Cyprus’ plan to raid bank deposits sends markets scuttling. Global equities, the euro and oil have slumped after the eurozone demanded that Cyprus tax bank savings in return for a €10B bailout. Cyprus’ government is reportedly considering a tax-free threshold for smaller deposits as it attempts to win over legislators for the levy ahead of a parliamentary debate later today. The publicized plan is to tax accounts of under €100,000 at 6.7% and those above that level at 9.9%. "This is a nuclear war on savings and wealth," writes Jefferies’ David Zervos.
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Boeing loses out to Airbus for massive Indonesian deal. Airbus (EADSF.PK) has won an order from Indonesia’s Lion Air for over 234 Airbus A320 jets in a deal worth $24B. The booking is a blow to Boeing (BA), as Lion Air had been seen as a fortress for the U.S. company.
China retains Zhou as central bank chief. China has kept on Zhou Xiaochuan as head of the country’s central bank, an indication that the nation will continue the opening up of the financial sector. The government has also filled out its economic team with what former World Bank official Yukon Huang calls a mixture of "activist reformers" and more cautious appointments.
Top Stock News
STMicro, Ericsson to end chip JV. STMicroelectronics (STM) and Ericsson (ERIC) plan to close ST-Ericsson after failing to find a buyer for the loss-making mobile-chip joint venture. Ericsson will retain 1,800 workers and a suite of thin 4G mobile chips, while STMicro will keep 950 employees and other products. A further 1,600 staff will lose their jobs. The shutdown will cost STMicro $350-450M, less than a prior forecast of $500M. Ericsson already made a provision of 3.3B Swedish kroners ($515.7M) in 2012.
HSBC could slash thousands more jobs. HSBC (HBC) could reportedly axe up to 5,000 or more jobs as part of the desire of CEO Stuart Gulliver to lower expenses by another $1B in 2013. The cuts would add to the sharp staff and cost reductions the bank has already implemented in the past couple of years, and are set to be unveiled at an investor day in May. While the bank has slashed its outgoings, it’s still far away from meeting its cost-income ratio targets.
Panasonic mulls future of healthcare and TV operations. Panasonic (PC) is considering its options for its healthcare and TV operations following reports that the company could sell its healthcare unit as part of its strategy of offloading non-core assets, and that it could withdraw from the TV plasma market as part of downsizing of the overall TV business. KKR (KKR) and other private-equity funds could be interested in the healthcare operations, for which Panasonic wants up to ¥100B ($1.04B).
Dex One, SuperMedia file for Chapter 11 in order to complete merger. Dex One (DEXO), formerly known as R.H. Donnelley, has made a "pre-packaged" Chapter 11 filing along with SuperMedia (SPMD) as the companies look to win court approval for their merger. The idea is to sideline two out of 400 senior creditors who refused to accept a lengthening on the maturity of the firms’ debt by up to 26 months until December 2016 as part of the merger.
JPM’s Highbridge unit raises $5B fund. JPMorgan (JPM) asset manager Highbridge Capital Management has raised a $5B mezzanine debt fund, the largest such vehicle the firm has created since the financial crisis. The fundraising comes as investors seek out high yields due to low interest rates, and follows Blackstone’s raising of a similar $4B fund last year.
Korea probes foreign carmakers. South Korea is investigating Toyota (TM), BMW (BAMXY.PK), Mercedes-Benz (DDAIF.PK) and Volkswagen (VLKAY.PK) for allegedly colluding on prices. The probe follows progress that the companies have made in cutting into the market share of domestic automakers after trade agreements between South Korea and the U.S. and EU.
Apple, VW under fire in Chinese TV expose. China Central Television (CCTV) has accused Apple (AAPL) and Volkswagen (VLKAY.PK) of giving consumers a bad deal. It’s worth taking notice, as it was CCTV allegations about chicken quality at Yum Brands’ (YUM) KFC that led to a plunge in sales.
Top Economic & Other News
U.K. to further delay debt reduction. U.K. Finance Minister George Osborne is set to acknowledge in the budget on Wednesday that the government’s debt will only start falling in 2017-18 at the latest rather than in the 2015-16 timeframe previously given. The new forecast is also well after the original plan of 2015. Still, Osborne intends to use any available cash to support growth and ease the burden on households.
China risks financial crisis – Nomura. China’s economy is showing the same symptoms that sparked the financial crisis in 2008, Nomura warns, citing a spike in leverage to a record 155% of GDP in 2012, a fall in potential growth, and soaring property prices. Should the government maintain loose monetary policy this year, the risk of a crisis in 2014 would increase. "The true extent of the financial risks in China is not fully appreciated by investors," Nomura says.
City dwellers earn and spend more than their rural counterparts. The Labor Department says that 92% of households were urban and the rest rural in 2011 – the latest year for which data is available. The metropolitan group earned 32% more money and spent 18% more with outlays of $50,348 on average. Urban spending took the lead in most categories – housing was the biggest disparity – while rural households spent more on healthcare, transportation, entertainment, and, of course, pets.
Australia warns on government revenues. Australia faces a "massive hit to government revenues" that "will inevitably continue to impact beyond the current year," Treasurer Wayne Swan said yesterday. The deficit increased a further A$4.6B ($4.8B) in the first four weeks of 2013 – above Swan’s February estimate of A$2B – taking the total shortfall for the first seven months of the fiscal year to A$26.8B.
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In Asia, Japan -2.7% to 12221. Hong Kong -2% to 22083. China -1.7% to 2240. India -0.7% to 19293.
In Europe, at midday, London -0.9%. Paris -1.4%. Frankfurt -1.1%.
Futures at 7:00: Dow -0.7%. S&P -0.9%. Nasdaq -1%. Crude -1.1% to $92.45. Gold +0.45% to $1599.40.
Today’s economic calendar:
10:00 NAHB Housing Market Index
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