Good morning New York,
FT ALPHAVILLE
Scratch one stupid idea: Joseph takes us through the latest Eurogroup statement on Cyprus and counts how many times they now promise that insured deposits below €100k will not be bailed-in. Though, he notes, there is still a lot of mind-bleach being pushed on Europeans.
Did Russia lose at Russian roulette? Kate notes that if the Cypriot government was trying to coddle Russian depositors by initially agreeing, way back on March 16, to penalise small depositors along with larger ones, that has backfired badly. Some Russian depositors are no doubt in the smaller Cypriot banks, which won't be touched under this new agreement. Yet they're unlikely to stick around (voluntarily) after the past week's events.
The London whale on what was realistic: By now, it should be well understood that the credit derivatives book in JPMorgan's chief investment office was woefully mismarked, says Lisa. Worryingly, the practice of marking at the extremes of the bid-offer, giving the most favourable result, was rubber-stamped as acceptable practice by both the bank's controller and the outside auditor.
NEWS
EU ministers approve Cyprus bailout deal: The agreement will see depositors with accounts worth less than €100,000 protected. But those above those levels in Laiki Bank, the second largest and most troubled financial institution, would be severely cut and the losses on large deposits in Bank of Cyprus, which will survive as a much smaller entity, are also yet to be decided, but could be as high as 40 per cent. The Eurogroup agreement will come as a relief, since rescue deals struck by the Troika have been unpicked by ministers in the past. (Financial Times)
Bankers' pay premium narrowing: "Investment bankers still get paid much more than other professionals, including doctors and engineers, but for the first time in a generation, the gap is narrowing." The multiple they receive of average private sector pay has fallen from 9.5 times in 2006 to 5.8 times last year, according to research compiled by PwC for the FT. (Financial Times)
England and Wales house prices posted their biggest month-on-month gain in three years in March, driven by London, a survey by Hometrack showed. Prices rose 0.3 per cent from February, the fastest increase since March 2010. In year-on-year terms house prices were flat, the first time they have not fallen since September 2010. (Reuters)
Plan to crack down on banks' capital regulation arbitrage: A plan for hefty charges on banks that use pricey CDS to cut their capital requirements outlined in a highly technical consultation announced on Friday by the Basel Committee on Banking Supervision takes aim at banks that have been exploiting a regulatory loophole by buying credit protection on risky loans but deferring or spreading out the premiums for several years. (Financial Times)
Markets expect Chinese easing cycle to end: "China's swap market is signaling interest-rate increases for the first time since 2011 after inflation accelerated to a 10-month high and the housing market defied government cooling efforts. Two-year contracts that exchange the People's Bank of China's 3% savings benchmark for a fixed payment rose eight basis points this month to 3.03%, data compiled by Bloomberg show." (Bloomberg)
US Congress reviews tax break for corporate interest payments: Kenny Marchant, a Texas Republican, and Jim McDermott, a Democrat from Washington state, leaders a working group on "debt, equity and capital" in the House of Representatives ways and means committee, the powerful tax-writing panel, are evaluating a move that would reduce the tax code's bias towards debt and encourage equity funding instead. The Senate finance committee is also exploring limiting the interest payment deductions, aides said. (Financial Times)
Questions remain over death of Berezovsky: The death of exiled tycoon Boris Berezovsky remained shrouded in mystery on Sunday, although police said there was no evidence that anyone else was involved. UK police said the man once dubbed the "Godfather of the Kremlin" had been found on Saturday on the bathroom floor of his multimillion-pound mansion in Ascot, outside London, with the door locked from the inside. (Financial Times)
Dell evaluating alternative offers: "A special committee of Dell's board is evaluating separate takeover proposals from Blackstone Group and billionaire investor Carl Icahn to decide whether either or both are likely to trump an existing $24.4bn take-private deal, a source familiar with the discussions said on Sunday." Icahn offered $15 per share for 58 per cent of Dell, while Blackstone proposed paying more than $14.25 per share, the source said. Both offers would leave some Dell stock publicly traded, in contrast to the Silver Lake group deal already agreed, which would see all of Dell bought for $13.65 per share.(Reuters)
Xi to focus on trade in Africa: Chinese president Xi Jinping's speech in Dar es Salaam today, on his first overseas trip as president, is expected to focus on trade relations in a move to ease local fears China was in Africa purely for its resources. (Reuters)
Sinopec and parent China Petrochemical reach $3bn deal: China Petroleum & Chemical have agreed to form a joint venture that will acquire $3bn in oil and gas assets held by its state-owned parent in countries including Kazakhstan, Colombia and Russia. The joint venture between Sinopec and parent China Petrochemical will be called Sinopec International Petroleum E&P Hongkong Overseas. (Wall Street Journal)
Markets: The euro, stocks and crude oil were firmer after Cyprus reached a deal on a €10bn bailout. Money was moving out of supposed havens, pushing the yen and Swiss franc lower, while forcing Treasury yields higher. US index futures suggested Wall Street's S&P 500 would open later in the day with a gain of six points to 1,564, leaving the benchmark only a point shy of a record closing level – a bull run predicated on an improving US economy coupled with still ultra-accommodative monetary policy. If maintained, New York's rise will add further impetus to the FTSE All-World equity index, which is up 0.4 per cent after the Asia-Pacific region advanced 0.9 per cent and as the FTSE Eurofirst 300 pops 0.8 per cent in early skirmishing. (Financial Times)
