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Answered: Why Markets Hit Again On Cyprus Worries



March 19, 2013 – Comments (5)

The markets are taking a hit again today on more worries out of Cyprus. This tiny country is turning out to be a possible catalyst for contagion in the Euro Zone. Plenty of new drama is surfacing. The SPDR S&P 500 ETF Trust (NYSEARCA:SPY) is trading at $154.32, -0.65 (-0.42%).

There was a scheduled vote today on whether or not to impose the tax on depositors in Cyprus. The automatic tax on all funds within banks in Cyprus sent the markets reeling yesterday. However, today, even if the vote did not pass, disaster could be around the corner.

If the vote does not pass, Cyprus may have to exit the Euro Zone as they default on their loans. Should this happen, it could spread quickly to Greece, Italy, Spain and Portugal.

In other words, if the vote passes and a tax is imposed on all depositors, it creates a run on the banks, if it is not passed, Cyprus defaults exit the EU. Either way, contagion is a very likely outcome across Europe.

Gareth Soloway

5 Comments – Post Your Own

#1) On March 19, 2013 at 2:13 PM, SkepticalOx (98.53) wrote:

What hit? A 0.42% drop is NOISE.

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#2) On March 20, 2013 at 12:06 AM, awallejr (29.12) wrote:

Oh please, Cyprus is the excuse not the reason for any correction.  I submit the S&P 500 will hit a new high before May of this year.  Let's see if I am right.

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#3) On March 28, 2013 at 10:51 AM, awallejr (29.12) wrote:

Well S&P hit an all time new high today before May. 

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#4) On March 28, 2013 at 11:56 AM, abbyjosephew (< 20) wrote:

Cyprus Problem” a Clear Indicator of What Could Be Ahead for France, Italy, Spain

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#5) On March 29, 2013 at 12:19 AM, awallejr (29.12) wrote:

Then talk about those countries. The only issue I had with Cyprus was if they were going to basically haircut those whose deposits were insured.  Since that didn't happen end of story.

My local deli didn't care in the end.  Bottom line the S & P made a new high, so now the past is irrelevant. It is all about the future.

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