Nobody Move; The Fed Is Trying To Save Us

Cheap money has been fueling M&A. Avid readers also recall the case being made for the problems of a FED withdraw from MBS & Treasury purchases. The FED has driven away big money and long-term investors from traditional money markets. Most are seeking alpha through means like alternative investments. Actually, the dynamic of the system has been so skewed and jacked up by the FED that now we are hearing talk of "gated" bond holders. As noted on Zero Hedge "Federal Reserve officials have discussed imposing exit fees on bond funds to avert a potential run by investors, underlining regulators’ concern about the vulnerability of the $10tn corporate bond market". The problem is bad and apparent to the FED regarding where money is flowing that the central banks feels a need to force capital allocation. We're in some real bad territory.
It doesn't get any better when the loudly proclaimed "money on the sideline" refuses to manifest itself, a short glance at the levels of money market funds will show that.

Now we have corporations sprinting to buy up whatever they can ahead of the FED's expected 2015 increase in rates which will make borrowing more expensive in the future relative to today.  We have a historic 5 year bull market recovery and so far all we have seen is share buybacks, M&A, negative european deposit rates, and a seemingly out-of-control Federal Reserve doing whatever it can to justify "gating" money into bond funds.  The M&A trend has been astonishing.  S&P Capital IQ highlights six points about current M&A:

• Year to date 2014 announced US M&A volume exceeds $715 billion on 8,254 deals compared to $461 billion from 7,660 deals a year ago.
• A typical US M&A deal in 2014 was valued at 16.3x EBITDA and 4.0x revenue compared to year ago multiples of 16.3x EBITDA and 6.9x revenue.
• 101 US M&A deals worth individually $1 billion or greater have been announced in May 2014 compared to 80 deals of that size occurring at this time a year ago. 
• Year to date 2014 announced US M&A transactions find 101 transactions valued at $1 billion or greater; 56 deals valued between $500 million to $999.9 million; 378 deals valued between $100 million to $499.9 million.
• Consumer discretionary represents the most active sector for US M&A based on deal proceeds to date in 2014 with $197.8 billion, or a 28% market share of US M&A proceeds.
• Only two S&P 500 sectors are seeing lower aggregate M&A deal value year to date compared to year earlier period: energy and financials.