Good morning,

Markets are called to open flat this morning. This is what's happening today:

  • Chinese shares jumped after Tom DeMark, the founder of Market Studies LLC whose forecasts on the nation’s stocks proved accurate in the past, said the Shanghai index will rebound this week;
  • European policy makers must weigh how far to push Cyprus after lawmakers in the Mediterranean nation rejected an unprecedented levy on bank deposits, throwing into limbo a rescue package designed to keep it in the euro;
  • Russia scrapped an auction of 15-year bonds, opting for a sale of shorter-dated securities as investors avoid riskier assets on concern over a proposed tax on Cyprus bank deposits;
  • Companies in Europe reporting results today include Bowleven, Volvo and Asos;

Cyprus is the fifth euro-zone country to seek a bailout since 2010 to avoid a collapse of its financial system. Its parliament yesterday rejected an unprecedented levy on bank deposits, dealing a blow to European plans to force depositors to bear part of the rescue burden in a standoff that risks renewed tumult in the euro area. The levy sparked outrage in the island nation. It also ignited concern among investors about breaking the taboo over the safety of bank deposits and potentially triggering bank runs in other European countries. The final plan put to MPs would have raised euros 5.5 billion and exempted all those with less than euros 20,000 in their accounts. But this, too, was rejected, with 36 MPs votes against, 19 abstentions and one absence.

Cyprus will today turn to Russia to fill the black hole in its financial system after its Parliament overwhelmingly rejected a plan to raid its bank accounts. Michalis Sarris, the Cypriot Finance Minister, will today fly to Moscow to present a plan to his Russian counterpart, after his office denied reports that he had resigned. His plan involves imposing a 20-30% levy on Russian-held deposits in Cypriot banks, which could cost the account holders billions of euros. In exchange, Russia would be given equity in Cyprus's future national gas company and additional strategic benefits in the sector. At the same time, Russian investors would be given more influence over Cyprus's banks. This would entrench Russian influence in the beleaguered nation, but would result in further delays while the terms of the deal were negotiated. Any deal with Moscow would cause deep discomfort in the EU and IMF, which deliberately excluded Russia from negotiations at the end of last week. However, public hostility towards Europe appears to be increasing, with senior Cypriot politicians accusing the eurozone of "extortion".

Laurence D. Fink, chief executive officer of BlackRock Inc., the world’s largest asset manager, said Cyprus is not a major problem and U.S. equities will rise 20% this year as the economy rebounds.

Apple (report from Bloomberg issued on 19/03/2013)

Traders are paying the most in five years for bullish Apple Inc. options relative to U.S. technology companies on speculation the shares are poised to rebound from a 35 percent plunge since September.

Implied volatility, which traders use to gauge the cost of options, for contracts with an exercise price 10 percent above Apple shares is 29.8, compared with 11.7 for calls on the Technology Select Sector SPDR Fund, according to three-month data compiled by Bloomberg. That’s close to the widest gap since October 2007.

The cheapest Apple shares in more than a decade and the likelihood the company will increase its dividend mean it’s a good time to buy the stock, according to Oliver Pursche at Gary Goldberg Financial Services in Suffern, New York. Analysts’ forecasts show the maker of iPhones and iPads is poised to boost its dividend by more than half, providing investors hit by a share slump with one of the highest yields in the U.S. technology industry.

“Investors are recognizing that the negative momentum in the stock is overdone,” Pursche, president of Gary Goldberg Financial Services and co-manager of the GMG Defensive Beta Fund, said yesterday by phone. The firm manages about $650 million and owns Apple stock. “It’s just very cheap on a price- to-earnings basis, and there are indications that they’re going to raise the dividend, which is also very attractive.”

For more information on Apple, conact our offices on 25688688.

Good day and happy trading!

Kristian Camenzuli