“European stocks fell for a third day before Cypriot lawmakers meet to discuss a 5.8 billion-euro ($7.5 billion) bank-deposit levy needed to win a bailout. U.S. index futures were little changed and Asian shares climbed.

Rio Tinto Group (RIO) sank to a three-month low as Goldman Sachs Group Inc. downgraded the shares. ThyssenKrupp AG plunged the most in 15 months 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 world’s second-biggest maker of luxury goods.

The Stoxx Europe 600 Index (SXXP) fell 0.3 percent to 295.94 at 11:29 a.m. in London, trimming this year’s advance to 5.8 percent. The gauge sank as much as 1.2 percent yesterday, before rallying to close 0.2 percent lower, as euro-area policy makers pushed Cyprus into taking money from bank accounts to reduce the cost of its bailout package to 10 billion euros.

“Cyprus begins to lift the veil on how Brussels works,” Michael O’Sullivan, head of portfolio strategy at Credit Suisse Private Banking in London, told Mark Barton on Bloomberg Television. “One of the pillars of banking reform across Europe was depositor insurance, and that’s now unfortunately off the table. For other peripheral countries, there may be more bank refinancing to come.”

The number of shares trading hands on Stoxx 600 companies today was 7.2 percent lower than the average of the past 30 days, Bloomberg data show. Standard & Poor’s 500 Index futures added less than 0.1 percent, while the MSCI Asia Pacific Index rose 0.4 percent.

Cyprus Debate

Cypriot lawmakers will meet at 6 p.m. local time to debate how to spread the proposed tax on bank deposits among account holders. The levy, announced March 16, sparked outrage in the island nation and concern among investors about setting a precedent by breaking the taboo against raiding bank accounts. Banks and stock markets in Cyprus are closed today and tomorrow….”

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“Japanese shares gained, with the Topix Index (TPX) rebounding from the biggest drop in 10 months on speculation yesterday’s decline was excessive. Exporters and shippers climbed after the yen weakened.

Toyota Motor Corp., the world’s biggest carmaker, rose 1.9 percent. Kawasaki Kisen Kaisha Ltd. (9107), Japan’s third-largest shipping company by market value, rose 3.2 percent, paring yesterday’s 4.8 percent drop. Daiei Inc. (8263) tumbled 5.7 percent after surging 34 percent yesterday on a report retailer Aeon Co. may buy a stake in the department-store operator.

The Topix gained 1.7 percent to 1,045.89 at the close in Tokyo after yesterday dropping the most since May as a plan to tax Cyprus deposit holders to fund a bailout sparked concern of bank runs in the euro zone. The Nikkei 225 Stock Average rose 2 percent to 12,468.23. Volume was 36 percent below the 30-day average as Haruhi Kuroda prepares to replace Bank of Japan Governor Masaaki Shirakawa tomorrow.

“There was general panic in response to the Cypriot deal yesterday but now, after some reassessment, markets are realizing it’s a special case and so the risk of contagion is low,” said Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd., which manages $126 billion and is overweight on Japan equities. “While the BOJ leadership change has been priced into stocks in the short-term, there’s much better to come if the push to end deflation gathers momentum.”

Topix Rally

The Topix rallied 45 percent from Nov. 14, when elections were announced that brought Prime Minister Shinzo Abe to power on a platform of increased stimulus and monetary easing from the central bank. The gauge is trading at 1.2 times book value, compared with 2.2 times for the Standard & Poor’s 500 Index and 1.6 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg….”

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World Markets

Currencies

Commodities

USD Libor

Euribor

Yields for Italy, Spain, France,  and Germany …

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“Author’s note: Back in July, my firm, Mischler Financial, featured “The Smartest Man in Global Capital Markets” for the first time. We were not able to identify him by name, nor can we now, but we can tell you that he is a respected international banker at one of the world’s largest financial institutions. We can also tell you that he has been spot-on since the summer, both in time frame and levels. (See the end of this article for a reprint of his July commentary, which you can judge against the current market situation.)

Our access to the “The Smartest Man in Global Capital Markets” is through Ron Quigley, Mischler’s Head of Fixed Income Syndicate and Primary Sales. Ron had a chance to speak to his source recently about where the markets are going now and over the next few months, looking into 2014. What follows is quoted directly from that conversation. Enjoy! (With thanks to Ron!) 

The Outlook 

So, it’s mid-March 2013 and, the S&P 500 (INDEXSP:.INX) is at 1550, right where I said it would be nine months ago. Allow me to update my thoughts as to where we go from here; vastly more relevant than where we have come from:

The three major drivers of equity index valuations have been:

1. The generational low ownership structure of the asset class.
The major brokerages went into the end of FY 2012 with about 38-40% of total assets in equity-related securities; that has crept up to about 43% in the year-to-date move we have seen to the upside.  This remains meaningfully below the norm for the 1980-1990s, which was estimated around 65-70%.  Of course, if one subscribes to the PIMCO mantra that the equity culture is effectively “dead”: (they have been wrong), then maybe nothing changes.  If, however, Washington can be functional, the equity culture will continue to resurface as that’s what the Fed wants.

2. The historically overvalued nature of just about all the alternatives asset classes (i.e. fixed income).
Just about every aspect of the fixed income asset class is overvalued.  From IG bonds to HY, from EM to REITs, and from MLPs to Preferreds, et al; the excessive liquidity situation has effectively arbitraged yield-to-maturity to historically low levels across all these product lines.  It is quite possible, arguably likely, that this situation will persist a bit longer as the Fed maintains its QE stance and effectively provides a “backstop” to valuation deterioration. One day, this will end. We will get to that.

3. Expectations of continued upward revisions to US corporate earnings that may result in more multiple expansions, so long as Fed policy remains so accommodative…..”

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[youtube://http://www.youtube.com/ watch?v=YkKRU1ajKFA 450 300]

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” ‘A cesspit’: Libor scandal may be going on elsewhere

The market for determining one of the world’s key interest rates was a “cesspit” and banks cannot be trusted to be honest in several other major markets, the deputy governor of the Bank of England has warned.

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“Apple Inc. is poised to boost its dividend by more than a half, according to analysts surveyed by Bloomberg, providing investors hit by a share slump with one of the highest yields in the U.S. technology industry.

Apple will probably lift its quarterly dividend 56 percent to $4.14 a share, for an annual payout of $15.7 billion, according to the average estimate from six analysts. The resulting yield of 3.7 percent would be higher than 86 percent of the companies in the Standard & Poor’s 500 Index paying dividends. Apple could fund a payout with existing cash flow without using profit from overseas, which can be subject to extra taxes, said Gene Munster, an analyst at Piper Jaffray Cos.

Chief Executive Officer Tim Cook, who a year ago this month reinstated a dividend and announced a $10 billion buyback, faces mounting pressure to take bolder steps to pay out more of Apple’s $137.1 billion in cash and investments. Investors including David Einhorn’s Greenlight Capital Inc. are pushing for more money as growth slows and competition from rivals such as Samsung Electronics Co. intensifies.

“The accumulation of cash has become excessive,” Brian White, an analyst at New York-based Topeka Capital Markets Inc., said in an interview. He rates the shares a buy, with an $888 price target. “It doesn’t matter which bearish scenario you forecast, they’re never going to need this much cash.”

Apple shares rose 2.6 percent to $443.66 at the close on March 15. The stock has declined 37 percent from a peak on Sept. 19, compared with a 6.8 percent gain for the Standard & Poor’s 500 Index in the same period.

Returning Cash…”
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“The restructuring of the financial services industry, which has ranged from 30,000 layoffs at Bank of America Corp. (NYSE: BAC) to cuts at Citigroup Inc. (NYSE: C) and Barclays PLC (NYSE: BCS), has reached multinational HSBC Holdings PLC (NYSE: HBC). According to the Financial Times:

Stuart Gulliver, HSBC’s chief executive, said when he announced annual results last week that he would “fixate on costs” over the coming year and promised to find a further $1 billion of annual savings in 2013….”

 

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“As expected, Suntech Power Holdings Co. Ltd. (NYSE: STP) failed to make a required $541 million bond repayment scheduled for last Friday. The company claimed last week to have reached forbearance agreements with about 60% of its foreign bondholders, who agreed to give the struggling solar panel maker an additional two months to either pay or renegotiate.

The failure to make Friday’s payment is a default and a bankruptcy filing is a distinct possibility. Bondholders who did not agree to any forbearance are reported to be demanding that the trustee file an involuntary bankruptcy notice. If such a filing should occur, the bankruptcy could be either a Chapter 7 liquidation or a Chapter 11 reorganization. …”

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AMD, ACI, BBY, BCC, CNP, CRL, BREW, GNRC, HPQ, ISRG, KMB, OMX, ODP, ONNN, ORLY, BTU, RGLD, SI, STAN, SYMC, UTX, VZ,

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SOURCE 
NYSE

NASDAQ

AMEX 

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In Play ,

On the Wires 

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“Moments ago we got news that the same kind of “depositor repression” aka wealth tax just implemented in Cyprus over the weekend, may spread to other stability and deposit havens. Such as Switzerland. Just before 7 am Eastern, the SNB’s Moder, who is an alternative board member, said on the wires that the SNB will not exclude negative interest rates, which followed earlier comments from the IMF that the SNB should have negative rates if there is a renewed surge in the Swissie, and a plunge in the EURCHF, as has happened as the Euro has tumbled. Sure enough, the EURCHF soared on news that even Europe’s last remaining deposit bastion is about to be impaired, because all negative rates are is an ongoingdeposit confiscation, instead of a one-time “levy” as per Cyprus.

Bottom line: it is becoming increasingly clear that “your” money is not welcome anywhere, and the the authorities would rather you withdrew it, and injected it into the economy, in a desperate attempt to raise the velocity of money….”

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“BERLIN (Reuters) – 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.

“There has to be a social consensus for saving measures. High unemployment … does not help.”

Hinrichs said the people of Spain and Portugal had already proven they were willing to bear withausterity measures, but “this cannot continue forever”.

In Italy, there was the further danger that “a new government may not be strong enough for the still necessary reforms to strengthen growth,” he said….”

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“LONDON (Reuters) – The tarnished Libor interest rate benchmark should be replaced with a range of reference rates based on actual market transactions by banks, a global group of central bankers said on Monday.

Barclays , Royal Bank of Scotland (RBS) and UBS have all been fined for rigging the London interbank offered rate, which regulators are now reforming.

The rate is compiled by banks submitting quotes for the rates at which they believe they could borrow from another bank. It is used to price products worth trillions of dollars, ranging from home loans to credit cards, but central bankers signaled that its days ought to be numbered.

“It is clear that central banks must play an important role in supporting the development of alternative reference rates,” Bank of England Governor Mervyn King said in a statement.

King chairs a committee of central bankers at the Bank for International Settlements, which on Monday published a report on the role central banks could play in creating a choice of rates….”

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“Chancellor of the Exchequer George Osborne promised another austere budget and policies designed to mute calls for a fiscal stimulus for the U.K. economy.

Osborne said the pressures facing Cyprus are a reminder of what financial markets will do to nations that fail to act and suggested that he will resist calls in the March 20 annual budget to borrow money to fund giveaways. Instead, he promised measures to help the British retirees, military and diplomatic staff in Cyprus who are affected by the tax on bank deposits dictated by the island’s bailout, and he said he’d support plans to stimulate economic growth in Britain’s regions.

“There is no easy answer, there is no miracle cure,” Osborne, 41, told BBC1 Television inLondon yesterday. “We have to go on confronting the very difficult economic problems.”

Calls for greater action to aid growth from both his Conservative Party and the Liberal Democrats in the coalition government have subsided in recent days, suggesting Osborne’s budget will include measures to appease cabinet critics such as Business Secretary Vince Cable. Osborne will have to fund such actions with cuts elsewhere to stay the course on austerity.

The opposition Labour Party repeated its call for Osborne to cut value-added tax, reduceNational Insurance (ANAT) contributions for small companies and reintroduce the 10 percent starting rate of income tax. The party’s Treasury spokesman, lawmaker Ed Balls, suggested he would back an income-tax cut.

“If he wants to cut the basic rate, we will support him in that,” Balls told the same BBC program yesterday.

Cable’s Demands…”

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“The pound jumped to its strongest level in more than a month against the euro after the imposition of a levy on bank deposits in Cyprus threatened to throw Europe back into crisis, fueling demand for U.K. assets as a haven.

Sterling climbed by the most in five weeks against the currency shared by 17 European nations. Cypriot President Nicos Anastasiades bowed to demands by euro-area finance ministers to raise 5.8 billion euros ($7.5 billion) by taking a piece of every bank account in the island nation. U.K. government bonds gained, pushing down 10-year yields to the lowest this year. House prices rose for a third consecutive month in March, Rightmove Plc said.

“This is basically a euro story and something that explains the move in sterling,” said Ulrich Leuchtmann, head of currency strategy at Commerzbank AG in Frankfurt. “Euro- sterling is a choice between a rock and a hard place.”

The pound advanced 1 percent to 85.69 pence against the euro at 11:38 a.m. London time, after jumping by as much as 1.4 percent to 85.31 pence, the strongest level since Feb. 11. Sterling was little changed at $1.5119.

The U.K. currency has gained 1.6 percent in the past week, the best performer among 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Indexes amid speculation the Bank of England will boost its asset-purchase program to revive the economy. The central bank last increased the target in July, boosting it 50 billion pounds to 375 billion pounds.

The euro fell 0.8 percent and the dollar was little changed, in the period, while sterling has weakened 6.9 percent against the greenback.

Futures Bets…”

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“MasterCard Inc. (MA), which is under pressure from France to cut card payment fees, said European consumers are increasingly using credit and debit cards for purchases, dismissing the region’s sovereign debt crisis.

“Our business in Europe has been growing really well,” Ann Cairns, president of international markets at the company, said in an interview in Dubai. “The sovereign debt issue isn’t affectingconsumer confidence in the way that it might.”

The Purchase, New York-based company said it’s benefiting from strong consumer spending in the Nordic countries, the Netherlands, Germany and Eastern Europe. At the same time, consumers are also turning away from cash in favor of plastic.

Mastercard is expanding even as Europe’s crisis enters unprecedented territory after the region’s finance ministers agreed March 16 to a tax on Cypriot bank deposits. Officials unveiled a 10 billion-euro ($13 billion) rescue plan for the country, the fifth since the debt crisis broke out in 2009.

Gross dollar volume in Europe, or the value of transactions processed by MasterCard, climbed 9.3 percent to $1.1 trillion on a local currency basis last year, according to the company’s annual statement. Mastercard expects an 11 percent to 14 percent net revenue compound annual growth rate this year, Cairns said, without giving more detail on its expectations for Europe.

Economic Contraction

Europe’s 17-nation economy will follow last year’s 0.6 percent contraction by shrinking 0.3 percent in 2013, the first back-to-back decline since the euro’s debut in 1999, according to forecasts from the European Commission.

“Our business isn’t just credit cards,” said Cairns, who manages all markets and customer-related activities outside the U.S. “We’re consumer payments and despite sovereign debt, consumer payments continue to grow in the economy.”

Global consumer expenditure is increasing 5 percent to 6 percent, “so there is a natural growth curve,” she said. “Only 15 percent of the world’s consumer payments are electronic, 85 percent are still cash and paper so there’s a big circle which is growing outwards.”

Mastercard net income beat analyst expectations in the fourth quarter, rising 18 percent to $605 million. The company was rated new “Hold” at BNP Paribas Equity Research by equity analyst Arvind Ramnani today. The 12-month target price is $560.00 per share. Shares closed down 1.5 percent at $519.37 on March 15 in New York. They have gained 5.7 percent this year….”

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Q: The symbol below is obviously a joke, but i never quite understood how the Euro could have more value than the dollar given all the non addressed banking issues, higher unemployment, and deep recession scenarios. Strange no?

 

“The euro slumped the most in 14 months against the dollar after an unprecedented levy on bank deposits in Cyprus threatened to throw Europe back into crisis.

The 17-nation currency dropped to a two-week low versus the yen after Cypriot President Nicos Anastasiades bowed to demands by regional finance ministers to raise 5.8 billion euros ($7.48 billion) by taking a piece of every bank account in Cyprus. The yen strengthened against all 16 of its major counterparts after Anastasiades delayed a vote on the measure in parliament until today. The New Zealand dollar and Mexican peso weakened as investors sold higher-yielding currencies.

“The measure makes people nervous that this may happen to other countries in the future and there could be a flight of capital out of the region,” said Mansoor Mohi-uddin, head of currency strategy at UBS AG in Singapore. “This adds to our bearish view on the euro, and we expect the currency’s downtrend to begin again.”

The euro slid 0.9 percent to $1.2962 at 6:11 a.m. in New York after dropping as much as 1.5 percent, the biggest decline since Jan. 13, 2012. The common currency declined 1.1 percent to 123.21 yen after sliding to 121.15, the weakest level since March 5. The yen gained 0.2 percent to 95.05 per dollar.

Scenes of Cypriots lining up at cash machines raised the specter of capital flight elsewhere and threatened to disrupt a market calm that settled over the 17-member currency bloc since the European Central Bank’s pledge in September to backstop troubled nations’ debt.

‘Credit Negative’….”

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“U.S. House Republicans won’t wait for President Barack Obama to issue a decision on the Keystone XL pipeline. They plan to vote by the end of May on legislation that would sidestep the White House and offer congressional approval to the TransCanada Corp. (TRP) project.

House Energy and Commerce Committee Chairman Fred Upton said today that the bill would be on the House floor by Memorial Day.

The measure sponsored by Nebraska Republican Lee Terry is being designated H.R. 3, using one of the numbers held in reserve by Republican leadership for their top-priority bills.

“There is no reason for us to not only refine that oil, but also to keep most of it in the U.S.,” Upton, a Michigan Republican, told a press conference.

The project would cross six states and link the tar sands inAlberta, Canada, to Texas refineries along the Gulf Coast. It requires a presidential permit because it crosses an international border.

In January 2012 the Obama administration rejected a proposed route for the pipeline after concerns were raised about the impact of the project on an ecologically sensitive area inNebraska. The route now under consideration was submitted in May 2012.

‘Political Statement’…”

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