The 6am Cut London | FT Alphaville

The 6am Cut London

Bail-in proposed for Cyprus: “A radical new option for the financial rescue of Cyprus would force losses on uninsured depositors in Cypriot banks, as well as investors in the country’s sovereign bonds, according to a confidential memorandum prepared ahead of Monday’s meeting of eurozone finance ministers. The proposal for a “bail-in” of investors and depositors, and drastic shrinking of the Cypriot banking sector, is one of three options put forward as alternatives to a full-scale bailout.” It hasn’t been endorsed by its authors at the European Commission or by individual eurozone members. (Financial Times)

Eurozone finance ministers meet today in Brussels to discuss aid to Cyprus and Greece. (Bloomberg)

“Barclays is preparing to cut at least £2bn from its annual cost base of £20bn as part of a strategic overhaul to be presented by the bank on Tuesday, say bank insiders and analysts. The cuts are to focus on a retrenchment from some of Barclays’ investment banking operations in Asia, particularly its equities franchise, as well as a partial wind-down of retail and commercial banking in parts of Europe, such as Italy, bankers said.” (Financial Times)

Small UK banks complain of risk-weighting disadvantage: Small banks have rounded on UK, EU and Basel III regulations they say have imposed a “glass ceiling” that works at odds with government efforts to promote competition and growth. New entrants and smaller banks who cannot use their own databases to create internal risk models are hit with higher “standardised” capital requirements than their bigger or longer-established rivals. (Financial Times)

Most Asian markets were closed on Monday but Australian stocks were little changed at a three-year high, while the euro dropped to its lowest level in two weeks. S&P 500 futures gained 0.1%. (Bloomberg)(Reuters)

US/AMR merger could come this week: “US Airways and AMR Corp are nearing an $11 billion merger that would create the world’s largest airline and could announce a deal within a week, after resolving key differences on valuation and management structure, people familiar with the matter said.” (Reuters)

Non-EU companies won’t be exempted from data privacy rules, says EU commissioner for justice Viviane Reding. The firm approach is likely to spark a diplomatic battle between Brussels and Washington, which has actively been trying to water down the EU’s tough new privacy legislation by handing US companies a de facto exemption from it. (Financial Times)

City job vacancies were 18% lower in January than a year earlier, according to recruiter Morgan McKinley. (Financial Times)

Transit systems in the US north-east are restarting today after a record-setting blizzard affected New York, Connecticut, Massachusetts, and Rhode Island, but commuters were warned to allow extra time for travelling. Schools in Boston will be closed today and utility companies reported that some 350,000 customers were still without electricity across nine states after the wet, heavy snow brought down tree branches and power lines. (Bloomberg)(Reuters)

China has eclipsed the US as the biggest trading nation for total imports and exports of goods. (Bloomberg)

The FBI is probing corruption allegations against a subsidiary of EADS, Europe’s biggest aerospace company, relating to a contract in Saudi Arabia for the UK’s Ministry of Defence.” (Financial Times)

State of the Nation previews: Job creation and middle class struggles are expected to be the main focus of President Obama’s address on Tuesday, along with immigration, gun control and climate change. (Bloomberg)(Financial Times)

Venezuelan devaluation sparks panic: “Panic buyers thronged Venezuelan shops over the carnival weekend after the government of Hugo Chávez announced a surprise devaluation that analysts said was overdue but would only partly right the listing economy.” The exchange rate will be adjusted to 6.3 from 4.3 bolívars per dollar. (Financial Times)

COMMENT AND CURIOS:

- Credit vigilante Jeremy Stein arrives at the Fed. (Gavyn Davies’ FT blog)

- Wolfgang Münchau: The Irish debt deal is essentially monetary . (Financial Times)

- How a doomed Lehman CDO won a AAA rating from S&P. (Bloomberg)

- US data expected to make the G20 meeting a somewhat upbeat affair on Friday. (Reuters)

- Private sector job creation spurs a labour market recovery in northern England and Midlands. (Financial Times)

- Ed Luce: What Obama *could* say. (Financial Times)

- David Einhorn on Apple and Green Mountain bets. (Financial Times)

- A crucial update from Tesla Motors is nearing. (Wall Street Journal)

- Freezing in Greece. (Reuters)

OVERNIGHT MARKETS: MIXED

Asian markets
Nikkei 225 down -203.91 (-1.80%) at 11,153
Topix down -11.83 (-1.22%) at 957.35
Hang Seng up +38.16 (+0.16%) at 23,215

US markets
S&P 500 up +8.54 (+0.57%) at 1,518
DJIA up +48.92 (+0.35%) at 13,993
Nasdaq up +28.74 (+0.91%) at 3,194

European markets
Eurofirst 300 up +13.82 (+1.20%) at 1,162
FTSE100 up +35.51 (+0.57%) at 6,264
CAC 40 up +48.45 (+1.35%) at 3,650
Dax up +61.29 (+0.81%) at 7,652

Currencies
€/$ 1.34 (1.34)
$/¥ 92.53 (92.70)
£/$ 1.58 (1.58)

Commodities ($)
Brent Crude (ICE) down -0.06 at 118.84
Light Crude (Nymex) down -0.03 at 95.69
100 Oz Gold (Comex) up +0.50 at 1,667
Copper (Comex) unchanged 0.00 at 375.35

10-year government bond yields (%)
US 1.95%
UK 2.12%
Germany 1.61%

CDS (closing levels)
Markit iTraxx SovX Western Europe -0.81bps at 105.75bp
Markit iTraxx Europe -2bps at 115.77bp
Markit iTraxx Xover -6.92bps at 446.76bp
Markit CDX IG -0.5bps at 89.3bp

Sources: FT, Bloomberg, Markit