Archive - Apr 29, 2014

In what turned out to be immaculate timing, it was only yesterday that we previewed the collapse in Apple's domestic cash hoard (at the expense of its soaring, if non-recourse offshore cash)  which we concluded by saying that "what this simply means is that after making the history books with the biggest ever, $17 billion bond offering 12 months ago, Apple is about to issue a whole lot more of debt." Less than 24 hours later, it did just that. Moments ago Apple filed a bond offering prospectus, in which it laid out a 7-part bond offering consisting of two FRN tranches (due 2017 and 2019), and 5 fixed rate tranches (due 2017, 2019, 2021, 2024 and 2044), with Goldman and Deustche Bank as lead underwrtiers.

• EU regulators unveil details of bank stress tests (FT)
• Just use NSAfari: U.S., UK advise avoiding Internet Explorer until bug fixed (Reuters)
• China’s Income Inequality Surpasses U.S., Posing Risk for Xi  (BBG)
• US races to refuel infrastructure fund as revenue dries up (FT)
• New Era Dawns at Nokia as Company Appoints CEO, Plans $1.4 Billion Special Dividend, Share-Repurchase Program (WSJ)
• Obama reassures allies, but doubts over 'pivot' to Asia persist (Reuters)
• Dissent at SEC over bank waivers (FT)
• U.S. Banks to Help Authorities with Tax Evasion Probe (WSJ)
• U.S., Europe Impose New Sanctions on Russia (WSJ)
• Why the U.S. Is Targeting the Business Empire of a Putin Ally (BBG)
• Euro-Area April Economic Confidence Unexpectedly Declines (BBG)
• Bitcoin traders settle class actions over failed Mt. Gox exchange (Reut

The bankruptcy of Energy Future Holdings, aka TXU, aka the largest LBO ever has been long in coming. As we previewed it most recently in September of last year, "if there was one deal that epitomized the last credit bubble, aside from the Blackstone IPO of course, it was the ginormous, $45 billion 2007 LBO of TXU, now Energy Future Holdings... the time to pay the piper for the last credit-fuelled binge has arrived and inevitable bankruptcy of this landmark deal is now just days away." It turned out it was more like months away, but it finally arrived, and moments ago, TXU finally succumbed to (lack of) cash flow reality, when it filed for a prepackaged Chapter 11 bankruptcy on Tuesday morning after months of negotiations with creditors aimed at speeding the restructuring of the private-equity backed utility's debt load of more than $40 billion. While it is unclear just how much total debt the company will ultimately restructure, it is likely that the final number will be greater than Enron's, making this also the largest ever non-financial bankruptcy in history.

If one needed a flurry of "worse than expected" macro data to "explain" why European bourses and US futures are up, one got them: first with UK Q1 GDP printing at 0.8%, below the expected 0.9%, then German consumer prices falling 0.1% in April, and finally with Spanish unemployment actually rising from a revised 25.73% to 25.93%, above the 25.85% expected. All of this was "good enough" to allow Italy to price its latest batch of 10 Year paper at a yield of 3.22%, the lowest yield on record! Either way, something else had to catalyze what is shaping up as another 0.5% move higher in US stocks and that something is the old standby, the USDJPY, which ramped higher just before the European open and then ramped some more when European stocks opened for trading. Look for at least one or two more USDJPY momentum ignition moments at specific intervals before US stocks open for trading. But all of that is moot. Remember - the biggest catalyst of what promises to be the latest buying panic rampathon is simple: it's Tuesday (oh, and the $2-$2.5 billion POMO won't hurt).

For most of us, our priorities are going to have to change as we all adjust to a standard of living that is less than that of the prior generation. Still, there is reason for hope if we approach the coming decade with the proper mindset.