š„BREAKING: The Bigly-est LME Everš„
The US Treasury Department Announces a Bold Initiative to Reduce Federal Debt
Today the U.S. Department of the Treasury announced it will launch an unprecedented liability management exercise (LME) in hopes of reducing its $36 trillion debt stack and a leveraged capital structure that credit rating agencies and many economists now view as unsustainable. Commenting on the proposed debt exchange, Treasury Secretary Scott Bessent told reporters:
āItās about time we brought some Wall Street financial wizardry and billionaire business savvy to the staid world of the U.S. Treasury market and get this damn debt thing under control.ā
He then elaborated on the details:
āStarting next week we will commence a tender offer to purchase up to $20 trillion of Treasury securities maturing after 2030 for 50 cents on the dollar. Furthermore, we will transfer ownership of our national parks and other federal lands to an unrestricted subsidiary, and investors participating in the exchange will also receive their pro rata share of a $5 trillion PIK interest first lien term loan due in 2075 secured by our nationās wondrous natural assets. As an additional sweetener, investors who participate in the exchange will receive a 10-year option to purchase 200,000 bitcoin owned by the U.S. Treasury at $100,000 per bitcoin and 200 million $Trump meme coins at $25 per coināslightly above current market prices. Thereās no good reason why this novel approach to debt management, successfully employed by dozens of PE sponsor-owned companies for several years now, shouldnāt be available to the largest and greatest sovereign debtor in the world.ā
Commerce Secretary Howard Lutnick provided some additional color, stating:
āSome have speculated that such a proposal would irreparably damage the credit standing of the United States. I think thatās bullsh*t. Staying the course is what will sink us. When bitcoinās value inevitably soars to millions of dollars per coin and $Trump coin eventually reflects a value that is worthy of our countryās greatest president, takers of this exchange offer are going to feel like they pulled a fast one on Uncle Sam.ā
Also commenting on the proposed LME, President Donald J. Trump added:
āI named only the best and brightest to my Cabinet for incredible ideas like this. After Secretary Bessent explained the mechanics of it to me, āLMEā became my second favorite word in the English language after ātariffs,ā though Iām not sure if LME is actually a word. Any scheme that lets a debtor pay less than they owe has my attention. With the annual interest savings from the LME, we could permanently extend the beautiful Trump tax cuts of ā17 and maybe even add to them, saving average Americans hundreds of dollars or even millions of dollars in taxes each year. I am also commissioning DOGE to review all Treasury debt outstanding and root out fraudulent amounts owed. Elon tells me he thinks a lot of this debt doesnāt really exist.ā
After the other members of his Cabinet went around the table singing the ideaās praises one-by-one, President Trump posted on Truth Social:
š¤·āāļøBREAKING: Paul Weissā RX Group Attempts Lateral Moveš¤·āāļø
Today the entire RX group at Paul Weiss Rifkind Wharton & Garrison LLP, in opposition to the firmās very high profile and recent EO-induced presidential bootlicking, marched into the office of chairman Brad Karp, and respectfully self-deported, taking their uber-impressive book of recent restructuring wins ā Forever21 ā¦ a ā¦ *checks notes* ā¦ liquidation ā¦ and 23andMe ā¦ *checks notes* ā¦ basically a liquidation ā with them.
A defeated Mr. Karp begged and pleaded with the team to stay: the whole point of getting slammed by the proverbial Trump Steak in the first place was to prevent clients and talent from leaving. And now theyāre triggering a āpartner runā and heading for greener pastures ā emphasis on the āgreenā (š¤) ā anyway?? Cāmon, yāall! You canāt go to Sullivan & Cromwell or (back to) Kirkland & Ellis!! Thatās betrayal!!!
But theyāre not. The team told Mr. Karp that they were going to join Skadden Arps Slate Meagher & Flom LLPās beleaguered restructuring group when ā¦ before they even left Mr. Karpās office ā¦ everyoneās phones started buzzing with push notifications.
āYouāve gotta be f*cking kidding me,ā one enraged PW RX partner reportedly exclaimed before shuffling off and dunking his head into a bowel of Saratoga water.
Sources tell us that after the cacophony of sh*t hitting pants concluded, one of the co-chairs of the restructuring department rang up Bill Malley, Managing Parner at Perkins Coie, who didnāt hesitate to tell said co-chair and the rest of the PW team to go f*ck themselves and āā¦enjoy their devalued dollars as democracy dies one six-minute increment at a time.ā
As of the time of this writing, the PW teamās ultimate destination remains unknown.
šCharts, Tweets + Media of the (Mid)Week š
Sadly, these charts š are no (April Foolās Day) joke ā unlike, in case it wasnāt patently obvious, every single other word above.
Headline and core PCE rose last week, indicating that inflation is back on the rise.
The Atlanta Fed is hardcore bearish on Q1 GDP: its GDPNow model estimate fell from -1.8% on March 26 to -2.8% on Friday.
Others are more sanguine:
Indeed, the NY Fedās Staff Nowcast suggests a GDP improvement to 2.9% from 2.7%:
Which is kinda curious because all of the economic sentiment surveys are heading downward:
In case the previous chart didnāt sufficiently reek of fear, howās this for a vibe-killer (from the University of Michiganās March Surveys of Consumersā and as noted in
):āConsumer sentiment confirmed its early month reading and fell for the third straight month, plummeting 12% from February. The expectations index plunged a precipitous 18% and has now lost more than 30% since November 2024. This monthās decline reflects a clear consensus across all demographic and political affiliations; Republicans joined independents and Democrats in expressing worsening expectations since February for their personal finances, business conditions, unemployment, and inflation. Consumers continue to worry about the potential for pain amid ongoing economic policy developments. Notably, two-thirds of consumers expect unemployment to rise in the year ahead, the highest reading since 2009. This trend reveals a key vulnerability for consumers, given that strong labor markets and incomes have been the primary source of strength supporting consumer spending in recent years.ā
Worsening expectations? Indeed, hereās more bad news:
The high yield market is taking all of the views/news in stride but spreads did widen last week by roughly 18 bps. Fridayās close represented a YTD high:
We may be in for a wild ride ahead: happy Liberation Day tomorrow, everyone.
Luckily thereāll be a regularly scheduled PETITION edition tomorrow to distract you.
šResourcesš
We have compiled a list of a$$-kicking resources on the topics of restructuring, tech, finance, investing, and disruption. š„You can find it hereš„.
Kick rocks