Morning Report – no movement on the debt ceiling 10/14/13

Vital Statistics:

Last Change Percent
S&P Futures 1685.9 -13.1 -0.77%
Eurostoxx Index 2963.5 -10.8 -0.36%
Oil (WTI) 101.5 -0.5 -0.49%
LIBOR 0.246 0.002 0.90%
US Dollar Index (DXY) 80.15 -0.213 -0.27%
10 Year Govt Bond Yield 2.69% 0.00%
Current Coupon Ginnie Mae TBA 105.2 -0.2
Current Coupon Fannie Mae TBA 104.3 -0.1
RPX Composite Real Estate Index 200.7 -0.2
BankRate 30 Year Fixed Rate Mortgage 4.28
Stock markets are weaker this morning as a deal fails to emerge over the weekend. The bond market is closed.
No deal emerged over the weekend, and it appears Democrats are moving to the left as they want to address the sequestration cuts. Not sure if this is just a negotiating posture or something they intend to hold on to. Supposedly we will hit the debt ceiling this week. Republicans offered a 6 week clean extension of the debt ceiling over the weekend, with the government remaining shut. This was rejected by Democrats.
Earnings season kicks off in earnest this week, with heavyweights like Coca Cola, Citi, Johhny John, Goldman, Google, and GE.

32 Responses

  1. Foist!

    And heh.

    @JayCostTWS: I’m glad Costas sounded off on the Redskins. I wish more gentry liberals would offer their unsolicited opinions on how ppl are bigots.

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  2. “Republicans offered a 6 week clean extension of the debt ceiling over the weekend, with the government remaining shut. This was rejected by Democrats.”

    Was this an actual vote, or just media reports?

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  3. I’m pretty sure I’ve read that under Carter, who had D majorities in the House and Senate, we went past the debt limit by a couple of days as a new increase was, brace yourself, negotiated.

    That’s why Carter will always be the worst modem President. Not because if that but because he couldn’t get anything through a majority D Congress.

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    • I think Collins’ offer was one I would have taken were I the Majority Leader.

      If we view the parties as having aligned now as the party of more government and the party of less government rather than their historical alignment of each being the party of government for different folks then the Rs come out of this smelling like roses if the Ds reject a 6 mo CR b/c they want a 6 wk CR.

      The TEAs were overreaching and setting a bad precedent by negotiating for repeal or non-implementation of ACA, but the Ds would be making a similar misstep, IMHO, by trying to walk away, at the last possible minute, from the Sequester they half authored, as the price to raise the Debt Ceiling and keep the government open.

      This business of funding by CR goes back now through Congresses controlled by each party as well as divided ones. There is no political advantage for the party seen to be saying no on Thursday.

      George, we already went past the statutory ceiling months ago. We did THAT under Carter and others. This time we are going past the actual point of “no mas”, which is later than the statutory date because of enhanced revenue collection and stealing from federal pension funds.

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  4. George, we already went past the statutory ceiling months ago. We did THAT under Carter and others. This time we are going past the actual point of “no mas”, which is later than the statutory date because of enhanced revenue collection and stealing from federal pension funds.

    Why do you believe the Administrations date on this?

    Also, don’t we have to “breach” the debt ceiling just to dismantle it as an issue?

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    • Why do you believe the Administrations date on this?

      Treasury has better numbers than anyone else, AFAIK.

      Also, don’t we have to “breach” the debt ceiling just to dismantle it as an issue?

      No. We could reinstitute the “Gephardt” thingie, or repeal the statute, or go with McConnell’s Amendment. Debt Ceiling brinksmanship sucks. IMHO.

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  5. Here’s the Carter reference. It was brinksmanship coupled with a technical problem that produced a real default, i.e. interest on Treasuries was not paid on time.

    http://www.huffingtonpost.com/2013/10/07/debt-ceiling-breach-1979_n_4058492.html?ir=Business

    http://dmarron.com/2013/10/04/actually-the-united-states-has-defaulted/

    “Because of severe technical difficulties, the U.S. government was unable to repay investors in Treasury bills (T-bills) in late April through early May, 1979. This incident led to a 60 basis point increase in T-bill rates at the initial occurrence of the default”

    http://onlinelibrary.wiley.com/doi/10.1111/j.1540-6288.1989.tb00353.x/abstract

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  6. “I think Collins’ offer was one I would have taken were I the Majority Leader. ”

    As I mentioned on PL, I think the medical device tax repeal still tied it to Obamacare and the Democrats aren’t going to accept that.

    It should be a clean CR and clean debt ceiling increase at FY2013 sequester levels. I.e. maintaining the status quo.

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  7. If I were the Democrats, I’d suggest that their demand should be a clean CR and debt ceiling increase for six months at FY 2013 sequester levels, no device tax repeal or any other BS and the Republicans have to agree to cease filibustering the appointment of budget conferees in the Senate.

    I.e. make the fight over regular budget order. The Republicans got plenty of play over the argument that the Senate refused to pass a budget for years, so the Democrats can now turn that back around on them.

    What Democrats should realize is that regular budget order, with reconciliation rules, is a trap for Republicans and specifically the tea party. Should the Republican negotiators be the appropriation chairs and not tea party stalwarts, there’s a possibility that the Democrats can get a deal that includes revenue increases.

    That’s why the Republicans have blocked the conferees from being appointed.

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    • That is a thoughtful negotiating position JNC and the Ds should have already played that card.

      I think they have misplayed a politically strong hand and that they now need to take the best deal they can get – Collins’, or a scooch more. There is some possibility that they rejected in order to give Rs more cover in lining up behind Collins, so that the deal can look better when they finally accept it. But I doubt it. At PL, you are the voice of pure reason.

      Brent, does BoA explain the reasoning behind the date they fear?

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  8. Bank of America is saying Nov 15 is the real d-day

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  9. Bank of America is saying Nov 15 is the real d-day

    They’re racist!

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  10. Mark, here is the story… have not seen the primary source:

    From: FIRST WORD (BLOOMBERG/ 731 LEX A)
    To: BRENT NYITRAY (DELLACAMERA CAPITAL)
    At: 10/14 11:39:16

    Treasury to Near Certainly Default on Nov. 15 If No Deal: BofAML

    Oct. 14 (Bloomberg) — Treasury likely won’t be able to cover large coupon payment of $31b due on that date, if no deal on extending the debt ceiling has been reached by then, BofAML strategist Marcus Huie wrote in client note.
    * Expects Treasury to defer coupon auctions from Oct. 17, if
    no deal, replace with cash management bill sales
    * Announcement Thursday on size of 30Y TIPS sale first
    test
    * By Oct. 31, Treasury payment capacity will be $22b,
    sufficient to cover $6b coupon payments and roll over bills
    maturing that day
    * Nov. 1 $67b Social Security, Medicare, defense and veteran
    payments due, Treasury will be only able to make 50% of
    these payments
    * Conceivable that bills maturing after Nov. 1 can be
    rolled over with new issuance as weekly interest
    payments ~$10m, “rounding error in budget terms”

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  11. Apparently Juicebox NEVER prints rumors.

    n the weeks leading up to the launch I heard some very ugly things about how the system was performing when transferring data to insurers — a necessary step if people are actually going to get insurance. I tried hard to pin the rumors down, but I could never quite nail the story, and there was a wall of official denials from the Obama administration. It was just testing, they said. They were fixing the bugs day by day.

    http://m.washingtonpost.com/blogs/wonkblog/wp/2013/10/14/five-thoughts-on-the-obamacare-disaster/

    Pity. In hindsight a story like that woulda been Pulitzer worthy, no?

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    • George, while the fed website is inoperable in TX, Walgreen’s has obliged with a working website so that in CenTex Rosanne could go directly to each of the three providers: CIGNA, BC-BS, or Scott & White. Too bad the Feds didn’t just hire Walgreen’s or CVS to do the work.

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  12. Mark, you should post that comment, with a link to the Walgreen’s site, to Wonkblog, or E-mail Ezra directly.

    MiA: I emailed him.

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  13. I just figured out why everyone is having trouble enroll ing in Obamacare, they’re using the old cover sheet on the TPS report!

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    • Peggy Noonan gives us some measure of what a small and deceitful man Paul Krugman is. She calls him “mischievous”. She is far too polite.

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      • It will be very interesting to see how the Supremes rule on the Twilight Zone case they are hearing today, which revolves around the question of whether a state’s constitutional ban on racial discrimination is actually a violation of the US constitution’s ban on, er, racial discrimination.

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  14. I didn’t know they were trying to do subsidy determinations on the fly.

    I did Part D enrollment casework for a few days. It was kind of an all hands on deck thing. So I was in rural GA with a laptop enrolling people. It worked, but it was time consuming. about 30 minutes a person. and I was speedy and knew how the system worked.

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  15. http://www.washingtonpost.com/national/health-science/many-athletes-tout-the-gluten-free-way-whats-the-science-behind-the-claim/2013/10/14/cc0b601c-d42f-11e2-b05f-3ea3f0e7bb5a_story.html

    OT: I’ve been doing the paleo thing. which is sometimes associated with the crossfit thing. I don’t know if it works or not. but after doing about 80% for a few months and then 100% for a 30 days as part of a challenge at the gym, i’m down 10-15 pounds and when from a 34 to a 32 waist. which i haven’t been since college.

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  16. Congrats Nova. My perception of that program is that you eat grubworms, nuts and throw rocks around.

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  17. Here’s today’s routine.

    EMOTM 10 Minutes (every minute on the minute for 10 minutes.
    2 Dealdlift (i’m at about 200ish for that)
    5 HSPU (hand stand push up. or scale it. less reps. or do a dumbbell press)

    4 Rounds:
    10 Burpees
    15 Kettlebell Swings (53lbs men/35 women)
    20 Wall ball (14/8 as high as you can go)

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    • NoVA – this morning at my Y gym, while I was using the leg press, I watched a newbie doing the wallball. I say newbie because he threw it up against the fir down/bulkhead housing the AC ductwork, which is sheetrock over frame, not against the hundreds of feet of available cinderblock wall.

      Yes, he cracked the sheetrock. Yes, I was the only one looking when he did it. He sheepishly moved to a cinderblock wall. Maybe no one else will notice.

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      • Scott and JNC – I am sitting tight. That was my inclination, anyway.

        NoVA and JNC – did you read the stuff about CGI, the no bid Canadian contractor that was doing the rollout, and how that company had so botched a province wide website for Ontario that they were in litigation about it? 14 mo. delay is what I have read.

        Apparently, if it had gone out for bids, that process would have taken “too long”, so we go to an exception that allows no-bid contracts to “approved” contractors.

        Apparently, this has been around for a long time and while it sometimes works, when it doesn’t it is spectacular. I have been told we never could have had a process whereby Google, Yahoo, Cisco, Microsoft, H-P, IBM, or Dell, with their big server farms, could have bid on the job, because that process would have taken until the beginning of 2017 to complete. NoVA, is that an exaggeration?

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  18. NoVA, the Part D enrollment was a pro bono thing?

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  19. “NoVA, the Part D enrollment was a pro bono thing?”

    No. I was working at CMS.

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  20. Mark — i was pulled aside for remedial wall-ball instruction. I tend to shoot it like a basketball, which is incorrect form. but that’s hilarious.

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  21. Mark, I know CMS contracting takes forever. and I also know that if they tried to do this in house, its not surprising.

    Like

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