Today's Headlines

Bloomberg:   

• Cyprus Rejects Deposit Levy in Blow to European Bailout Plan. Cyprus’s parliament rejected an unprecedented levy on bank deposits, dealing a blow to European plans to force savers to shoulder part of the country’s bailout in a standoff that risks renewed tumult in the euro area. Cypriot legislators in the capital Nicosia voted 36 against the proposal with none in favor in a show of hands today. There were 19 abstentions. Hammered out by euro-area finance chiefs at the weekend, the deal had sought to raise 5.8 billion euros ($7.5 billion) by drawing funds from Cyprus bank accounts in return for 10 billion euros in international aid. “There is no precedent for what would happen if Cyprus rejected the conditions,” Holger Schmieding, chief economist at Berenberg Bank in London, wrote in a note before the vote. “Our best guess is that Europe would give Cyprus a brief and final chance to rethink and vote again.”

• European Car-Sales Drop Accelerates on Decline in Germany. Europe’s car-sales contraction accelerated in February as a steepening decline in Germany, the region’s biggest market, hurt previously resilient Volkswagen AG (VOW), Bayerische Motoren Werke AG and Daimler AG. Registrations dropped 10 percent to 829,359 vehicles last month from 923,553 a year earlier, the Brussels-based European Automobile Manufacturers’ Association, or ACEA, said today in a statement. Two-month sales fell 9.3 percent to 1.75 million cars. The decline in January amounted to 8.5 percent. 

• Cyprus Deposit Raid Stokes Senior Bond Concerns. Europe’s unprecedented tax on Cyprus bank deposits is raising concern among holders of senior bank bonds that they’ll be made to take losses should another country need rescuing. The Markit iTraxx Financial Index of credit-default swaps insuring senior debt of 25 banks and insurers rose as much as 19 basis points to 162 basis points yesterday, according to prices compiled by Bloomberg. That’s the biggest jump since Aug. 2, before the European Central Bank steadied markets by announcing its bond-buying program, and the gauge is now at the highest in almost three weeks.

• Irish Foreclosure Wave Risks Housing Recovery: Mortgages. Irish bankers preparing for the biggest wave of foreclosures in the nation’s history are struggling with how to dispose of the homes as the central bank pressures them to go after owners of investment properties. Ireland, which had the biggest real estate crash in Europe with a 50 percent plunge in residential prices since 2007, is only now contemplating significant repossessions. The focus is on the so-called buy-to-let market, or properties bought to rent, which jumped during Ireland’s decade-long real estate boom, and now account for more than a fifth of the 142 billion- euro ($184 billion) mortgage market.

• Euro at Almost Three-Month Low as Cyprus Delays Vote. “The uncertainty regarding the vote is helping the market try to challenge a very key support at $1.2872, $1.2874 and $1.2876, which are absolutely key levels for euro-dollar,” said Sebastien Galy, a foreign-exchange strategist in New York at Societe Generale SA, said in a telephone interview. The euro’s drop reflects “deeper uncertainty regarding the outcome of the vote, the timing of the vote for that matter, and the general willingness to buy the dollar as a hedge.” The euro fell 0.5 percent to $1.2899 as of 11:51 a.m. in New York, touching the weakest since Nov. 23.

• European Stocks Fall on Concern Cyprus to Reject Bank Tax. National Bank of Greece SA led a gauge of lenders to the lowest close this year. Rio Tinto Group (RIO) sank the most since 2011 as Goldman Sachs Group Inc. downgraded the shares. ThyssenKrupp AG fell the most in a year after a report the German steelmaker is considering raising capital. Cie. Financiere Richemont SA slid the most in almost two months as an investor sold a stake in the luxury-goods company.

• Japan Vows Foreign-Policy Response to Territorial Incursions. Japanese Prime Minister Shinzo Abe signaled he will implement a more robust foreign policy in the midst of disputes with Russia and China that underscore his push to boost defense spending. Japan yesterday said two Russian fighter jets intruded on its airspace, which Russia’s Defense Ministry denied. The alleged incursion followed accusations that Chinese ships used weapons-targeting radar on a Japanese destroyer and helicopter last month near islands claimed by both countries. China today issued a denial and accused Japan of spreading falsehoods, while the Foreign Ministry in Tokyo summoned the Chinese ambassador. “When our sovereignty and national interests are threatened we must change our foreign policy to firmly express our point of view,” Abe told parliament today.

• Vale(VALE) Slumps to Six-Month Low as Goldman Cuts Iron Ore Forecast. Vale SA (VALE5), the world’s biggest iron- ore producer, fell to a six-month low after Goldman Sachs Group Inc. cut its price estimate for the commodity this year. The shares slumped 3.5 percent to 32.51 reais at 1:05 p.m. in Sao Paulo. A close at that level would be the lowest since Sept. 4. The stock contributed the most to the benchmark Bovespa index (IBOV)’s 1.4 percent drop today. “The two key drivers of this more subdued outlook are the growing role of scrap in Chinese steel production, and ongoing investment in Chinese domestic iron-ore production,” the Goldman Sachs analysts wrote.

• Oil Falls on Signals Cyprus to Reject Deposit-Tax Plan. West Texas Intermediate oil fell on concern Cyprus’s bailout will falter, deepening Europe’s debt crisis. WTI’s discount to Brent crude traded in London narrowed to less than $15 a barrel.

Wall Street Journal:

• Workers Saving Too Little to Retire. Workers and employers in the U.S. are bracing for a retirement crisis, even as the stock market sits near highs and the economy shows signs of improvement. New data show that powerful financial and demographic forces are combining to squeeze individuals and companies that are trying to save for the future and make their money last.
  Fifty-seven percent of U.S. workers surveyed reported less than $25,000 in total household savings and investments excluding their homes, according to a report to be released Tuesday by the Employee Benefit Research Institute. Only 49% reported having so little money saved in 2008. The survey also found that 28% of Americans have no confidence they will have enough money to retire comfortably—the highest level in the study's 23-year history.

• U.S. Probes Microsoft, Partners Over Bribery Claims. Federal regulators are investigating Microsoft Corp.'s relationship with business partners that allegedly bribed foreign government officials in return for software contracts, according to people familiar with the matter. Lawyers from the Justice Department and the Securities and Exchange Commission are examining kickback allegations made by a former Microsoft representative in China, as well as the company's relationship with certain resellers and consultants in Romania and Italy, these people said.

MarketWatch: 

• Countries most exposed to Cyprus banks.

CNBC: 

• Is China Trying to Take Apple(AAPL) Down?

• Some Manufacturers Say 'Adios' to China. 

• How Russia Could Take Revenge Over Cyprus Deal.

Zero Hedge: 

• Chart Of The Day: Housing Starts - Found In Seasonal Translation... Again. 

• Cyprus Contagion Spreading: Greek Bonds Plunge Most Since Bailout. (graphs)

• Cyprus Now Set To Vote Against Bailout, Ruling Party To Abstain Guaranteeing Failure To Ratify "Bail-In".

• Daniel Hannan Urges Cyprus To "Default, Devalue, And Decouple" Itself Back To Growth. (video) 

• Follow The Cyprus Bailout Vote: Live Webcast From Parliament.

Business Insider: 

• ZERVOS: There's No Going Back, We Might Have An STD Situation Brewing ... 

• Former Cyprus Central Banker Goes Off On The EU And Says The European Project Is Dying.

• Senate Democrats Cave And Drop Assault Weapons Ban From Major Gun Legislation — For Now. 

• JPMORGAN(JPM): Cyprus Could Still Default, And The Market Is Underestimating The Risks. 

• Greek Stocks Are Getting Crushed. 

• Big Money Managers Are Getting Worried About A Chinese Hard Landing Again.

CNN:

• Syrian regime, rebels blame each other for chemical attacks. The specter of chemical weapons attacks in the Syrian civil war emerged Tuesday, with the government and rebels each blaming the other for using such munitions. The embattled government of President Bashar al-Assad accused rebels of a deadly chemical weapons missile attack. At least 25 people died and dozens more were injured Tuesday in the town of Khan al-Asal in Aleppo province, Syrian state media said, quoting government figures. Rebels rebuffed the claims and blamed the regime.

Reuters:

• PIMCO cuts euro exposure as investors decry Cyprus bailout plan. A demand that Cyprus seize money from depositors to help rescue the island's banks is a wake-up call for those who believed the euro zone crisis was solved, institutional investors and hedge funds said. One of the world's biggest money managers, PIMCO, has already reduced its euro currency allocations in response to the planned levy unveiled at the weekend, a senior executive told Reuters on Tuesday.

• BMW sees profit stagnating as investment costs rise. BMW expects earnings to stagnate this year as costs for 11 model launches, the development of fuel-efficient technology and expanding production eat up higher profits from rising car sales.

Telegraph: 

• Cyprus bailout - live. Eurozone governments are "essentially blackmailing" Cyprus, said Anthanasios Orphanides, former governor of the Cypriot central bank, as he warned against the "slow death of the European project". 

• Are we on the brink of another sterling crisis? The pound's value affects not just our holiday money and investments but the entire economy. Jeremy Warner on what the future holds for sterling.