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ZERVOS: I'm Staying In My Bunker, And Not Buying Any Stock After This Cyprus News

Mar 25, 2013, 20:51 IST

Jefferies strategist David Zervos is a long-time bull who suddenly turned bearish following last week's shocking developments in Cyprus.

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In the wake of the Cyprus deal, he's still nervous.

He writes that he's staying in his bunker.

As for the market reaction, it has NOT been painful to exit risk and sit on the sidelines for the last week: the Euro remains weak; the Yen remains strong; Treasuries trade within last week’s ranges; and Bunds trade amazingly well. Finally, as I sit here and watch spoos bounce around 1555/1560, there is NOTHING about the price action that makes me want to buy. In fact, it feels quite easy to be in the bunker with nothing on the books. For me, it is more tactical than fundemental. We have been pounding the table for risk-on all year (and certainly alot longer than that). We told clients to ignore the sequester and Italian election results with good results. And heading into this Cyprus mess the spoo was +10 ytd and nky was +20 ytd. Its been a great start. Why play with an extremely hard to value tail situation. If you miss 1 to 2 percent in risk because it all calms down then so be it. You are still dealing with a 20 to 30 percent chance of material set back. I just don't like the odds with the market at the highs.

US stocks are falling today, in part due to comments from the Eurogroup President that the Cyprus situation might not be a one-off. So Zervos is looking good right now.

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Find mor Zervos at Markit Hub >

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