We noted yesterday that the ‘gains’ that shorts had temporarily enjoyed from the start of April were rapidly squeezed out since the gap-open lows on NFP Friday. However, yesterday’s massive outperformance of the Russell 3000′s ‘most-shorted’ names relative to the index itself suggest more than a few weak hands threw in the towel. Desk chatter this morning was that this was the largest cover day since June. Of course, this morning’s ramp suggests there are more stops and shorts to be chewed through yet…
Intriguingly the short cover stopped (or slowed) as the FOMC Minutes were pre-released… (around 2pmET)
Charts: Bloomberg
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NICOSIA, April 8 |
NICOSIA, April 8 (Reuters) – Cyprus’s Central Bank said on Monday it would extend an inquiry into the banking crisis that has crippled the island to fully cover Cyprus Popular Bank , nationalised last year after heavy exposure to Greece.
A central bank-commissioned probe leaked last week showed the island’s largest bank, Bank of Cyprus, failed to provide regulators with timely information about its exposure to Greek sovereign debt which saddled the bank with huge losses.
The inquiry would now move on to Popular, Central Bank governor Panicos Demetriades said.
“It is expected to be completed in the next few months,” Demetriades told lawmakers in parliament.
Under a 10 billion euro bailout deal, Cyprus will wind down Popular, with some of its assets transferred to Bank of Cyprus. Bank of Cyprus will also slap depositors with heavy losses to pay for its own recapitalisation needs.
Demetriades said a clear picture of Bank of Cyprus’s requirements would be known by the end of June.
The first instalment of the investigation, by consultants Alvarez and Marsal, drew criticism that it did not focus on the role of Popular in the crisis, which was kept on a funding lifeline for months as Cyprus attempted to negotiate terms of a bailout.
When the European Central Bank threatened to pull its aid to Popular, Cyprus buckled and agreed to accept tough bailout terms.
The inquiry would focus on the purchase of Greek bonds and expansion strategies pursued by Popular in previous years, Demetriades said.
In Bank of Cyprus’s case, the inquiry was focused on the circumstances leading to its heavy, loss-making exposure to Greek government bonds.
The consultants also said they had discovered evidence of a “mass deletion of data” on one computer and “unnecessary delays” in getting information from the bank.
