Creditors, large depositors to take haircut in Cyprus rescue. Hours before a possible financial meltdown in Cyprus, the eurozone agreed to a €10B bailout in which the country's second-largest bank, Laiki, will be closed and its operations folded into Bank of Cyprus. Deposits of over €100,000 will be hit with a large tax, perhaps 30% or more, while those below that level will be left untouched. Laiki's senior bondholders will be wiped out, while Bank of Cyprus's creditors will also be affected.
Cheniere to export £10B worth of gas to U.K. Cheniere (NYSEMKT:LNG) has signed a £10B 20-year deal to provide 1.7M metric tons of natural gas per year to U.K. energy company Centrica (OTCPK:CPYYF) in the first such agreement between a U.S. supplier and a British utility. The deal is subject to Cheniere securing financing and the required regulatory approval, which isn't necessarily such a sure thing given the opposition to gas exports in the U.S.
Bidding war breaks out for Dell. Dell (NASDAQ:DELL) has confirmed that it has received bids from Blackstone (NYSE:BX) and Carl Icahn, and that Michael Dell is willing to "explore in good faith the possibility of working with third parties regarding alternative acquisition proposals." Icahn has offered $15 a share for 58% of the company and Blackstone has bid $14.25 in its proposal, while Dell's offer is $13.65. The latter would have one chance to try to match or outbid the rival proposals. Dell was +2.6% premarket.
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Cyprus bailout sends global shares higher. They say in Britain that a week's a long time in politics. Well it's also a long time in the financial markets. Last Monday, a plan to hit depositors in Cyprus sent global shares and the euro tumbling. Today, a plan to hit depositors in Cyprus has sent many bourses and the euro higher. Moody's, though, remains unimpressed, saying that Cyprus remains at risk of default.
Supreme Court set to hear "pay for delay" case. The Supreme Court is due to hear a "pay for delay" case today over whether it's legal for drug companies to pay generic rivals tens of millions of dollars to hold off from launching copycat versions of medicines. The case is the FTC vs Actavis (ACT) and involves Abbott Labs' (NYSE:ABT) AndroGel testosterone treatment. The FTC says the practice costs customers $3.5B a year, while drug firms argue that it protects innovation.
AstraZeneca's revenue from Crestor blockbuster safe until 2016. AstraZeneca (NYSE:AZN), which is in the midst of a patent cliff, has received a boost after Actavis (ACT) unit Watson Laboratories and Egis agreed to drop their attempts to introduce generic versions of AstraZeneca's blockbuster cholesterol drug Crestor until May 2016. The settlement comes after a court upheld the patent on the treatment in December.
Deutsche Bank ensnared in Iranian allegations. Half of the €600M Deutsche Bank (NYSE:DB) retroactively set aside for litigation in 2012 may reportedly be linked to violations of U.S. sanctions on Iran. The bank restated its 2012 profit on Wednesday last week after inexplicably increasing "litigation provisions". It now appears the move "could be a sign U.S. investigations of possible Iran-linked transactions (have) reached an advanced stage."
Deutsche Bank boss requests pay cut. In a move that cost him almost €2M, Deutsche Bank (DB) co-CEO Anshu Jain reportedly asked not to be paid part of his 2012 bonus so that his compensation would be in line with that of fellow chief Juergen Fitschen. It's some nice press for Deutsche Bank given the Iranian allegations. On Friday, the company said it was docking Jain's and Fitschen's pay because of the earnings restatement.
Senate backs online sales tax measure. The Senate has voted 75-24 to allow states to collect sales taxes from online retailers with $1M+ in annual revenues and no presence within a given state's borders. While the vote was non-binding, the margin of victory suggests a filibuster shouldn't be a problem when a binding vote is held. Amazon (NASDAQ:AMZN) and eBay (NASDAQ:EBAY) have already begun collecting in a number of large states, and many investors assume that collections will expand in time.
Top Economic & Other News
EU should be wary of Russian retaliation over Cyprus. With Russian citizens holding an estimated €30B in Cyprus, EU businesses might have to brace themselves for reprisals over the bailout deal for the island. "There are a number of large German companies operating in Russia," says former Kremlin adviser Alexander Nekrassov. "You could possibly look at freezing assets or taxing assets." However, Nekrassov doesn't think Russia will cut off gas supplies, as it did with Ukraine in 2009.
Households help keep government borrowing rates low. An emphasis by consumers on boosting savings and limiting debt is continuing to help ensure that the government can borrow at rock-bottom rates even though the economy remains sluggish and its debt mounts. As of March 6, deposits at U.S. financial institutions surpassed loans by $2.03T; a month before Lehman collapsed, loans exceeded deposits by $205B. In 2012, households put $1.04T in Treasurys, up from $648B in 2011.
In Asia, Japan +1.7% to 12546. Hong Kong +0.6% to 22251. China -0.1% to 2327. India -0.3% to 18681.
In Europe, at midday, London +0.9%. Paris +1.4%. Frankfurt +1.3%.
Futures at 7:00: Dow +0.3%. S&P +0.5%. Nasdaq +0.6%. Crude +0.5% to $94.18. Gold -0.3% to $1603.60.
Today's economic calendar:
8:30 Chicago Fed National Activity Index
10:30 Dallas Fed Manufacturing Outlook
1:15 PM Bernanke at the London School of Economics
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