Italy Considers Raiding Bank Deposits to Save Failing Banks

“Uninsured deposits could be used in future bank failures provided global rulemakers agree on a common approach, according to Federico Ghizzoni, the chief executive officer of Italy’s biggest lender, UniCredit SpA. (UCG)

Cutting large deposits in failing banks, along with other liabilities such as bonds, to offset losses is acceptable as long as small savers’ funds remain protected, Ghizzoni told reporters in Vienna late yesterday. The European Union has to introduce identical rules in all of its member statesand ideally those rules would be coordinated globally, he said….”

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“European stocks were little changed, following yesterday’s biggest drop in five weeks, as theEuropean Central Bank kept interest rates at a record low, and investors awaited an update on monetary policy from ECB President Mario Draghi.

Banca Generali (BGN) SpA lost 5.1 percent after Assicurazioni Generali SpA sold part of its stake in the lender. European Aeronautic, Defence & Space Co. dropped 1.3 percent as an investor offered to sell shares worth 384 million euros ($492 million) in the owner of Airbus SAS.BTG Plc (BTG) gained 1.1 percent after increasing its sales forecast for 2013.

The Stoxx Europe 600 Index (SXXP) fell less than 0.1 percent to 294.67 at 1.01 p.m. in London, paring a drop of as much as 0.3 percent. The equity benchmark slid 0.9 percent yesterday and the Standard & Poor’s 500 Index retreated from a record high in New York as U.S. services and jobs data missed forecasts.

“I don’t expect any new things from Draghi today; his comments are usually very general and there will be no big change from what he’s said before regarding the ECB being there as a support if needed,” Michael Kapler, an equities portfolio manager at Mittelbrandenburgische Sparkasse in Potsdam, Germany, said by phone. “With the recent weaker economic data from the U.S., the focus is more on expectations coming down.”

Asian shares pared losses today after the Bank of Japan (8301) said it will double its purchases of bonds in an attempt to stimulate economic growth. The BOJ will buy 7 trillion yen ($73 billion) of securities a month.

National benchmark indexes advanced in 10 of the 18 western European markets. Germany’s DAX rose 0.4 percent, the U.K.’s FTSE 100 slipped 0.3 percent, and France’s CAC 40 added 0.7 percent.

ECB Decision…”

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“Australia’s dollar held a rebound from a three-week low against its New Zealand counterpart as traders pared bets for interest-rate cuts after retail sales in the larger nation climbed by the most in more than three years.

The so-called Aussie gained for a second day against New Zealand’s kiwi dollar after government data showed that retail sales jumped 1.3 percent in February and building approvals rebounded. Both South Pacific currencies fell against the dollar and surged against the yen after the Bank of Japan (8301) expanded monetary stimulus.

“The retail sales number was extremely strong,” said Alvin Pontoh, an Asia-Pacific strategist at TD Securities Inc. inSingapore. “It justifies the move higher in the Aussie. The Reserve Bank of Australia said this week that there are signs the economy is responding to previous easing of monetary policy and we’re clearly seeing that evidence today.”

The Australian dollar rose 0.1 percent to NZ$1.2435 at 5:42 p.m. in Sydney from yesterday, when it also added 0.1 percent. The pair touched NZ$1.2396 on April 2, the lowest since March 8. The Aussie fell 0.3 percent to $1.0431, and New Zealand’s currency lost 0.3 percent to 83.89 U.S. cents.

Australia’s dollar jumped 2.1 percent to 99.44 yen and New Zealand’s surged 2.1 percent to 79.96 yen.

The advance in Australia’s retail sales beat the 0.3 percent advance predicted by the the median forecast in a Bloomberg News survey of economists and was the biggest back-to- back gain in almost four years.

Separate reports showed building approvals rebounded 3.1 percent in February from a revised 2.0 percent drop in January, and a measure of the services industry advanced to the highest level in 14 months….”

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“Japan’s Topix Index (TPX) jumped the most in eight weeks as the yen slumped after the Bank of Japan (8301) doubled monthly bond purchases in its first policy decision since Haruhiko Kuroda took over as governor.

The Topix climbed 2.7 percent to close at 1,037.76 in Tokyo, the biggest gain since Feb. 6. The gauge reversed a 2 percent loss after the decision, with more than seven stocks rising for each that fell. The Nikkei 225 Stock Average (NKY) added 2.2 percent to 12,634.54. Volume was 42 percent above the 30-day average. The yield on the country’s 10-year government bonds slumped 12.5 basis points to a record low of 0.425 percent.

“We’re getting a sea change in monetary policy and it’s happening fast, said Kazuyuki Terao, Tokyo-based chief investment officer at Allianz Global Investors Japan Co. ‘‘That was what markets had expected, but it’s still positive.”

Sumitomo Realty & Development Co. surged 10 percent to pace gains among property companies, which rose the most among the 33 Topix industry groups. Honda Motor Co. (7267), a carmaker that gets 81 percent of its revenue outside Japan, climbed 3.4 percent, bouncing back from a 3 percent decline. Fujifilm Holdings Corp., which has a bird flu treatment under regulatory review, rose 5.7 percent after the disease took a third life in China.

The Topix has rallied 44 percent since mid-November amid optimism Prime Minister Shinzo Abe’s new government and the Bank of Japan would take more steps to beat deflation. Thegauge traded at 15.6 times estimated earnings on average, compared with 14 for the Standard & Poor’s 500 Index and 12.6 for the Stoxx Europe 600 Index.

Kuroda Stimulus…”

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[youtube://http://www.youtube.com/watch?v=6ihPOTDxMfE 450 300]

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“South Korea’s stocks tumbled the most in more than four months and the won sank to a half-year low as the risk of conflict with North Korea curbed demand for the nation’s assets. The cost of protecting sovereign bonds against default climbed to the highest since September.

North Korea ratified a law this week authorizing plans for “counter-actions” against U.S. aggression including a nuclear strike, official media reported today. The communist nation in the past week said that a “state of war” exists with the South, announced plans to restart a mothballed nuclear plant and prevented South Korean workers from entering a jointly run industrial park at Gaeseong, on its side of the border.

“North Korea is heightening its threats day by day and that risk factor is having a negative impact on South Korean financial markets,” said Jeon Seung Ji, an analyst at Samsung Futures Inc. in Seoul. “Rising tension is prompting foreign investors to sell more Korean stocks, weakening the currency. In the meantime, exporters are likely to look for a point to sell dollars.”

The Kospi index fell 1.2 percent to 1,959.45 at the close in Seoul, its steepest loss since Nov. 15. The won dropped 0.5 percent to 1,123.71 per dollar, after touching 1,125.50 earlier, the weakest since Sept. 13. The currency slumped 5.3 percent in the past three months, Asia’s second-worst performer, as tensions with North Korea escalated.

Bond Risk…”

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“The yen weakened the most since October 2011 and Japanese 10-year bond yields fell to a record as the nation’s central bank said it will double asset purchases. Spanish and Italian notes stayed higher after the European Central Bank kept its benchmark rate at a record low.

Japan’s currency depreciated 2.6 percent to 95.47 yen per dollar at 7:52 a.m. in New York, while 10-year yields slumped to 0.425 percent. Spain’s two-year note yield dropped seven basis points to 2.13 percent and Italy’s fell 10 basis points to 1.57 percent. The won slid to a six-month low and the pound weakened 0.2 percent to $1.5103. The Stoxx Europe 600 Index gained less than 0.1 percent, while Standard & Poor’s 500 Index (SXXP) futures climbed 0.4 percent after the gauge dropped from a record yesterday. Gold retreated to a 10-month low….”

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World Markets

Currencies

Commodities

USD Libor

Euribor

Yields for Italy, Spain, France,  and Germany …

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So Magic Johnson’s son came out of the closet today (or yesterday, wTF, I don’t know) and that’s what he looks like. I couldn’t care less about his orientation, whether he enjoys to play with balls in the mud or not. But WTF is Magic Johnson’s son doing looking like a fat drag queen?

I do believe a DNA test is in order for Magic and the mother of this donut lover. Perhaps they can go on Maury Povich and hash it out.

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“Cities may start to use bankruptcy as a tool to skirt obligations the way that airlines have for decades and car companies have done more recently. As AMR, the parent of American Airlines, has been able to reset debt obligations, deals with suppliers and union contracts, the same may be part of the restructuring of cities from Stockton to Detroit. Public finances will never be the same, if one or both cities declare Chapter 9.

U.S. Bankruptcy Judge Christopher Klein is set to rule on whether Stockton can use bankruptcy to abandon its obligations to the California Public Employees’ Retirement System, to which its owes $900 million. The long-time covenants between cities and their employees could be broken as they never have been. Municipal jobs, once considered both safe and an excellent means to a good retirement, will be at risk in a growing number of cities that lost tax revenue during the recession, as they continued to spend and borrow money from the capital markets. In a stroke of irony, the investors that supported these cities may take huge losses themselves.

A number of cities might have gone bankrupt in the recent past. That list would include both Flint and Pontiac in Michigan, which were deserted by the auto industry as sales crumbled and plants moved to areas with more modern facilities and further from the UAW headquarters. And there were the jobs that moved to Mexico and other lower wage markets. Both cities were assigned emergency managers by the state of Michigan that were given dictator-like power. Whether the actions were preferable to bankruptcy will be argued for years….”

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“The February report for the purchasing managers index (PMI) came in at 54.2, a number that indicates expansion in the economy. Even better, the new orders index posted a reading of 57.8. But these numbers mask a continuing decline in U.S. manufacturing, according to a report in yesterday’s Wall Street Journal.

The March PMI consensus estimate calls for a slight drop to 54, which indicates that expansion is continuing, but the problem remains that more businesses are closing than are opening. Job numbers have grown by 500,000 in manufacturing since early 2010, surely a good sign. However, the Wall Street Journal notes that 5.7 million manufacturing jobs fled the United States in the decade from 2000 to 2010.

One way to gauge the success of U.S. manufacturing is how much the country exports….”

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SOURCE
NYSE

NASDAQ

AMEX

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In Play ,

On the Wires

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“Dell Inc. (DELL) founder Michael Dell will only consider backing a buyout by Blackstone Group LP (BX) if the private-equity firm guarantees he can remain as chief executive officer, according to a person familiar with the discussions.

In several recent meetings in Austin, Texas, with Chinh Chu and David Johnson — the Blackstone executives overseeing the firm’s bid — Michael Dell said he would be more likely to support their proposal if he retained an influential role, a second person familiar with the talks said. Negotiations are ongoing and the two sides may not reach an understanding….”

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Get a handle on global growth by looking at PMI numbers that are being released over the next two days.

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“PALO ALTO, CA–(Marketwire – Apr 1, 2013) – Tesla Motors (NASDAQ: TSLA) announced today that sales of its Model S vehicle exceeded the target provided in the mid February shareholder letter. As customers who note their Model S serial number this weekend will realize, vehicle deliveries (sales) exceeded 4,750 units vs. the 4,500 unit prior outlook. As a result, Tesla is amending its Q1 guidance to full profitability, both GAAP and non-GAAP.

“I am incredibly proud of the Tesla team for their outstanding work. There have been many car startups over the past several decades, but profitability is what makes a company real. Tesla is here to stay and keep fighting for the electric car revolution,” said Elon Musk, Tesla Motors co-founder and CEO. “I would also like to thank our customers for their passionate support of the company and the car. Without them, we would not be here.” …”

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“Wall Street pay, while lucrative, isn’t what it used to be — unless you are a board member.

Since the financial crisis, compensation for the directors of the nation’s biggest banks has continued to rise even as the banks themselves, facing difficult markets and regulatory pressures, are reining in bonuses and pay.

Take Goldman Sachs, where the average annual compensation for a director — essentially a part-time job — was $488,709 in 2011, the last year for which data is available, up more than 50 percent from 2008, according to Equilar, a compensation data firm. Some of the firm’s 13 directors make more than $500,000 because they have extra responsibilities.

And those numbers are likely to skyrocket for 2012 because the firm’s shares rose more than 35 percent last year and its directors are paid in stock. Goldman Sachs is expected to release fresh pay data in the coming weeks.

Goldman’s board is the best compensated of any big American bank and the fifth-highest paid of any company in the country, according to Equilar. Some of its rivals are not that far behind. The nation’s biggest banks paid their directors over $95,000 a year more on average in 2011 than what other large corporations paid.

Goldman defends the board’s pay, saying that the bulk of the compensation is in stock that directors cannot touch until after they have left the board.

That arrangement, the firm says, aligns directors’ interests with those of shareholders.

“The board’s pay is set at a level that reflects the firm’s long-term performance as well as directors’ substantial time commitment and the increased demands placed on them in recent years by new laws and regulations,” said David Wells, a Goldman spokesman.

More broadly, banks and compensation experts say, financial firms must now pay a premium to entice and keep qualified directors.

After the financial crisis, some financial firms’ boards were criticized for being asleep at the wheel and not understanding the risks being taken. Recruiters say banks are redoubling efforts to recruit directors with more financial expertise who can exercise better oversight….”

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“Cyprus may imposes losses of as much as 60 percent on Bank of Cyprus Plc accounts exceeding 100,000 euros ($128,000) as part of an aid deal to stop the country from going bankrupt.

Customers will have 37.5 percent of their deposits above this amount converted into shares with full voting rights and access to any future Bank of Cyprus dividend, the Nicosia-based central bank said in an e-mailed statement. A further 22.5 percent will be temporarily withheld to ensure the lender meets the terms of its recapitalization, as agreed under Cyprus’s loan agreement with international creditors, the central bank said.

President Nicos Anastasiades agreed March 25 to impose losses on Bank of Cyprus’s larger depositors in exchange for a 10 billion-euro bailout after failing to get financial aid fromRussia, one of the nation’s biggest investors. The agreement also shuttered Cyprus Popular Bank Pcl (CPB), the country’s second- largest lender.

The deposit-loss plan “will make things worse as small and medium-sized companies will run out of liquidity,” Marios Mavrides, a lawmaker for the ruling Disy party, said in a phone interview from Nicosia. The move “does not help to gain back people’s trust, deposits should be free in order to gain that trust,” he said.

Deal Rejected…”

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“Banks including Bank of America Corp., Barclays Plc (BARC) and JPMorgan Chase & Co. (JPM) won dismissal of antitrust lawsuits by plaintiffs claiming they were harmed by the rigging of the London interbank offered rate.

In more than two dozen interrelated cases before U.S. District Judge Naomi Reice Buchwald inNew York, the banks were alleged to have conspired to depress Libor by understating their borrowing costs, thereby lowering their interest expenses on products tied to the rates.

While potential damages were estimated to be in the billions of dollars, the judge ruled the cases must be dismissed because of the inability of litigants that included brokerage Charles Schwab Corp. (SCHW), pension funds and other bondholders to show they were harmed. Buchwald, whose March 29 ruling allowed some commodities-manipulations claims to proceed to a trial, said that, while private plaintiffs must show actual harm, her ruling didn’t impede governments from pursuing antitrust claims tied to attempts to manipulate Libor.

“We recognize that it might be unexpected that we are dismissing a substantial portion of plaintiffs’ claims, given that several of the defendants here have already paid penalties to government regulatory agencies reaching into the billions of dollars,” Buchwald wrote. “There are many requirements that private plaintiffs must satisfy but which government agencies need not.”

Key Metric…”

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“China’s March new home prices posted the biggest gain in more than two years as buyers rushed into the market ahead of property curbs by local governments, driving real estate stocks higher.

Prices climbed for the 10th month, rising 1.1 percent to 9,998 yuan ($1,610) per square meter (10.76 square feet) from February, SouFun Holdings Ltd. (SFUN), the country’s biggest real estate website owner, said in a statement today after a survey of 100 cities. That’s the biggest increase since January 2011.

“The earlier property policy uncertainty drove quite a lot of buyers into the market, while supply, usually low in the first quarter, couldn’t catch up with the demand,” said Zhao Zhenyi, a Shanghai-based property analyst at Industrial Securities Co. “Home sales will weaken in the coming months as more local governments announce curbs for the cities.”

About 17 cities have issued details of property curbs by the end of the first quarter. The capital city of Beijing banned single-person households from buying more than one residence, while Shanghai prohibited banks from giving credit to third-home buyers, the local governments said over the weekend.

Home prices rose 3.9 percent last month from a year ago, according to the SouFun statement.

A gauge tracking property shares advanced 0.9 percent at the close of trading in Shanghai, the most among five industry groups on the Shanghai Composite Index. (SHCOMP) The benchmark measure fell 0.1 percent.

Safe Haven…”

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