As its recent 10-K confirmed, AAPL's domestic cash - the amount of cash available for such corporate transactions as dividends and buybacks - had dropped to just $18.1 billion (and that is including the several billion in commercial paper issued in fiscal Q4), the lowest domestic cash hoard since March 2010, a time when AAPL's offshore cash was a tiny $24 billion compared to the near record $137 billion last quarter! So knowing full well that a buyback a day keep the Icahnator away, AAPL, urgently looking to refill its domestic cash since its offshore cash remains untouchable (absent being taxed on its repatriation), did the only thing it could do: prepare to issue more bonds, which is what we forecast would happen a few weeks ago, and what the WSJ overnight confirmed is already in progress.
- To salvage his presidency, Obama faces pressure to reboot - but will he? (Reuters)
- Pro-Russian separatist Zakharchenko wins Ukraine rebel vote (Reuters)
- Russia's Recognition of Ukrainian Separatist Election Is 'Incomprehensible,' Germany Says (Moscow Times)
- Man Running World’s Biggest Wealth Fund Tackles China Riddle (BBG)
- Russian Supply Underpins Global Oil Glut (WSJ)
- Argentina accuses Procter & Gamble of tax fraud, says suspends operations (Reuters)
- ECB Skips Fireworks for Day One of New Role as Supervisor (BBG)
- HSBC Hit by $1.7 Billion of Provisions (WSJ)
Saudi Arabia is the middle of two 'wars" - religious (from The Kingdom's perspective, Iran is a large Persian country sitting at the easternmost edge of the Middle East, from where it projects power across the Arab world by manipulating and exploiting the region's Shiite communities and other minorities); and geopolitical (it appears to reveal that the kingdom is willing to tolerate Brent prices between USD80-USD90/bbl for a period of 1-2 years in order to achieve two aims: to slow increases in US tight oil production and to pressure other OPEC members to contribute to supply discipline.)
The Federal Reserve is saying one thing, but is actually doing the complete opposite...
- Futures rally after BOJ ramps up stimulus (Reuters), Japan's central bank shocks markets with more easing as inflation slows (Reuters)
- Kuroda Jolts Markets With Assault on Deflation Mindset (BBG)
- Japan Mega-Pension Shifts to Stocks (WSJ)
- Russia Raises Interest Rates (WSJ)
- Oil-Price Drop Has Saudi Officials Divided (WSJ)
- Not anymore, the BOJ is here: Fed Exit Could Spark Slump in All Markets, ATP CEO Says (BBG)
- Wal-Mart Weighs Matching Online Prices from Amazon (WSJ)
- Euro-Area Inflation Picks Up From Five-Year Low on Stimulus (BBG)
- Big Banks Brace for Penalties in Probes (WSJ)
- Ex-UBS Trader Defense Could Be Threat to U.S. Forex Cases (BBG)
And then there is BusinessWeek, which quite to the contrary, is urging its readers in its cover story, ignore common sense, and do more of the same that has led the world to dead economic end it finds itself in currently. In fact, it is, in the words of NYT's Binyamin Appelbaum, calling the world governments to become the slaves of a defunct economist. And spend, spend, spend, preferably on credit. Because, supposedly, this time the resulting crash from yet another debt-funded binge will be... different?
- "Soaring consumer confidence" - How the Economy Is Stoking Voter Anger at Incumbent Governors (WSJ)
- Euro zone deflation worries shield German Bunds from upbeat Fed (Reuters)
- Greece’s Euro Dilemma Is Back as Minister Sees Volatility (BBG)
- Ukraine gas supplies in doubt as Russia seeks EU payment deal (Reuters)
- Sterling Lads Chats Show FX Traders Matching Fix Orders (BBG)
- NATO Tracks Large-Scale Russia Air Activity in Europe (WSJ)
- U.K. SFO Charges Ex-Tullett Prebon Broker in Libor-Rigging Probe (BBG)
- Jerusalem on edge after shooting of rabbi (FT)
- Israeli police kill Palestinian suspected of shooting far-right activist (Reuters)
- Samsung seeks smartphone revamp to arrest profit slide (Reuters)
To summarize (even though with liquidity as non-existant as it is, this may be completely stale by the time we go to print in a minute or so), European shares erase gains, fall close to intraday lows following the Fed’s decision to end QE. Banks, basic resources sectors underperform, while health care, tech outperform. Companies including Shell, Barclays, Aviva, Volkswagen, Alcatel-Lucent, ASMI, Bayer released earnings. German unemployment unexpectedly declines. The Italian and U.K. markets are the worst-performing larger bourses, the Swiss the best. The euro is weaker against the dollar. Greek 10yr bond yields rise; German yields decline. Commodities decline, with nickel, silver underperforming and wheat outperforming. U.S. jobless claims, GDP, personal consumption, core PCE due later.
- Fed set to end one crisis chapter even as global risks rise (Reuters)... you mean, for the third time?
- Insider-Trading Probe Focuses on Medicare Agency (WSJ)
- He's sorry: Rajoy Apologizes as New Wave of Graft Allegations Hits Spain (BBG)
- China could 'punish' Hong Kong over protests, says ex-HK central bank chief (Reuters)
- Dubai Insists the Boom is Not a Bubble This Time Around (BBG)
- Bank-Data Sharing Accord Expands Push to Find Tax Cheats (BBG)
- Deutsche Bank Sinks to Third-Quarter Loss on Legal Costs (BBG)
- Kim Jong Un Executes 10 Officials for Watching Soap Operas (BBG)
- French drugmaker Sanofi sacks CEO Viehbacher (Reuters)
As Deutsche Bank observes, the Fed has been wanting to hike rates on a rolling 6-12 month horizon from each recent meeting but never imminently which always makes the actual decision subject to events some time ahead. They have seen a shock in the last few weeks and a downgrade to global growth prospects so will for now likely err on the side of being more dovish than in the last couple of meetings. They probably won't want to notably reverse the recent market repricing of the Fed Funds contract for now even if they disagree with it. However any future improvements in the global picture will likely lead them to step-up the rate rising rhetoric again and for us this will again lead to issues for financial markets addicted to liquidity. And so the loop will go on for some time yet and will likely trap the Fed into being more dovish than they would ideally want to be in 2015.
Deutsche Bank executives are dropping like flies. Just days after receiving a clean bill of health from Europe's oh-so-stressful stress-tests, Deutsche Bank has decided that longtime finance chief Stefan Krause needs to be replaced. Perhaps most interesting is the bank that faces 'serious financial reporting problems' in the US and has a derivatives book literally the size of (actually 20 times bigger) than Germany, has decided the right man for the job is an ex-Goldman Sachs partner. Marcus Schenck, according to WSJ, will replace Krause, having worked at German utility E.ON until last year when he joined Goldman.
A summary of the key things on traders' minds this morning, as reported by Peter Garnry, head of equity strategy at Saxo Bank
- CDC says returning Ebola medical workers should not be quarantined (Reuters)
- Sweden’s central bank cuts rates to zero (FT)
- Hacking Trail Leads to Russia, Experts Say (WSJ)
- Discount-Hunting Shoppers Threaten Stores’ Holiday Cheer (BBG)
- Apple CEO fires back as retailers block Pay (Reuters)
- Repeat after us: all China data is fake - China Fake Invoice Evidence Mounts as HK Figures Diverge (BBG)
- FX Traders’ Facebook Chats Said to Be Sought in EU Probe (BBG)
- Euro Outflows at Record Pace as ECB Promotes Exodus (BBG)
- Apple boosts R&D spending in new product hunt (FT)
Just when you thought the humor out of the central bank that just released a stress test whose adverse scenario did not even assume the most likely Eurozone outcome, i.e., deflation, couldn't get any better, moments ago we learned that the test, which was supposed to restore confidence in Europe's banking system and in the oversight and regulatory abilities of Europe's central bank, had "errors and inconsistencies" which forced the ECB to "briefly remove from its website" the results of Italy's most insolvent bank, Monte Paschi, "after discovering an error in its key capital ratio", a bank which based on the ECB's (faulty?) failure assessment was halted countless times earlier today after crashing so hard the regulator had to ban selling it short. Again.
- White House questions new Ebola rules, nurse plans to sue (Reuters)
- States stand firm on Ebola quarantines despite White House pressure (Reuters)
- Rousseff Naming Brazil Finance Minister Key to Regain Trust (BBG)
- Ukraine leader wins pro-West mandate but wary of Russia (Reuters)
- Single Firm Holds More Than 50% of Copper in LME Warehouses (WSJ)
- Treasury Liquidity Squeeze Seen as Dealer Shut Off Machine (BBG)
- CVS follows Rite-Aid, shuts off Apple Pay (USAToday)
- Oil Speculators Bet Wrong as Rebound Proves Fleeting (BBG)
- Draghi Sets Stimulus Pace as ECB Reveals Covered-Bond Purchases (BBG)
- German Ifo Business Confidence Drops for Sixth Month (BBG)