Bloomberg:
- EU Keeps 5.8 Bln-Euro Revenue Goal for Cyprus Bank Tax. Euro-area finance ministers told Cyprus to raise 5.8 billion euros ($7.5 billion) from bank depositors to unlock emergency loans, maintaining the revenue target while suggesting sparing small-scale savers. The finance chiefs from the 17 euro countries kept the pressure on Cyprus as they signaled flexibility in applying the tax announced three days ago. The levy sparked outrage in the island nation and concern among investors about setting a precedent by breaking the taboo against raiding bank accounts. “Cypriot authorities will introduce more progressivity in the one-off levy compared to what was agreed on March 16, provided that it continues yielding the targeted reduction of the financing envelope and, hence, not impact the overall amount of financial assistance,” the ministers said in a statement following a teleconference late yesterday.
- Deauville Zombie Strikes as Cyprus Tax Inflames Crisis. The Deauville zombie is back. Europe’s aid package for Cyprus brought back memories of the German-French deal at the English Channel resort of Deauville in October 2010 that made bond writedowns part of the debt-crisis management toolkit. Investors responded then by pushing Ireland and Portugal to follow Greece into bailouts. Only 14 months later did European leaders decide that imposing losses on creditors wasn’t such a good idea after all. Now Germany has broken another taboo, forcing Cyprus to siphon money out of bank accounts to earn its 10 billion-euro ($13 billion) rescue. The markets’ snap reaction was the same, turning the Mediterranean island into the latest threat to the stability of the euro area. “It looks like a botched and improvised job, and unprofessional -- groping in the dark without much consideration of what sort of signal it sends,” said Alessandro Leipold, a former International Monetary Fund official who is now chief economist at the Lisbon Council research group in Brussels. “That’s no way to really run a crisis.”
- Cyprus Deposit Raid Stokes Senior Bond Concerns: Credit Markets. Europe's unprecedented tax on Cyprus bank deposits is raising concern among holders of senior bank bonds that they will 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 after Cyprus's announcement. That's the biggest jump since Aug. 2. "This sets a precedent," said Robert Kendrick, an analyst in London at Legal & General Investment Management, which oversees about $585 billion. "If the authorities are prepared to impose losses on depositors, then presumably they wouldn't think twice about impairing senior bondholders."
- RBA’s Lowe Calls Cyprus Tax on Deposits a ‘Step Back’ for Europe. Reserve Bank of Australia Deputy Governor Philip Lowe said the European Union’s decision to force Cypriot savers into a bailout was a “step back” for the region and could increase instability in the financial system. “The fact that this approach of haircutting depositors has been sanctioned could lead the public to think it could happen again,” Lowe said in response to audience questions following a speech in Sydney. “It could make the system more susceptible to bank runs and that’s something that the authorities in Europe will have to watch very, very carefully.”
- China’s Stocks Rise on Valuation After Biggest Drop in Two Weeks. “It’s a rebound for stocks and the market is still on a downward trend amid uncertainty of the economy,” said Wei Wei, an analyst at West China Securities Co. in Shanghai. “Today’s data don’t say much about the general picture of the economy and are distorted by the Chinese new year factor.” The Shanghai Composite Index (SHCOMP) added 0.2 percent to 2,244.79 as of 10:20 a.m. local time. It dropped 1.7 percent yesterday.
- Credit Growth Imperiled as Gold Lures Deposits: Corporate India. Indian banks are struggling to attract deposits to fund credit growth amid the slowest economic growth in a decade as customers buy assets such as gold and real estate to protect themselves against inflation.
- Syria Strife Spills Over Into Lebanon. Syria fired rockets into Lebanon in what Washington called a "significant escalation" of the war, as Syria's main opposition group picked a naturalized U.S. citizen as its first prime minister to lead an interim government that aims to rule over rebel-held territory. Also on Monday, Secretary of State John Kerry offered a green light for other Western powers, including Britain and France, to provide arms to rebels fighting Syrian President Bashar al-Assad, as the two nations push the European Union to permit shipments of such lethal aid.
- Tensions Rise Between Facebook(FB), Developers. The Social Network Steps Up Efforts to Curb Spam, But Developers Say It Is Blocking Competing Apps.
- Fisker Sales Talks Fall Apart. Chinese Bidders for Luxury Hybrid Car Maker Disagree Over Government Loan. Chinese auto makers have pulled back from talks to buy Fisker Automotive Inc. over a disagreement on whether to revive a loan agreement with the U.S., leaving the Anaheim, Calif., company's future uncertain ahead of an April loan payment. Fisker management had proposed to the Chinese that as part of any sale it tap the remaining portion of a $529 million U.S. loan, a move that would commit a new owner to building Fisker cars at a former General Motors Co. auto factory in Delaware, a person familiar with the situation said on Monday.
- Gleacher Notes 'Serious Decline'. Gleacher & Co. disclosed in a securities filing Monday that it had recently experienced "several adverse events" that resulted in a "serious decline" in its financial results. In its annual filing with the Securities and Exchange Commission, the advisory and trading firm said, "We have experienced a significant decline in revenue in the first quarter of 2013, and we cannot predict when or if we will be able to reduce or reverse this decline and associated losses."
- The Talented Mr. Perez. How Obama's Labor nominee muscled a city to drop a Supreme Court case.
- Senate Dems' budget accused of double-counting spending cuts. Senate Democrats' budget plan is coming under increasing criticism from Republicans, who say it effectively pats itself on the back twice for savings that were only achieved once -- and even then, promises another $7.3 trillion in debt over the next decade.
CNBC:
- Power Shift: Energy Boom Dawning in America. Randy Foutch calls it a renaissance, but when you listen to the veteran Texas oilman and others describe America's nascent energy boom, it sounds more like a miracle.
- New China Leader Xi to Meet US's Lew to Discuss Cyber Row, trade. U.S. Treasury Secretary Jack Lew will meet new Chinese President Xi Jinping on Tuesday at a critical time in relations between the world's two largest economies, with cyber hacking, the Chinese currency and market access high on the agenda for talks.
Business Insider:
Reuters:
- Cyprus bank deposit tax sets "dangerous precedent": IIF chief. A proposal to impose a tax on bank deposits in Cyprus sets an "incredibly dangerous precedent" and undermines confidence built up in recent months over Europe's handling of its debt crisis, the head of a global banking association said on Monday. Tim Adams, managing director of the Institute of International Finance, said a weekend announcement that Cyprus would impose a one-off tax on bank accounts as part of a 10 billion euro bailout by the European Union had reignited concerns over the euro zone crisis. Adams told Reuters the announcement broke with practices that depositors' savings were guaranteed. Cyprus will vote on the decision on Tuesday. "Crossing the Rubicon of addressing insured deposits and undermining the explicit guarantee - you can call it a tax or whatever you want - but essentially the broken guarantee opens up lots of different possibilities for destabilizing effects in the short term, medium term and long term," Adams said in an interview. "The next time there is a crisis in any one of these countries, depositors are going to ask themselves, why am I going to stick around to see if the same set of rules are applied or not? I do think it is an incredibly dangerous precedent, without question," he added. The IIF is the world's largest international lobbying group for financial firms, with more than 450 members. He warned that savers in other larger European countries could become nervous and start withdrawing their money. "It is the medium term that is concerning. What happens if we're back at Spain, Portugal or Italy at some point six months from now, and the same set of issues arise?" he said. "There is less confidence and greater probability of instability because of this," added Adams.
- California officials OK $8.6 bln in debt for high-speed rail. California officials approved on Monday the sale of up to $8.6 billion in state bonds to help build a planned high-speed rail system projected to cost $68 billion.
- We're no populist scaremongers, says German anti-euro party. Leaders of Germany's new anti-euro party took their nascent campaign to Berlin on Monday, keen to reassure potential voters that they are neither populist nor extremist and have come up with a considered plan to bring back the Deutschmark. The "Alternative for Germany" has been denounced by the country's mainstream parties as an irrational group of scaremongers, keen to profit from anxiety over the growing cost of euro zone bailouts in Europe's paymaster. But the leaders of the new movement, headed by economist Bernd Lucke who until 2011 was a member of Chancellor Angela Merkel's Christian Democrats (CDU), tried to present a more sober face and distance themselves from other parties in Europe that mix their euroscepticism with unabashed populism and anti-immigration platforms.
- Levy plan ‘bleak day for banking union’. The weekend decision to strip €5.8bn from the savings accounts of Cypriot banking customers has blown a hole in the EU’s ambitious reforms billed as the route out of the eurozone crisis, while potentially undermining a growing reliance at banks around the world on funding their operations with customer deposits. “This is a totally crazy decision,” said one European bank chief. “This is the biggest policy mistake that the [European Central Bank] has subscribed to.”
- Cyprus: investors slam 'crazy' bailout. The botched bail-out of Cyprus has been labelled as “crazy” by investors after the apparent tearing up of Europe’s deposit guarantees plunged markets into uncertainty.
- Beijing May Issue Detailed Property Curbs End-March. The city of Beijing may issue detailed property curbs around end-March, citing a person familiar with the situation. The city may lift the floor for tax calculations on existing home transactions, the person said. The policy will raise transaction costs and curb the overheated market, according to the report.
- None of note
- Asian equity indices are -.25% to +.75% on average.
- Asia Ex-Japan Investment Grade CDS Index 102.50 -4.5 basis points.
- Asia Pacific Sovereign CDS Index 83.5 +3.0 basis points.
- FTSE-100 futures -.18%.
- S&P 500 futures +.16%.
- NASDAQ 100 futures +.20%.
Earnings of Note
Company/Estimate
- (FDS)/1.26
- (DSW)/.72
- (LNCR)/.61
- (WSM)/1.29
- (ADBE)/.31
- (CTAS)/.62
8:30 am EST
- Housing Starts for February are estimated to rise to 915K versus 890K in January.
- Building Permits for February are estimated at 925K versus 925K in January.
- (JAH) 3-for-2
- (FELE) 2-for-1
- The German ZEW Index, UK CPI, weekly retail sales reports, Morgan Stanely European Financials Conference and the (KLIC) investor day could also impact trading today.
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