Gov./Fed spending is helping create jobs?
Earninings Kickoff
The Week Ahead:
Earnings season gets going with Alcoa (AA)
Major banks report.
