Dell

The underlying question in Bill Gross' latest monthly letter, built around Jeremy Stein's (in)famous speech earlier this month, is the following: "How do we know when irrational exuberance has unduly escalated asset values?" He then proceeds to provide a very politically correct answer, which is to be expected for the manager of the world's largest bond fund. Our answer is simpler: We know there is an irrational exuberance asset bubble, because the Fed is still in existence. Far simpler.

• Risk of instability hangs over Italy poll (FT), Protest votes add to uncertainty in close Italy election (Reuters), and... Risk On
• Czech inspectors find horsemeat in IKEA meatballs (Reuters)
• China’s Slower Manufacturing Casts Shadow Over Recovery (Bloomberg)
• So much for reform: China Prepares for Government Shuffle as Zhou Stays at PBOC (Bloomberg)
• France to pause austerity, cut spending next year instead: Hollande (Reuters)
• Sinopec to buy stake in Chesapeake assets for $1.02 billion (Reuters)
• White House warns states of looming pain from March 1 budget cuts (Reuters)
• China Quietly Invests Reserves in U.K. Properties (WSJ)
• Osborne Keeps Austerity as Investors See Downgrade as Late (BBG)
• South Korea's new president demands North drop nuclear ambitions (Reuters)
• Russia accuses U.S. of double standards over Syria (Reuters)

• Office Depot Agrees to Buy Officemax for $13.50/Shr in Stock
• Bulgarian Government Resigns Amid Protests (WSJ)
• Rome will burn, regardless of Italian election result (Reuters)
• Abe Says No Need for Foreign Bond Buys Under New BOJ Chief (BBG)
• Rhetoric Turns Harsh as Budget Cuts Loom (WSJ)
• Muddy Waters Secret China Weapon Is on SEC Website (BBG)
• Business Loans Flood the Market (WSJ)
• Staples May Be Winner in Office Depot-OfficeMax Merger (BBG)
• Fortescue Won't Pay Dividend, Profit Falls (WSJ)
• Key Euribor rate on hold after rate cut talk tempered (Reuters)
• FBI Probes Trading in Heinz Options  (WSJ)
• Spain Said to Impose Yield Ceiling on Bond Sales by Regions (BBG)
• BOK’s Kim Signals No Rate Cut Needed Now as Outlook Improves (BBG)

• John Kerry just got happier: Berkshire Hathaway, 3G Buying Heinz for $72.50 a Share, or $28 Billion - ~20% premium to last price (CNBC)
• US Airways, AMR to Merge (WSJ) - can thousands of workers spell "synergies"?
• Draghi, Carney show ascent of "whatever it takes" central bankers (BBG) ... to preserve the Goldman way of life
• Euro zone economy falls deeper than expected into recession (Reuters)
• Soros has made $1 billion betting against the Japanese Yen (WSJ)
• Ex-Analyst at SAC Felt Pressured for Tips  (WSJ)
• Desalination Seen Booming at 15% a Year as World Water Dries Up (BBG)
• China's 'Wall' Hits Business (WSJ)
• Israel publishes some details as Australian spy mystery deepens (Reuters)
• Tata Motors Profit Falls 52% (WSJ)
• AB InBev Will Sell Corona Unit to Salvage Modelo Takeover (BBG)
• "Blade Runner" Pistorius charged with murdering girlfriend (Reuters)
• In Ohio and beyond, Obama sees model for manufacturing revival (Reuters)

• Obama Paints Wider Role for Government in Middle Class Revival (BBG)
• Obama to Seek a New Trade Deal With EU (WSJ)... or this is strawman why 2016 GDP will be higher
• Mobile phone sales fall for the first time since 2009 (Telegraph)
• Sequester Looms, No Deal in Sight (WSJ)
• Neither US party swallows a compromise (FT)
• Embattled Economies Cling to Euro (WSJ)
• For China, Spending Is Harder Than It Looks (WSJ)
• Bank of England's Sir Mervyn King says recovery in sight (BBC) - just a little more inflation first
• G7 fails to defuse currency tensions (FT)
• Japanese Leader Urges Firms to Boost Wages (WSJ) - so does the US one
• Fed Bank Chiefs Back Money-Fund Overhaul (WSJ), or force everyone out of MMFs and into stocks

• Pope steps down, citing frailty (Reuters)
• Japan’s economic minister wants Nikkei to surge 17% to 13,000 by March (Japan Times)
• Venezuelan devaluation sparks panic (FT)
• Rajoy releases tax returns, but fails to clear up doubts over Aznar years (El Pais)
• Companies Fret Over Uncertain Outlook (WSJ)
• Home Depot Dumps BlackBerry for iPhone (ATD)
• Kuroda favors Abe's inflation target, mum about BOJ role (Kyodo)
• A Cliff Congress May Go Over (WSJ)
• U.S., Europe Seek to Cool Currency Jitters (WSJ)
• Radical rescue proposed for Cyprus (FT)
• Franc Is Still Overvalued, SNB’s Zurbruegg Tells Aargauer (BBG)
• Northeast Crawls Back to Life After Crippling Blizzard (WSJ)

• Rate-Rig Spotlight Falls on 'Rain Man' (WSJ)
• Blizzard Cancels U.S. Flights, Threatens Snow in New York (BBG)
• Monti says he did not know of bank probes (FT)
• Japan's Aso: yen has weakened more than intended (Reuters)
• Japan Pledges Foreign-Policy Response to Territorial Incursions (BBG)
• Paratroops mutiny in Bamako in blow to Mali security efforts (Reuters)
• China, Japan engage in new invective over disputed isles (Reuters)
• Asteroid to Traverse Earth’s Satellite Zone, NASA Says (BBG)
• EU leaders haggle over budget tightening (FT)
• China Trade Tops Forecasts in Holiday-Distorted Month (Bloomberg)
• Buffett’s Son Says He’s Prepared Whole Life for Berkshire Role (BBG)

• Bersani's lead over Berlusconi continues to erode, now just 3.6 Pts, or inside error margin, in Tecne Poll
• Spain gears up for U.S. debt investor meetings (Reuters)
• PBOC Set for Record Weekly Liquidity Injection (WSJ)
• RBS Trader Helped UBS’s Hayes With Libor Bribes, Regulators Say (BBG)
• ECB, Ireland reach bank debt deal (Reuters)
• AMR-US Airways Near Merger Agreement (WSJ)
• Monte Paschi says no more derivatives losses (Reuters) ... remember this
• Harvard’s Gopinath Helps France Beat Euro Straitjacket (BBG) - by sliding into recession?
• Obama Relents on Secret Drone Memo (WSJ)
• Brennan to face questions on interrogations, drones and leaks (Reuters)
• Wall Street Success With Germans Boomerangs (BBG)
• Khamenei rebuffs U.S. offer of direct talks (Reuters)
• Boeing Preps Redesign to Get 787 Flying  (WSJ)

• Tunisian opposition politician shot dead, protests erupt (Reuters)
• China says extremely concerned after latest North Korea threats (Reuters)
• Postal Service to cut Saturday mail to trim costs (AP)
• Debt Rise Colors Budget Talks (WSJ)
• Obama proposes short-term budget fix, Republicans swiftly object (Reuters)
• S&P Analyst Joked of Bringing Down the House Before Crash (BBG)
• Dell’s Bigger Challenge Ahead in Turnaround After Buyout (BBG)
• Some of the Mark Carney Gloss Is Coming Off (WSJ)
• Japan Official Says BOJ Tools Sufficient as Shake-Up Looms (BBG)
• S&P Lawsuit Undermined by SEC Rules That Impede Competition (BBG)
• Heavy Clashes Erupt in Syrian Capital (WSJ)

With a modest premium over yesterday's closing price (and 25% premium to Jan 11th price), and thanks to a big hand from Microsoft (with a bridge not an equity participation), Michael Dell (and Silver Lake) are taking Dell private.

• *DELL TO BE ACQUIRED BY MICHAEL DELL-SILVER LAKE FOR $13.65-SHR
• *DELL TO BE BOUGHT IN DEAL VALUED AT $24.4 BILLION :DELL US
• *DELL DEAL TO BE FINANCED BY FUNDS INCLUDING $2B MICROSOFT LOAN
• *DELL SAYS THERE IS NO FINANCING CONDITION :DELL US
• *DELL PACT PROVIDES GO SHOP PERIOD FOR 45 DAYS         :DELL US

Funding by BofAML, Barclays, CS, and RBC - better hope the CLO demand keeps up. Full PR below:

With yields compressed to record low levels, thanks to Bernanke's repression, and a consensus expecting margin stability and a huge hockey-stick in earnings going forward, the question is why aren't there more LBOs? Earnings yields relative to high-yield financing is back up at levels seen during the LBO Boom of 2003-7 and Private Equity shops appear full of money on the sidelines, so why aren't there more LBOs? At its simplest level, an LBO is enabled by a relative mis-pricing between debt and equity ‘costs’ that a private equity firm can utilize to fund the deal (cheap credit relative to equity in the WACC). These factors appear defensible but the main fear we have is their sustainability.

• Obama to meet with Goldman's Blankfein, other CEOs Tuesday (Reuters)
• Chinese Firms Shrug at Rising Debt (WSJ)
• McGraw-Hill, S&P Sued by U.S. Over Mortgage-Bond Ratings (BBG)... but not Moody's or Fitch
• Dime a Dozen: Dollar Stores Pinched by Rapid Expansion (WSJ)
• Dell Board Said to Vote Monday Night on $24 Billion LBO (BBG)
• BOJ Governor Shirakawa to step down on March 19 (Reuters)
• Alberta may offer more to smooth way for Keystone (Reuters)
• Facebook Is Said to Create Mobile Location-Tracking App (BBG)
• Barclays takes another $1.6 billion hit for mis-selling (Reuters)
• Apple App Advantage Eroded as Google Narrows IPhone Lead (BBG)
• Texas School-Finance System Unconstitutional, Judge Rules (BBG)
• World Risks ‘Perfect Storm’ on Capital Flows, Carstens Says (BBG)

• 'London Whale' Sounded an Alarm on Risky Bets (WSJ)
• Deadly Blast Strikes U.S. Embassy in Turkey (WSJ)
• Abe Shortens List for BOJ Chief as Japan Faces Monetary Overhaul (BBG)
• Endowment Returns Fail to Keep Pace with College Spending (BBG) - More student loans
• Mexico rescue workers search for survivors after Pemex blast kills 25 (Reuters)
• Lingering Bad Debts Stifle Europe Recovery (WSJ)
• Peregrine Founder Hit With 50 Years (WSJ) - there is hope Corzine will get pardoned yet
• Deutsche Bank to Limit Immediate Bonuses to 300,000 Euros
• France's Hollande to visit Mali Saturday (Reuters)
• France, Africa face tough Sahara phase of Mali war (Reuters)
• Barclays CEO refuses bonus (Barclays)
• Edward Koch, Brash New York Mayor During 1980s Boom, Dies at 88 (BBG)
• Samsung Doubles Tablet PC Market Share Amid Apple’s Lead (BBG)

• Boeing misses Q4 top line ($22.3 bn, Exp. $22.33 bn) beats EPS ($1.28, Exp. $1.18), guides lower: 2013 revenue $82-85 bn, Exp. 87.9 bn
• Hilsenrath discovers DV01: Fed Risks Losses From Bonds  (WSJ)
• Airlines had 787 battery issues before groundings (Reuters)
• Monte Paschi ignored warnings over risk, documents show (Reuters) as did Mario Draghi
• China averts local government defaults (FT)
• Economy Probably Slowed as U.S. Spending Gain Drained Stockpiles (Bloomberg)
• Bono Is No Match for Retail Slump Hitting Dublin’s Fifth Avenue (BBG)
• Catalonia requests €9bn from rescue fund (FT)
• US plans more skilled migrant visas (FT)
• Japan PM shrugs off global criticism over latest stimulus steps (Reuters)
• CIA nominee had detailed knowledge of "enhanced interrogation techniques" (Reuters)
• Cleanliness Meets Godliness as Russia Reeled Into Cyprus (BBG)
• Deutsche Bank Seen Missing Goldman-Led Gains on Cost Rise (BBG)

• Fed Pushes Into ‘Uncharted Territory’ With Record Assets (BBG)
• Next up in the currency wars: Korea - Samsung Drops on $2.8 Billion Won Profit-Cut Prediction (BBG)
• China Warns ‘Hot Money’ Inflows Possible on Easing From Abroad (Bloomberg)
• BOJ Shirakawa affirms easy policy pledge but warns of costs (Reuters)
• Merkel Takes a Swipe at Japan Over Yen (WSJ)
• Wages in way of Abe’s war on deflation (FT)
• Italian PM under fire over bank crisis (FT)
• Senior officials urge calm over islands dispute (China Daily)
• Spain tries to peel back business rules (FT)
• Rifts Over Cyprus Bailout Feed Broader Fears (WSJ)
• Soros Says the Euro Is Here to Stay as Currency War Looms (BBG)