Senate Democrats Warn Debt Ceiling Extension May Not Pass Unless Republicans Also Agree To Reopen GovernmentSubmitted by Tyler Durden on 10/10/2013 - 12:35
As the White House statement suggested earlier, the GOP gambit for a "clean" 6-week debt limit extension, already accepted as a given by the market, may not be able to pass unless the Republicans fold some more, according to the latest news out of The Hill which reports that "Senate Democrats could reject a House GOP proposal to extend the nation’s debt ceiling by a few weeks, saying any short-term debt-limit increase should also reopen the government." This step was to be expected: the House Republicans are once again in disarray and this is the perfect time to demand even more concessions. However, with their political credibility, and capital, already at record lows, will the republicans agree to not only fold on the debt ceiling, albeit temporarily, but also passing a Continuing Resolution - which as a reminder was the source of contention all along?
"The President has made clear that he will not pay a ransom for Congress doing its job and paying our bills. It is better for economic certainty for Congress to take the threat of default off the table for as long as possible, which is why we support the Senate Democrats’ efforts to raise the debt limit for a year with no extraneous political strings attached. The President also believes that the Republican Leadership in the House should allow for an up or down vote on the clean continuing resolution passed by the Senate that would pass with a bipartisan majority to reopen the government. Once Republicans in Congress act to remove the threat of default and end this harmful government shutdown, the President will be willing to negotiate on a broader budget agreement to create jobs, grow the economy, and put our fiscal house in order. While we are willing to look at any proposal Congress puts forward to end these manufactured crises, we will not allow a faction of the Republicans in the House to hold the economy hostage to its extraneous and extreme political demands. Congress needs to pass a clean debt limit increase and a funding bill to reopen the government."
It would appear the stock market has decided it's a done deal. The S&P has soared 40 points from its lows yesterday retracing all the way to pre-shutdown levels and the all-important Dow has regained the Maginot 15,000 level. Never mind that short-dated T-Bills are selling off once again (10/17 now only -10bps from -30bps earlier; and the 11/29/13 bills is 6bps higher at 11bps).
GROSS: 6 weeks reprieve from the gallows. Washington sure knows how to put on a show. Buy 5yr Treasuries and Corps.
— PIMCO (@PIMCO) October 10, 2013
One wonders: was this just another case of mistaken ticker identity euphoria. After all TW Telecom's ticker: TWTC. That of Twitter: TWTR. And if so, now may be a good time to put on limit sell orders 20% above the NBBO in all other permutations of TWT_ tickers.
Snatching failure from the jaws of victory...? 10/17 T-Bills are 9bps off their low yields of the day and the S&P 500 has given back 5 points of its gains as the White House potentially snubs Boehner's offer.
U.S. HOUSE REPUBLICAN LAWMAKERS CONCERNED THAT CLEAN DEBT LIMIT INCREASE WOULD NOT FORCE OBAMA TO NEGOTIATE-SENIOR REPUBLICAN AIDE
OBAMA IS WILLING TO NEGOTIATE ON BROAD BUDGET ISSUES, BUT ONLY AFTER CONGRESS ENDS SHUTDOWN, LIFTS DEBT CEILING-WHITE HOUSE OFFICIAL
Of course, this dip also coincides with the end of POMO.
The Speaker of the House has a plan - apparently - that enables the debt-limit "can" to be kicked 6-weeks down the line to Nov 22nd in a "clean" bill that appears dirtied by the lack of a CR for the government shutdown (though including a broader budget talks process). Democrats are already pushing for an end-2014 debt-ceiling extension that McConnell says "wil not fly." We look forward to hearing from Boehner on how this is not a "fold" and how the rank-and-file will agree to this... see you in six-weeks... (and while stocks are incapable of discounting anything that far out, T-Bills are starting to price in that reality). But. U.S. HOUSE REPUBLICAN LAWMAKERS CONCERNED THAT CLEAN DEBT LIMIT INCREASE WOULD NOT FORCE OBAMA TO NEGOTIATE-SENIOR REPUBLICAN AIDE and HOUSE REPUBLICAN LEADERS PLAN TO PRESENT PROPOSED SHORT-TERM DEBT LIMIT HIKE TO WHITE HOUSE ON THURSDAY; WANT TO SEE WHAT OBAMA OFFERS IN RETURN-SENIOR REPUBLICAN LAWMAKER
The S&P 500's 32 point rally off the lows yesterday has some excited that the "All-Clear" will be signaled soon from Washington and traders can go back their business of BTFATH. In an effort to provide guidance for just what that would mean, and assuming Yellen/Bernanke (absent any jobs data to guide their hand from the "buy" button to the "strong buy" button) stays the course, the Fed balance-sheet flow suggests an End-October S&P 500 Target of 1,800... and all driven by the optimistic expansion of multiples.
Is it any wonder that there are rumors of CEO after CEO turning down the top-job at Microsoft? As Gartner just announced, the 2013 "back-to-school" sales quarter experienced its lowest PC volume since 2008. Excuses are myriad - from inventory channel delays, currency volatility, and operating system upgrades - but the bottom-line is that "cheaper Android-based tablets attracted first-time consumers," and the PC slide continues to its sixth consecutive decline in worldwide shipments.
Gold may not be money, but the proceeds from selling it sure is, at least to the IMF, which moments ago announced that it has received government approval to "transfer the profits from gold sales low-income countries." Reuters reports that "The International Monetary Fund has received approval from its member nations to transfer the profits from gold sales conducted a few years ago to a fund to help low-income nations, IMF chief Christine Lagarde said on Thursday. "We have just reached the threshold of enough approval from our membership to transfer the existing gold profit to meet the financing needs of our low-income countries," she said at a news briefing opening the fall meetings of the IMF and World Bank." What was left unsaid is that the bailout needs of the high-income countries, once the debt crsisis comes back with a vengeance as it always does - which as the Keynesian uberminds have demonstrated can only be "solved" with more debt, more monetization, and more pent up inflation - will make sure that gold prices jump right back to new highs at which point the IMF can sell another batch of gold to fund the "poor countries" again, and so on, repeating the process until all fiath is extinguished, or until the IMF runs out of gold, whichever comes first.
Forget about the headlines, the most concerning statement from the entire circus of Jack Lew's hearing was his comment that the world counts on the US to be responsible. It seems that boat sailed a long time ago. The following succinctly summarizes the key aspects of his testimony and the Q&A. As a reminder, Lew noted "Obama did negotiate," denied the chance of "prioritization," and warned that other nations appear ready (and somewhat excited) for the US to falter.
After reading the coverage of Janet Yellen’s Fed Chair nomination yesterday, it feels as though it’s 2006 all over again. Confidence in our central bankers seems to be approaching all-time highs, little more than five years after it collapsed alongside the financial sector. The overwhelmingly positive response to Yellen’s nomination is worrisome because, well, it’s overwhelming positive. As Galbraith once astutely observed: “In economics, the majority is always wrong.”
As investors "celebrate" a potential can-kicking "resolution" - the T-Bill market is pricing in a recurrence of the catastrophe in just 6 weeks. While the shortest-dated bills are rallying, the End-November to mid-December bills are selling off dramatically... the 12/05/13 Bills are now +8bps to 12bps.