Investor focus shifted in the 1st quarter from domestic policy issues such as the fiscal cliff, the budget debate and sequester, to renewed concerns of turmoil abroad, particularly in the Eurozone. The mid-February announcement that banks in the Mediterranean island state of Cyprus were insolvent and would need a bailout set off investor concerns around the world. The news cycle was very fluid and the status of the bailout seemed to change hourly. Initially it appeared that the bailout terms would include “haircuts” of 7-10% for all depositors. Pictures of bank runs in Cyprus and “bank jogs” in other troubled areas of southern Europe, specifically Italy and Spain, were painted by critics of central bank policy makers with the thinly veiled insinuation that “if it happens over there, it can happen here.” Ultimately, the sanctity of insured deposits prevailed and accounts up to €100,000 were protected, while large depositors suffered write-downs of as much as 30% in exchange for bank equity. As of the end of the quarter, it seemed as though the Cyprus situation was reasonably well contained and that the country would remain a member of the Euro; however, the message appears to have been sent that exit from the unified currency would be considered for countries unable to keep their fiscal house in order.