Today's Headlines

Bloomberg:

• ECB Said Likely to Delay Vote on Emergency Cyprus Bank Lending. The European Central Bank is likely to delay a decision on whether to continue to supply Cypriot banks with emergency funds as it awaits clarity on the nation’s bailout, two people familiar with the deliberations said. The ECB assumes that a bank holiday in Cyprus will be extended to the end of the week, and there is a public holiday on the Mediterranean island on March 25, the people said on condition of anonymity. That means policy makers don’t need to vote on whether to extend or halt Emergency Liquidity Assistance to Cypriot banks at their mid-month meeting in Frankfurt, which starts today and ends tomorrow, the people said. The delay gives the Cypriot government and euro-area finance ministers five more days to forge a deal to prevent the implosion of the island’s banking sector.

• Europe Plays I-Didn’t-Do-It Blame Game on Cyprus Bank Tax. To listen to the German and French governments, the European Central Bank and European Commission, no one was responsible for the Cypriot deposit tax that was unanimously endorsed in the early hours of March 16 and fell apart yesterday. German Finance Minister Wolfgang Schaeuble opened the blame game on Sunday, telling ARD television that the commission, ECB and Cypriot government engineered the swoop on ordinary bank accounts and “now they have to explain it to the Cypriot people.” By then, the Cypriot people were lining up at cash machines and painting “No” on the palms of their hands to protest the levy that, even with a tax-free allowance built in for the smallest savers, didn’t win a single “Yes” vote in the Cypriot parliament. “The Cyprus fiasco has the hallmark of a classic whodunit,” Sony Kapoor, head of the Re-Define think tank, said in an e-mailed note. “Someone somewhere took a decision that now no one nowhere appears to have made.”

• Osborne Says 2013 U.K. Growth Forecast Cut in Half. Chancellor of the Exchequer George Osborne said the forecast for U.K. economic growth this year was cut by half as he lowered corporation tax and set out an updated central-bank remit to aid Britain’s recovery. Gross domestic product will increase 0.6 percent this year, compared with a previous forecast of 1.2 percent, Osborne told Parliament in London as he delivered his annual budget statement today, citing the Office for Budget Responsibility’s predictions. The economy will grow 1.8 percent next year, compared with a previous estimate of 2 percent, and it will expand 2.3 percent in 2015, he added. “It is taking longer than anyone hoped, but we must hold to the right track,” Osborne told lawmakers. “The problems in Cyprus this week are further evidence that the crisis is not over, and the situation remains very worrying,” he said, referring to the uncertainty over a planned European Union rescue package for the Mediterranean island.

• Hollande Woes Deepen With Resignation Before Confidence Vote. French President Francois Hollande’s government faces its first confidence vote over its handling of the economy as Budget Minister Jerome Cahuzac’s resigned amid an investigation into his finances. Cahuzac, 60, is the first minister to exit since Hollande won power last May and is stepping down after a probe into whether he had an undeclared Swiss bank account. Today’s confidence vote, called by the opposition and unlikely to prevail because of Hollande’s Socialist Party’s majority in the National Assembly, will follow a speech by Prime Minister Jean- Marc Ayrault. “The French economy is paralyzed,” Jean-Francois Cope, head of the opposition Union for a Popular Movement, said today on I-tele television. “Our confidence motion is intended as a wake-up call for the government.” 

• European Stocks Advance as Leaders Weigh Cyprus Fate. European stocks climbed, snapping a three-day loss for the benchmark Stoxx Europe 600 Index, as the region’s policy makers weighed options for keeping Cyprus in the euro area. Deutsche Bank AG and BNP Paribas SA paced a rebound in banks, both rising at least 1 percent. U.K. homebuilders rallied as Chancellor of the Exchequer George Osborne announced a new program to support British housing. Rheinmetall AG lost 6.9 percent after forecasting lower earnings in 2013. The Stoxx 600 advanced 0.3 percent to 296.5 at the close of trading, after falling 1 percent in the past three days.

• Fed Officials Trim Forecasts for 2013, 2014 Jobless Rate. Federal Reserve officials forecast the nation’s unemployment rate will hit the central bank’s threshold for raising interest rates sometime in 2015, while projecting faster improvement in the labor market this year. U.S. central bankers estimate the jobless rate will average 6.7 percent to 7 percent in the final quarter of 2014 and 6 percent to 6.5 percent in 2015, according to their central tendency estimates. Similarly, 13 of the 19 Federal Open Market Committee participants estimated that the first increase in the federal funds rate from its current range of zero to 0.25 percent will occur in 2015, the same as at the December meeting. Four estimated the first tightening in 2014, up from 3 in December. Eleven estimated that the benchmark lending rate will be 1 percent or lower by the end of 2015, compared with 12 in December.

• Caterpillar(CAT) Machine Retail Sales Drop Accelerates, Led by Asia. Caterpillar Inc., the biggest maker of construction and mining equipment, said global retail machine sales fell 13 percent in the three months through February. Asia Pacific sales declined 26 percent from the same period a year earlier, the Peoria, Illinois-based company said today in a filing. North American sales were 12 percent lower and Europe, Africa and the Middle East slid 9 percent. Latin America was up 3 percent. Caterpillar last month said global retail machine sales fell 4 percent in the three months through January. 

• Synthetic CDOs Making Comeback as Yields Juiced. Derivatives that pool credit- default swaps to make magnified bets on corporate debt, popularized in the last credit bubble, are making a comeback as investors search farther afield for alternatives to bonds at record-low yields. Citigroup Inc. is among banks that have sold as much as $1 billion of synthetic collateralized debt obligations this year, following $2 billion in all of 2012, according to estimates from the New York-based lender. Trading in so-called tranches of indexes that use a similar strategy to juice yields rose 61 percent in the past month. Synthetic credit, which amplified the financial crisis five years ago, is enticing investors after corporate-bond yields dropped to less than half the 20-year average.

• WTI Oil Rises on U.S. Supply Report, Cyprus Bailout. Prices advanced as much as 1.1 percent. Supplies fell 1.31 million barrels, the Energy Information Administration said. Analysts surveyed by Bloomberg forecast a gain of 2 million.

Wall Street Journal: 

• Live Blog: Obama-Netanyahu Press Conference. 

• Creditors Set to Reject Cyprus's Plan B. International creditors were set to reject an alternative bailout plan Cyprus cobbled together a day after the government's divisive tax on bank deposits died a quick death, two officials with knowledge of the situation said on Wednesday, leaving the island nation with narrowing options to rescue its outsize financial-services sector from collapse.

MarketWatch:

• Cyprus is euro zone’s very own Lehman moment. Commentary: Needlessly introducing new fear chokes off bull market.

• Pimco Weighs Selling Spain and Italy Bonds.

CNBC: 

• JPMorgan Chase(JPM) Secretly Downgraded by Bank Regulators. The Senate report on JPMorgan Chase's London Whale fiasco revealed that federal regulators secretly downgraded the bank's management rating last summer—a fact kept from investors and the public until last week. 

• US Mortgage Applications Fell Again Last Week as Rates Rose: MBA. Applications for U.S. home mortgages tumbled for a second week in a row last week as interest rates continued to climb to seven-month highs, data from an industry group showed on Wednesday. The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, fell 7.1 percent in the week ended March 15. The index of refinancing applications dropped 8 percent, while the gauge of loan requests for home purchases, a leading indicator of home sales, slipped 3.9 percent.

• Caution: China Stocks May See Double-Digit Correction. After a positive start to the year, Chinese equities have fast fallen out of favor with investors, down more than 6 percent in the past month on worries over a bubble building in the property market and on the overall growth outlook. According to technical analyst Ray Barros of Ray Barros Trading Group, the worst is not over for the market, he expects a further correction of up to 15 percent for the benchmark Shanghai Composite in the next two months. 

• 'We Will Be Slaves for Russia': Cypriots Warn.

Zero Hedge:

• When "Unique And Special Cases" Aren't. 

• Brevan Howard: "Faith In Endless Central Banker Put Is Serious Error". 

• Dr. Copper's Deja Vu. (graph) 

• Cyprus Banks To Reopen Next Tuesday At Earliest As Capital Controls Become Reality.

• Euro: Currency Or Prison?

Business Insider: 

• Europe Is A Complete Horror Show, And It's Luck May Have Just Run Out. The crisis in Cyprus is a good opportunity to take a step back and remind ourselves how incredibly broken the Eurozone remains.

• Two Of Russia's Billionaire Oligarchs Hold Their Steel Empire Through Cyprus.

• ENERGY 2040: Here's Exxon's US Outlook For The Next 27 Years. 

• Here's Where The Ugly Consequences Of Easy Monetary Policy Will First Appear. Some have argued that this mis-pricing is actually a bubble in the junk bond market. "More to the point, these are parts of the financial system where developed market central banks would likely be unwilling or unable to ‘do whatever it takes’ to prevent a serious setback. The question would then be whether setback and stress in these sectors could be contained in a world of high leverage." Keep an eye on the junk bond market.

• DEUTSCHE BANK(DB): Here's Why The ECB May Not Rescue Cyprus.

Project Syndicate:

• China's Hidden Debt Risk. Now China is experiencing a fourth instance of elevated debt risk, this time characterized by high levels of accumulated local-government and corporate debt. To be sure, China’s national balance sheet, which boasts positive net assets, has garnered significant attention in recent years. But, in order to assess China’s financial risk accurately, policymakers and economists must consider the risks that lie in the country’s asset structure – and the liabilities that are not included on its balance sheet.

NY Daily News: 

• Investigators search Paris home of IMF chief Christine Lagarde in inquiry over $400 million Bernard Tapie deal. Critics say the 2008 settlement between magnate Tapie and a state-owned bank, reached while Lagarde was France's Finance Minister, was too generous.

benzinga:

• Agriculture Equipment Likely to Lose Demand in 2014, According To Wells Fargo Analyst.
  Andrew Casey, an analyst at Wells Fargo, is growing more and more bearish on agriculture equipment next year, based on a likely decrease in cash flow among farmers. Casey went on to say that he believes commodity prices will come down in price soon too, specifically citing that corn may be closer to $4.25/bu, rather the current $7/bu that it is now. Because of the expected lower demand, Deere(DE) has been slashed to underperform from market perform with a price target of $72-75 from $90-93. AGCO Corp.(AGCO) was also cut to underperform from market perform and had its price target lowered to $40-43 from $51-54.

Reuters:

• FedEx(FDX) cuts forecast as air freight weakness hits profit. FedEx Corp cut its full-year forecast after a worse-than-expected quarterly profit as customers shift from air express to slower but cheaper modes of international shipping. Shares of the No. 2 U.S. package-delivery company fell 5 percent in early trading on the New York Stock Exchange. FedEx's express unit, its biggest source of revenue, has also been hit by overcapacity in the industry that has squeezed margins. Operating income in the express unit fell 66 percent. FedEx said the express unit underperformed due to weakness in Asia and other international markets, where margin pressures arising from excess capacity more than offset increased volumes. "We have a yield issue that exaggerated itself this quarter over last quarter," Dave Bronczek, CEO of FedEx Express, said on a conference call with analysts. FedEx plans to cut express capacity to and from Asia from April 1 and is looking at reducing its fleet by retiring more of its older, less-efficient aircraft.

• Analysis: ECB prepared to let Cyprus go, protect others. The European Central Bank is prepared to cut off funding to Cyprus and let the Mediterranean island succumb to financial meltdown if it has to, confident it has unlimited firepower to protect the rest of the euro zone.

• Lennar(LEN) beats estimates on surging home sales. No. 3 U.S. homebuilder Lennar Crop reported a first-quarter profit well above market expectations as lower interest rates and rising rents boosted home sales. 

• Europe transaction tax raises collateral crunch fears. A financial transaction tax (FTT) proposed by the European Commission could unleash a collateral crunch as much of the US$639trn over-the-counter derivatives market shifts to central clearing. Plans to slap a 0.1% levy on stock and bond transactions and 0.01% on derivatives could raise as much as EUR35bn each year. But the unintended consequences could pose a problem for implementation of the swaps clearing mandate that forms the backbone of the European Markets and Infrastructure Regulation (EMIR).

Telegraph: 

• Bank of England warns QE could hit sterling - minutes. Bank of England policymakers have warned that more quantitative easing could lead to “an unwarranted depreciation of sterling” if markets interpreted the move as evidence that the central bank was abandoning its commitment to low inflation.

Die Zeit:

• Asmussen Says ECB Will Only Fund Solvent Banks. European Central Bank Executive Board member Joerg Asmussen comments in interview. Says ECB can "only provide emergency liquidity to solvent banks". Says solvency of Cypriot banks "can't be considered a given unless an aid package, which ensures a fast recapitalization of the banking sector, is agreed soon". Says it's important that Cyprus's contribution is sufficient to guarantee debt sustainability.

Cadena Ser:

• Spain to Deny Aid to Regions Breaching Deficit Limit. Budget Ministry Montoro will deny subsidies for training medical professionals to work on organ transplants, citing a written order from the ministry. 

Luxembourg RTL:

• Dutch Finance Minister Jeroen Dijsselbloem, who leads the group of euro-area finance ministers, is "tainted" by debates over rescue plans in the Netherlands, Luxembourg Finance Minister Luc Frieden said in an interviwew.