After a week of self-humiliating headlines and scrutiny, the tiny island-nation of Cyprus and its clumsy Eurozone overlords have put forth a deal and belatedly avoided collapse. In turn, they've also allowed the bulls to get back to business of unabashedly pushing U.S. stocks to new highs.
And so, where once there was darkness and doubt, now exists opportunity, and some sort of unknown financial rescue toolkit that now includes bank deposits.
"At the end of the day, though we may have a rescue deal here for Cyprus and the EU" says Peter Kenny, managing director at Knight Capital Group in the attached video, we are also left with a certain "group-think" that is now uncertain as to where risk actually resides, including depositors. "From here on, (deposit seizures) is part of the equation," he adds.
While the $10 billion Cyprus bailout is tiny compared to other Eurozone rescues, there's plenty of precedent for it to grow and change in the future. And why not, given that the injections into Ireland, Portugal and Greece were 20 to 30 times bigger.
For now, markets worldwide have taken the news well, especially in the U.S. where stocks made an early jaunt into new territory before succumbing to selling pressure.
"The question is, will (the particulars of the Cyprus deal) migrate to other models?" Kenny asks.
It's hard to imagine how it couldn't, but in some regards Kenny explains that U.S. investors have found themselves in the enviable position where we seem to win no matter what happens since, as he points out, the U.S. is both the leader in the global recovery as well as the world's favorite safe haven.
Yes, we've found a way to land ourselves on top no matter what. It's heads I win, tails you lose and the way forward is up.
"Our uptrend is definitely confirmed. We're definitely moving higher," Kenny predicts, "and I suspect you're going to see more cash rotate in equities and out of fixed income."
- Investment & Company Information
- Peter Kenny
- Knight Capital Group