Time To Sell Long Positions

This is what happened in Cypress  last night

Overnight, what was previously declared a red line by Anastasiades and Finance Minister Michalis Sarris became a reality. For the first time in the eurozone, a haircut would be imposed, not on state creditors or bondholders, but on everybody with savings in Cypriot-based banks, including small depositors with less than €100,000 in the bank. The move is expected to raise €5.8 billion for which depositors would receive bank equity in return. 

Ironically, throughout the EU, deposits with less than €100,000 are insured by the state, meaning should the banks collapse before the levy is imposed, depositors’ savings- in theory- would be secured.  

This is the fifth aid package prepared by the troika- and the smallest- but the only one where depositors take a hit, largely due to the insistence of Germany and the IMF. 

The deposit levy - set at 9.9 percent on bank deposits exceeding €100,000 and at 6.75 per cent on anything below that - will take place on Tuesday after the bank holiday on Monday. 

To avoid a bank run, electronic transactions were frozen while the Cooperative Movement forced its branches, which are usually open on Saturdays, to close. 

Instead of waiting, we need to take profits in our long positions. Aggressive buyers should buy TZA or wait for rally in a day or two.