Today's Headlines

Bloomberg: 

• European Banks Slide as Cyprus Levy May Threaten Ratings. European banks declined on concern an unprecedented tax on savings in Cyprus will have negative implications for the ratings of the continent’s lenders. The Stoxx 600 Banks Index (SX7P) dropped as much as 2.4 percent, led by banks in crisis-hit Italy and Spain. UniCredit SpA (UCG), Italy’s biggest bank, slumped 5.2 percent to 3.63 euros at 1:20 p.m., the lowest level in three months. Societe Generale SA (GLE) lost 5.3 percent to 28.40 euros in Paris. “The psychological crux is that savers can now be called on to contribute to bailouts and it might have been smarter to let deposit insurance do its job,” Ingo Frommen, a banking analyst with Landesbank Baden-Wuerttemberg in Stuttgart, said by telephone. Goldman Sachs Group Inc. said the steps may unnerve deposit-holders in the nations most impacted by the European debt crisis. “It is reasonable to expect that the deposit volatility in stressed sovereigns could rise,” Goldman Sachs analysts including Jernej Omahen wrote in a report to investors. UniCredit also led the credit default swaps of European banks higher, with contracts on senior debt rising 21 basis points to 344. The plan has “broken trust in a way that is similar to the taboo that was originally broached in Greece and risks pushing citizens further away from Europe,” Frommen said. “Stocks could improve depending on how the vote goes, but if we see runs on banks or violence then Europe could shiver.”
• Bail-In Speculation Over Cyprus Sends Bank Default Risk Soaring. Traders are betting that Cyprus’s unprecedented levy on bank savings makes it more likely European authorities will force senior bank bondholders to share the burden of national bailouts. The Markit iTraxx Financial Index of credit-default swaps insuring the senior bonds of 25 lenders and insurers climbed 15 basis points to 158 as of 11:30 a.m. in London, the biggest jump in cost since Italy’s inconclusive election three weeks ago. Southern European banks bore the brunt of the increase, with swaps on Milan-based UniCredit SpA (UCG) rising 16 basis points to 340 and Banco Santander SA (SAN) of Spain adding 11 basis points to 267, according to prices compiled by Bloomberg. “Senior bondholders would, of course, be told to make a contribution if this situation came up in a large country like Spain or Italy,” said Gary Jenkins, founder of Buckinghamshire, England-based research firm Swordfish Research Ltd. Moody’s Investors Service said the move will limit support for bank creditors across Europe and shows that policy makers will risk financial-market disruptions to avoid sovereign defaults. Barclays Plc analysts Laurent Fransolet and Antonio Garcia Pascual said the levy “furthers the erosion of bondholder protection at European banks.”
• Merkel’s Cyprus Gamble Explained as German Vote Nears. Germany’s role in imposing the euro bloc’s first levy on bank deposits in Cyprus shows Chancellor Angela Merkel’s dilemma in explaining to voters facing September elections why they should pick up the tab for another bailout. “I have to go to my constituency and explain to my people in my constituency why we are willing to lend more than 3 billion euros ($3.9 billion) to Cyprus,” Michael Fuchs, deputy parliamentary leader of Merkel’s Christian Democratic Union party, said in an interview with BBC Radio 4 today. “Why should Germans bail out these people and they are not willing to accept at least a minor bailing out by themselves?”
• Russia Stocks Tumble Most in Developing World on Cyprus.The Micex Index (INDEXCF) declined 2.2 percent to 1,462.82 by the close in Moscow, the biggest one-day loss since Nov. 13 and the most among 21 emerging markets tracked by Bloomberg. The dollar- denominated RTS Index (RTSI$) fell 2.8 percent to 1,494.30. VTB Group (VTBR), Russia’s second-biggest lender, slumped 5.3 percent. OAO Sberbank (SBER), the nation’s largest lender with a 14 percent weighting on the Micex, retreated 3.8 percent.
• Euro Falls Most in 14 Months as Cyprus Turmoil Adds Debt Concern. The euro slid the most in 14 months against the dollar after a proposed levy on bank deposits in Cyprus threatened to worsen the European debt crisis. “The biggest fear right now is that there could be a domino effect, which is pushing the euro down,” Douglas Borthwick, a managing director and head of foreign exchange at Chapdelaine & Co. in New York, said in a telephone interview.
• China Stocks Cut by JPMorgan as Banks Seen Falling on Inflation. JPMorgan Chase & Co. advised cutting Chinese stock holdings and betting against the nation’s biggest banks as economic growth slows and inflation quickens. The largest U.S. lender by assets downgraded China to underweight and recommended bearish derivatives tied to the country’s four biggest banks, Adrian Mowat, JPMorgan’s chief Asia and emerging-market strategist, wrote in a report today. Mowat had a neutral position on China in a Feb. 20 note. “Growth momentum is now slowing with policy response constrained; a nasty combination,” Mowat wrote.
• Moody’s Sees Defaults as PBOC Warns on Local Risks. Moody’s Investor Services said China’s local-government financing vehicles face greater risk of default, as regulators warn 20 percent of their loans are risky. A rally in LGFV bonds may reverse, particularly should delinquencies emerge, Christine Kuo, a Moody’s analyst, wrote in an e-mailed response to questions on March 8. The average yield may rise to 7 percent by June from 6 percent now, according to Shenyin & Wanguo Securities Co., the first brokerage incorporated in China and ranked the nation’s most influential research provider by New Fortune magazine in 2010. “I see increased risk of LGFV defaults because the financial profiles of many remain weak and heavy refinancing is needed,” Hong Kong-based Kuo said. “Regulators have asked banks to control their LGFV exposures. Some of the projects could default unless other sources of funds are found.”
• Saudi Arabia’s Naimi Says $100 Crude Oil Is Reasonable Price. Oil at $100 a barrel is a “reasonable” price that won’t choke global economic growth, Saudi Arabia’s Oil Minister Ali Al-Naimi said. “Prices will stay at these current levels in the foreseeable future,” he said today in a speech in Hong Kong, according to the text reported by the official Saudi Press Agency. “Current price levels will not affect economic growth in Asia,” he said. 
• Gold Futures Jump to Two-Week High on European Debt Woes.Gold futures for April delivery rose 0.8 percent to $1,605 at 10:40 a.m. on the Comex in New York. Earlier, the metal reached $1,610.40, the highest for a most-active since Feb. 27. Volume was 30 percent above the average in the past 100 days for this time. 
• Copper Touches Four-Month Low as Cyprus Fuels Europe Concerns.Copper futures for delivery in May tumbled 2.2 percent to $3.4415 a pound at 10:34 a.m. on the Comex in New York after touching $3.4175, the lowest since Nov. 9. The euro slid the most in 14 months against the dollar. A stronger greenback saps demand for commodities as an alternative investment.

CNBC:  

• US Home Builder Confidence Declines for Third Month. 
• How Tiny Cyprus Could Still Have Big Market Impact. 
• Cyprus Bank Tax Lit 'Two Sticks of Dynamite': El-Erian. (video)

Zero Hedge:

• The Rape Of Cyprus By The European Union & The IMF. 
• Goldman's Cyprus Post-Post-Mortem: "A Depositor “Bail-In” – And/Or – A Wealth Tax". 
• "All The Conditions For A Total Disaster Are In Place". 
• Meanwhile, China Has A "Small" Inflation Problem. (graph) 
• JPMorgan(JPM): Opening "Pandora's Deposit Box" Means "More Extreme Deposit Flights In Future Crises". 
• The End Of Systemic Trust: The Canary Just Died. 
• Mainland China's First Default Raises Specter Of China's Credit Bubble Collapse. 
• The Sun Just Set On The German Empire In Cyprus As Locals Tear Down German Flag.

Business Insider:

• CYPRIOT BANK EMPLOYEE: Are We Guinea Pigs?
• JIM O'NEILL: The More They Try To Preserve The Euro, The More They Dismantle The Free Market For Goods. 
• REPORT: Cyprus Banks Will Remain Closed Until Thursday. 
• One Of The Biggest Bulls In The World Is Saying The Market Is Too Complacent About Cyprus.
• MSNBC Has Become Almost Entirely Saturated With Opinion, And Fox News Is Doing Much More Factual Reporting. MSNBC's programming became almost entirely full of commentary and opinion in 2012, while "factual reporting" saw almost no airtime, according to a new report from the Pew Research Center. The report, which is part of Pew's annual comprehensive State of the News Media, found that opinion and commentary fill 85 percent of the airtime on MSNBC. The network only devotes 15 percent to "factual reporting," according to the Pew study.

Reuters:

• S&P warns of socially explosive situation in euro zone. Standard and Poor's sees a high risk that Spain, Italy, Portugal and France will not be able to carry through necessary reforms as the unemployed become less willing to put up with austerity, S&P's Germany head Torsten Hinrichs told a newspaper. "The high unemployment in Spain, Italy and France is socially explosive," Hinrichs was quoted as saying in Monday's Neue Osnabrücker Zeitung.
• Cyprus suggests small deposits be tax exempt -parliamentary official. The Cypriot government is suggesting that deposits up to 20,000 euros be exempt from a bank levy announced over the weekend that the island needs to avert a default, a parliamentary official said on Monday. Remaining deposits up to 100,000 euros would be taxed at 6.7 percent and deposits exceeding that would be taxed at 9.9 percent, the official said on condition of anonymity.
• Global PC shipments falling more than expected -IDC. 
• EURO GOVT-Cyprus deposit grab spooks investors, hurts Spanish, Italian debt. Spanish and Italian bond yields rose on Monday after Cyprus caught investors off guard with a bailout deal partially funded by a tax on banks' savers that some feared could set a euro zone precedent. The value of Cypriot bonds fell sharply while increased demand for German debt, seen as least risky in the euro zone, pushed 10-year Bund yields to their lowest levels this year.
• Cyprus bailout set to thwart EFSF funding. It may be just a small island in the Mediterranean ocean, but Cyprus' financial difficulties will have major ramifications for the European Financial Stability Facility (EFSF) by limiting the flexibility it has to finance eurozone rescue efforts.

Telegraph:

• Daylight robbery in Cyprus will come to haunt EMU. One's first reflex is to gasp at the stupidity of the EU policy elites, but truth is that most EU officials handling the Cyprus crisis know perfectly well that their masters have just set the slow fuse on a powder keg – and they can only pray that it is slow. The decision to expropriate Cypriot savers – even the poorest – was imposed by Germany, Holland, Finland, Austria, and Slovakia, whose only care at this stage is to assuage bail-out fatigue at home and avoid their own political crises.
• Tomorrow, Cyprus could vote to leave the euro. This is political dynamite. 
• Cyprus bailout - live.

Passauer Neue Presse:

• Cyprus deal must be revised as it poses threat to entire euro zone, Peter Bofinger, an economic adviser to Merkel, said. Deal effectively amounts to expropriation, he said. Deal threatens the financial system in Cyprus as well as in Europe if people get upset and withdraw deposits from banks. Deal means savings deposits are not safe anymore, which Bofinger calls "breaking a taboo".

El Pais:

• IMF's Lagarde, Germany's Schaeuble wanted levy of 12% on Cyprus bank deposits to raise more than EU7b instead of EU5.8b agreed, citing people at the meeting. IMF, Germany's proposal was also supported by Austria, Finland and Netherlands.