July 27th, 2011
"Not politically feasible" is code for ...
If anyone actually cares, the Committee for a Responsible Federal Budget has released the following handy summary cheat sheet which compares and contrast the key aspects of the Boehner and Reid proposals. We suggest nobody spend more than 2 seconds skimming through these as both will be vastly reworked by the end of trading today.
Relevant news by www.thetrader.se
At stake is 1/4 trillion. The lawyers and lobbyists will get $100 million of that.
The trite soundbites:
- Senator Reid holds news conference on debt limit talks, says Democrats have compromised on debt limit, time for Republicans to “face facts.”
- Says Senate bill can reach $2.4 trillion cut
- “Confident” final bill will raise debt limit through 2012
- Schumer says it is time for Boehner to pull the plug on his plan
- Schumer says block of republicans can't lead nation off a cliff
- Says Reid's plan offers potential to break impasse
- Says Senate bill "is the better bill"
Apparently the GOP has cancelled its press conference scheduled for 10am, however now we have the democrats taking their place at 11:45 as Harry Reid is now expected to hold a conference 15 minutes before noon. In other news, there is some unconfirmed and likely 100% wrong rumor that a debt deal has been reached.
Update to the update:
- No deal: U.S. SENATE DEMOCRATIC LEADERSHIP AIDE SAYS "THERE IS NO DEAL" YET ON DEBT LIMIT, IN RESPONDING TO MARKET RUMORS
As we get closer to that point where economic reality and financial fact override/overpower politics & concerted central financial planning that attempts to outlaw insitutional failure, we need to employ fact based strategies backed by research based in realism to not only capitalize, but even last through the coming storm.
A snapshot of the US Afternoon Briefing covering Stocks, Bonds, FX, etc.
Just out from the office of David Grais of Grais & Ellsworth: "We also conferred, per the Court’s request, with the office of Attorney General of the State of New York. The Attorney General’s office has asked us to inform the Court that it is completing its analysis."
Yes, indeed it is. While everyone and their grandmother is foaming at the mouth how both republicans and democrats hiked the debt ceiling for umpteen times over the past x years, the truth is that never before has the ratio of the proposed debt ceiling to the tax receipt ratio been as high as it is now. At nearly 6 times, this means that the top line (forget bottom line) cash inflows into the Treasury are 6 times lower than the current debt ceiling. And following the upcoming $2.5 trillion this number will surge to almost 8 times. So please ignore the next "pundit" who is complaining about the hypocrisy of not agreeing to an outright debt ceiling hike this time around - as usual they have no idea what they are talking about.
State pension funds are still missing their targets by 50% despite significantly increasing their allocations to private equity...
And whoosh... On absolutely no news, ES just folded in on itself after a real size seller just hit every bid. Remember: there is no better trigger for affirmative policy in the 11th hour than an epic market crash. May 6 anyone?
The market has finally realized that "this" is getting real. As of the open everything, including USTs, has been sold off aggressively. Well, except for gold of course, but we all knew that. Gold just hit a new all time record above $1628. In other news, there will be a Republican press briefing at 10 am according to C-Span. Stay tuned.
Goodbye 11th hour. Hello 12th hour and 1 minute. According to MF Global's Chris Krueger, the probability that congress fails to raise the debt ceiling by August 2 is now 55%. Which means at least a 1 if not more notch downgrade by the rating agencies, which means massive and completely unpredictable spillover effects in money markets, structured finance, muni and all other financial products, which means the military will soon have to conduct many more urban exercises to prepare for "Tehran" (because the Iranian capital's downtown has at least 3 John Hancock center replicas). In the meantime, the market still thinks that Bernanke can fix this.