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Tonight’s Agenda

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Tonight’s Agenda

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  1. 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.

  2. Tonight’s Agenda • Elections • Announcements • Cyprus Bailout • BOJ – Monetary Policy • Q1 Rally  Yearend expectations • Jobs Report • 2Q Earnings Kick-off

  3. Election - President

  4. Platform of Brad & Kyle • A seamless continuation of the current leadership • More outside events, like Airliner and Tippie Build • End of meeting Q&A • Learn how the history of the markets affects today’s markets • We appreciate your time and hope you will vote for us!

  5. Election – Vice President

  6. Election – Dir. of Group Simulations

  7. Election – Dir. of Marketing

  8. Election – Dir. of Finance

  9. Election – Dir. of Volunteering

  10. Election – Dir. of Technology

  11. Announcements • Peter Schiffe April 27th– W10 – 6:30-7:30PM • Tippie Build – look for emails • Market Researchers – stick around after • HFT – Quantitative Trading

  12. Why did Cyprus Need a Bailout? • As always, Greece is the problem • Cyprus banks invested heavily in Greek debt • Two biggest banks invested 160% of Cyprus GDP into Greek debt • The value of the Greek debt owed decreased by 75%, the Cyprus banks where hit hard

  13. 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%

  14. Cyprus Thurs., March 21 Thurs., March 21 • 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 • 7 bills were submitted to Parliament “relating to the reorganization and recovery of the Cypriot banking system”

  15. 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

  16. 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

  17. 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

  18. 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”

  19. BOJ – Monetary Policy $600 Billion

  20. 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

  21. 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

  22. 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

  23. 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

  24. 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

  25. Down 0.07% for the week Markets have up/down week but major averages still up huge YTD

  26. 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

  27. March Jobs Report: 88,000 Jobs created; Unemployment Rate Falls to 7.6%

  28. 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. • Part-time workers • Two 20hr part time jobs = one full time 40hr job but would be 2 net jobs created. • Seasonal hires • Employees hired for holidays/special events aren’t real economic jobs. • 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.

  29. If the Labor Participation rate was the same as 2007 the unemployment rate would be 11%!!

  30. Santellivs. Liesman Round 37- Who's to blame for the bad jobs numbers????

  31. 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?

  32. Earninings Kickoff

  33. The Week Ahead: • Earnings season gets going with Alcoa (AA) • Major banks report.

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