Bounding to the October 17th X date and the Social Security ( real X Date ) of November 1st -

http://www.zerohedge.com/news/2013-10-15/those-utterly-baffled-happenings-washington-primer-under-140-characters

For Those Utterly Baffled By The Happenings In Washington, A Primer In Under 140 Characters

Submitted by Tyler Durden on 10/15/2013 19:25 -0400

All you need to know in one tweet.

The House CR & DL bill is dead. The Senate CR & DL bill is not written. What was murky is now opaque. #CrunchTime

7:18 PM - 15 Oct 2013

http://www.zerohedge.com/news/2013-10-15/house-republicans-fail-get-needed-votes-reminder-what-goldman-warned

As House Republicans Fail To Get The Needed Votes, A Reminder Of What Goldman Warned

Submitted by Tyler Durden on 10/15/2013 19:01 -0400

Update: Sure enough, NO HOUSE VOTE TONIGHT ON FISCAL IMPASSE PLAN, LAWMAKER SAYS

In a repeat of the Sequester farce, in which Boehner was unable to even get the needed votes to pass the House Republicans' version of their own bill, the debt ceiling impasse is becoming a sequester sequel deja vu when McConnell and Joe Biden had to hammer out a deal over the impotent political corpse of John Boehner. The reason, as various beltway journalists report, in this case the NRO, that House Republicans are now set to postpone tonight’s vote on their plan to end the fiscal impasse is that "The votes aren’t there," says a leadership aide. "We’ve been amending the bill all day, but we’ve been unable to get people around this strategy." As the NRO's Robert Costa adds, this development leaves Speaker John Boehner with few options as Thursday’s debt-ceiling deadline nears, and it throws the action back toward the Senate, which has been working on a bipartisan package.

The tension started off earlier in the afternoon, when the conservative outfit Heritage Action said it opposed the measure, and rank-and-file lawmakers normally supportive of leadership expressed alarm that they had shut down the government and would get nothing for itexcept a punitive measure hurting their own staff’s healthcare, according to GOP chiefs of staff.

WaPo adds:

The Republican-controlled House will vote Tueday night on a plan to reopen the federal government and avoid a first-ever default on the nation’s debt, only two days before the government exhausts its ability to borrow money.

But it was far from clear whether the Republican proposal, if approved, could attract enough support in the Democratic-controlled Senate to end Washington’s political crisis. The plan contained several provisions that Democrats have strongly opposed.

* * *

Even the inklings of a House proposal that emerged earlier Tuesday drew immediate condemnation from Democrats, primarily because the plan would include significant changes to President Obama’s signature health-care law. Unlike the Senate proposal, the House plan originally included a two-year repeal of a medical device tax and a provision eliminating the employer health-care contribution for members of Congress and White House officials.

Later Tuesday, House Republicans regrouped around the new version of their bill, which dropped the medical device tax provision, and officials said they would bring it the House floor tonight. The new proposal was also unlikely to win bipartisan support, in part because it would fund federal agencies only through Dec. 15, creating the threat of another government shutdown just before Christmas. But it could serve as a framework for further negotiations.

Which brings us to what Goldman, so far accurately, predicted would happen earlier today: namely a delay which pushes the US beyond the symbolic October 17 X-Date, loudly bandied about by fearmongers such as Jack Lew as a the drop dead date, when in reality the X-Date when the US truly runs out of cash, is a range between October 22 and November 1, something the GOP is well aware of.

Quote Goldman:

A deal could still be enacted by October 17, but there are reasons to think it could go a little longer. First, although Congress has taken the October 17 deadline surprisingly seriously, the Treasury will still have funds after that date,and Congress knows this. Second, if the House amends the Senate bill or passes its own instead, this will delay enactment.

It now seems that the House can not even pass its own bill, which means the GOP will have to hammer something out between the Senate and the House versions, steamrolling over Boehner once again.

Third, the Senate could present a procedural obstacle if even one member objects, since consideration can take as long as five days in that chamber. Fourth, if the House is eventually forced to take the Senate plan for a lack of viable alternative, Republican leaders are unlikely to want to hold that vote until the deadline, if not later. There is still a chance Congress will manage to get the debt limit raised by October 17, but a resolution later this week or even this coming weekend also appears possible.

In other words, as a result of today's most recent fiasco, it appears virtually assured that no deal will be hammered in the next 30 or so hours before the first X-Date, and the US will enter the cross into the dreaded X-Date time horizon. The only two questions then are i) who will negotiate the final deal and what will it look like, and ii) when will this take place. Because once the October 17 deadline crosses, which immediately removes the impetus for action, it is likely that the House will once again stall as long as possible, this time making the November 1 Social Security payout deadline the truly drop dead one, beyond which the US will indeed default unless there is some concrete deal on the table.

Congressional budget and debt ceiling talks collapse in both Senate and House - meanwhile are 47 million Americans receiving SNAP benefits about to be taken hostage come November 1 , 2013 ?

http://www.zerohedge.com/news/2013-10-15/foodstamp-program-shutdown-imminent

Foodstamp Program Shutdown Imminent?

Submitted by Tyler Durden on 10/15/2013 13:35 -0400

When over the weekend, a Xerox "glitch" shut down the EBT system, better known as foodstamps, for nearly the entire day across 17 states leaving millions without "funding" to pay for food leading to dramatic examples of the basest human behavior possible, some of the more conspiratorial elements saw this merely as a dress rehearsal for what may be coming in the immediate future. While there was no basis to believe that is the case, a USDA (the currently shuttered agency that administers the Supplemental Nutrition Assistance Program) memo obtained by the Crossroads Urban Center in Utah carries in it a very disturbing warning for the 46+ million Americans currently on foodstamps.

To wit: "understanding the operational issues and constraints that States face, and in the interest of preserving maximum flexibility, we are directing States to hold their November issuance files and delay transmission to State electronic benefit transfer (EBT) vendors until further notice." In other words, as Fox13News summarizes, "States across the country are being told to stop the supplemental nutrition assistance program for the month of November, pending further notice."

The full memo first posted on the Crossroads Facebook page is shown below:

More on this dramatic development which, if implemented, would will result in significant unpredictable outcomes across the nation:

“This is going to create a huge hardship for the people we serve here in our food pantry,” says Bill Tibbits who is the Associate Director at Crossroads Urban Center.

They posted a letter from the USDA on its Facebook page. It says in part, “in the interest of preserving maximum flexibility, we are directing states to hold their November issuance files and delay transmission to state electronic benefit transfer vendors until further notice.”

“What this means if there’s not a deal, if Congress doesn’t reach a deal to get federal government back up and running, in Utah about 100,000 families won’t get food stamp benefit,” says Tibbits.

In other words, tens of thousands of Utah families may not be able to feed their children come November.

...

“People out here are going to go without food,” says Loralee Smith whose been homeless since August and says the uncertainty is making her uneasy about where her next meal will come from. “I’m on food stamps, I don’t know if I’m going to get them, a lot of people are on food stamps and they don’t know if they’re going to get them.”

Others say if SNAP shuts down,they’ll find a way to feed themselves.

One hopes such "alternative" feeding arrangements will be peaceful, although in the most heavily armed nation in the world, and arguably the one where a massive portion of the population is now fully reliant on the welfare state for virtually every daily need, it is easy to see cutting off daily bread to tens of millions has a less than happy ending.

As the report notes, for people out on the streets like Richard Phillips, "It could impact us and it’s going to cause problems because you’re going to come to find out that people are going to steal and do what they have to do to survive."

Such a realization could come as a very unpleasant wake up call for the millions of other Americans who still live in their Ivory Towers, focusing on the daily gyrations of the S&P500, and largely oblivious of how the rest of America lives.

The full report on what may be the most catalytic event in the history of the US welfare state is presented below.

http://www.zerohedge.com/news/2013-10-15/goldman-chimes-deal-may-be-delayed-until-weekend

Goldman Chimes In: A Deal May Be Delayed Until The Weekend

Submitted by Tyler Durden on 10/15/2013 12:07 -0400

Obamacare

Volatility

White House

So much for all the "priced in" hope. At this point a delay past October 17 looks inevitable. But it's ok - despite what all the fearmongers have been saying, the world will not end on October 18, or 19, or later (which as we said earlier would only embolden the GOP to demand much more, until such time as the market really does crash), because as Goldman admits: 'missing the deadline by a few days would probably be manageable." In short, it seems that no deal by October 17 is now a, well, done deal.

From Goldman's Jan Hatzius

Competing Debt Limit Plans Are Similar But Might Delay Enactment

BOTTOM LINE: The House and Senate now have competing debt limit increases, which both extend the debt limit to February 2014 and reopen the government through January 2014, but differ on details. The differences are not enough to block enactment of a debt limit increase, but could delay enactment past October 17 given the procedural timelines in each chamber of Congress. That said, the fact that the proposals are so similar implies that a final agreement is close at hand.

1. The Senate had nearly reached agreement on the debt limit… The agreement had not been formally released but Senate leaders had been in the final stages of working out a deal that would reopen the government through January 15, 2014, at the same spending level in effect prior to the shutdown, and would extend the debt limit through mid-February. It includes minor technical changes to the Affordable Care Act ("Obamacare") and would establish a formal conference committee on the budget between the House and Senate to work out a broader fiscal agreement ahead of the next deadline. This negotiation would be expected to focus on replacing some of the cuts under sequestration--the next round of cuts takes effect January 15, 2014--with the budgetary effects offset with savings from other areas of the budget, spread over ten years.

2. …But the House may attempt to pass its own deal. House Republicans may put forward their own version of the debt limit bill instead. Theirs would take the basic components of the Senate's bill but would add a two-year delay of the medical device tax and a cancellation of subsidies under Obamacare for members of Congress. These provisions appear to be aimed at ensuring adequate Republican support in the House while still having a possibility of being adopted in the Senate (with these items, the House plan will now look broadly similar to the bipartisan plan discussed in the Senate over the weekend). There is still some uncertainty as to whether there will be adequate support in the Senate, or even the House, for this bill, however; House Democrats seems inclined to oppose the bill, as does the White House, and it is unclear whether there is enough support among House Republicans alone to reach a simple majority of 217 votes.

3. A deal could still be enacted by October 17, but there are reasons to think it could go a little longer. First, although Congress has taken the October 17 deadline surprisingly seriously, the Treasury will still have funds after that date, and Congress knows this. Second, if the House amends the Senate bill or passes its own instead, this will delay enactment. Third,the Senate could present a procedural obstacle if even one member objects, since consideration can take as long as five days in that chamber. Fourth, if the House is eventually forced to take the Senate plan for a lack of viable alternative, Republican leaders are unlikely to want to hold that vote until the deadline, if not later. There is still a chance Congress will manage to get the debt limit raised by October 17, but a resolution later this week or even this coming weekend also appears possible.

4. Congress needs to raise the debt limit by October 17 to avoid disruptions, but missing the deadline by a few days would probably be manageable. The Treasury will lose its ability to borrow on October 17 and will have to rely on its cash balance. The Treasury market has already seen disruptions from the debt limit debate, and going past the October 17 deadline is likely to exacerbate those and could deal another blow to confidence. That said, the practical implications of going past October 17 are manageable. Treasury settles several auctions on October 17. $87bn in 3-month, 6-month, and 12-month bills have already been announced. It downsized its auction of 4-week bills, announced this morning, to $20bn from $30bn last week. With $120bn in bills maturing October 17, this will result in a greater-than-expected pay down of $13bn in debt. As of October 10 (the most recent data available) the Treasury had a cash balance of $36bn. The Treasury has projected that it will have a $30bn cash balance as of October 17, though this morning's announcement might reduce that somewhat. At this point we estimate that the Treasury should have at least a $10bn cash balance through late next week. That said, given the volatility in the Treasury's daily cash flows, as the Treasury's cash balance dwindles the risk of a failure to make scheduled payments increases.

http://www.businessinsider.com/debt-ceiling-shutdown-deal-house-boehner-2013-10

House Republicans have shelved a vote on legislation to reopen the government and raise the debt ceiling, National Review's Robert Costa reports.

Costa's report came minutes after the House Rules Committee postponed a hearing on the legislation, likely because Republican leadership doesn't have the votes to pass its own plan.

The House of Representatives had planned earlier Tuesday afternoon to go ahead the vote, which featured an Obamacare-related provision.

Earlier in the day, House conservatives signaled their disapproval of a possible Senate deal that would reopen the government and raise the debt ceiling.

Leadership went ahead with plans to move its own legislation, despite no support from Democrats and conservative opposition. Heritage Action, a conservative group that has pushed the "defund Obamacare" movement over the past few months, announced Tuesday evening that it is advising House Republicans to vote "no" on the measure.

Meanwhile, Senate negotiations between Majority Leader Harry Reid and Minority Leader Mitch McConnell have stalled while McConnell waits to see if the House can pass its bill.

The details of the House plan have changed significantly since the morning. Originally, the plan was to fund the government through Jan. 15 and raise the debt ceiling through Feb. 7. The GOP's final legislation keeps the government funded only through Dec. 15.

It also originally included three Affordable Care Act-related provisions — a two-year delay of the tax on medical devices, an income-verification process for people applying for subsidies, and a version of the "Vitter amendment" that would bar just lawmakers (not congressional and White House staff) from receiving subsidies for federal health insurance under Obamacare.

Two of those — the medical-device tax and income verification — have been stripped from the legislation. Another — the Vitter amendment — has been altered back to its original version, which bars staffers from receiving subsidies.

House Speaker John Boehner said at a press conference Tuesday morning that "there have been no decisions about what exactly we will do."

"We are talking with our members on both sides of the aisle to try to find a way to move forward today," Boehner said. Later, House Minority Leader Nancy Pelosi told reporters in a press conference that Boehner didn't have the votes for the plan.

The White House blasted the reported original plan in a statement late Tuesday morning, saying it was a "ransom" designed to "appease a small group of Tea Party Republicans who forced the government shutdown in the first place."

"The president has said repeatedly that members of Congress don't get to demand ransom for fulfilling their basic responsibilities to pass a budget and pay the nation's bills," White House spokeswoman Amy Brundage said in the statement.

On the Senate floor Thursday morning, Majority Leader Harry Reid said that the new House proposal "blindsided" him and others in the Senate negotiations.

"I'm very disappointed with John Boehner, who would once again try to preserve his role at the expense of this country," Reid said.

Boehner spokesman Michael Steel, responded to Reid's comments minutes later, saying that he is "so blinded by partisanship that he is willing to risk default on our debt to protect a 'pacemaker tax.'"

President Obama is meeting with House Democratic leaders on Tuesday afternoon, the White House said.

Before they walked into the 9 a.m. House Republican conference meeting Tuesday morning, House conservatives complained to Costa. One Tea Party congressman called the Senate plan a "mushy piece of s—." Another said that if House Speaker John Boehner backs the deal, "he's in trouble."

"That seems to be an oxymoron. 'Senate,' then 'plan,'" said Rep. Louie Gohmert (R-Texas).

The opposition to the Senate plan is not really a surprise. House Republicans en masse won't be thrilled that the only thing they're "getting" out of this is an income-verification measure for people obtaining subsidies through the Affordable Care Act. It's not a policy victory with which they can go home to their constituents after a more than two-week shutdown.

According to Roll Call, about 15-20 House conservatives met in secret with Sen. Ted Cruz (R-Texas) Monday night at the Capitol Hill watering hole Tortilla Coast, where they plotted how to respond to the Senate deal. Given the reactions from House conservatives Tuesday, it's likely that they discussed how to hold firm on their opposition to any deal that does not fundamentally alter Obamacare.

And it appears that House leadership is not yet ready to give in to the Senate plan.

http://www.zerohedge.com/news/2013-10-15/stocks-slide-gold-soars-after-senate-suspends-negotiations

Stocks, BIlls Tumble, Gold Soars After Senate Suspends Negotiations, Feinstein Says Budget Talks "Fall Apart"

Submitted by Tyler Durden on 10/15/2013 14:38 -0400

CDS

Reality

It would appear the sad reality priced into T-Bills and USA CDS is starting to creep into stocks...

U.S. SENATE FISCAL NEGOTIATIONS SUSPENDED UNTIL HOUSE REPUBLICANS WORK OUT PLAN TO PROCEED ON DEBT LIMIT, GOVT FUNDING-SEN. DURBIN
SEN. FEINSTEIN SAYS `IT'S ALL FALLEN APART' ON BUDGET TALKS

Bills are being sold (bonds now snapping lower in yield), the USD and stocks are offered (at lows of the day) and gold and silver are well bid (at highs of day).

Stocks collapsing to wher VIX has been signaling... whocouldanode?

and stocks have way to go to meet Bills...

Charts: Bloomberg

http://www.zerohedge.com/news/2013-10-15/treasury-bills-collapse

Treasury Bills Collapse

Submitted by Tyler Durden on 10/15/2013 11:52 -0400

As equities continue to press back towards all-time highs, the Treasury Bill market is growing increasingly uncomrtable that these "people" in DC will find a solution before the 10/17/13 bill matures (10/17/13 Bill +15 at 35bps now!).Dec VIX is continuing to diverge higher against stock exuberance as at least someone is hedging. Following the dismal tail in the 3- and 6-month bill auctions, it seems the US equity market's dissonance is remarkable... It's not just the short-dated Bills, Feb Bills are now 8-9bps higher in yield (triple the levels they started the day at!)

and stocks keep catching down to Dec VIX protection bid...

Charts: Bloomberg

http://www.nakedcapitalism.com/2013/10/a-debt-deal-is-nigh-a-debt-deal-is-nigh-or-is-it.html

TUESDAY, OCTOBER 15, 2013

A Debt Deal is Nigh! A Debt Deal is Nigh! Or is It?

If you make a quick scan of the headlines, which is the way a lot of people interact with the news, you’d see numerous reports stressing that Senate leaders had made “progress” in the “let’s try not to crash into the debt ceiling” talks and were hopeful of getting a deal done. Stock markets took cheer from these reports.

We feel compelled to mention one matter: getting a debt ceiling/end the shutdown pact of some sort is merely a precursor to the hoped for performance of The Persecution and Assassination of What is Left of the American Middle Class, as Performed by the Inmates of the Beltway under the Direction of Barack Obama (more commonly described as the Grand Bargain or Great Betrayal).

It is also important to recognize that even though the messaging was positive, anyone who has an eye on the calendar knows that things have to go close to without a hitch for bills to get through the Senate and House in time to avert putting the Treasury in the position of having to make do with existing cash flow until the debt ceiling is lifted. Mind you, only really serious pessimists doubt that the debt ceiling will be raised, and likely well before the real crunch time of October 31-November 1. And even then that does not a default on Treasury bonds; one analyst argues the drop dead date for Treasuries is November 15 (personally, I think there is no way an Administration so close heavily populated with acolytes of Bob Rubin would ever let that happen. Expect the Fed to invoke its unusual and exigent circumstances powers in the unlikely event that things go on that long).

But it’s also critical to recognize that the sanguine reaction of equity markets represents the reactions of a particularly happy-go-lucky bunch that has had the Greenspan and Bernanke put protecting their backs for a very long time. Fixed income investors are a much more sober and quant-y bunch, and with good reason. As Goldman’s senior partner in the 1970s, Gus Levy, remarked, “In bonds, you eat like a bird and you shit like an elephant.” In other words, the upside is modest and the downside is considerable.

Credit markets get much less reporting than equity markets; in part, it’s because they have long been dominated by institutional investors, in part, because the markets are over the counter, and hence less transparent than exchange traded stocks. And they are just less sexy from a news standpoint; most bonds are fungible. Investors buy them on their credit risks and specific attributes, while stocks are story paper.

And those dour fixed income investors have been quietly preparing for possible nasty outcomes even as the US stock market has stayed comfortably within its recent trading range. One indicator: one month Libor is lower than comparable Treasuries. Remember that the mere effort to get out of the way of bad possible outcomes can produce serious dislocations. Fixed income markets were closed Monday due to the commercial bank holiday. We’ll have a much better reading on the sentiment of the investors who matter over the course of the day. Remember Jim Carville’s saying: “I used to think if there was reincarnation, I wanted to come back as the President or the Pope or a .400 baseball hitter. But now I want to come back as the bond market. You can intimidate everyone.”

Today, the New York Times is in particularly fine form, and its lead story on the debt negotiations is the best one-stop shopping on the status of the talks. Here’s the outline of the deal under discussion:

Negotiators talked into the evening as senators from both parties coalesced around a plan that would lift the debt limit through Feb. 7, pass a resolution to finance the government through Jan. 15 and conclude formal discussions on a long-term tax and spending plan no later than Dec. 13, according to one Senate aide briefed on the plan.

But keep in mind that the two Senators hashing out a possible deal, Harry Reid and Mitch McConnell, can’t make any binding commitments. They have to go back to their principals. One can assume that Reid is not too far out ahead of what Obama might accept. That is not a given on the Republican side, as the Times warns:

But while both Senator Mitch McConnell of Kentucky, the Republican leader, and Senator Harry Reid of Nevada, the Democratic leader, praised the progress that was made in the Senate, it was already clear that the most conservative members of the House were not going to go along quietly with a plan that does not accomplish their goal from the outset of this two-week-old crisis: dismantling the president’s health care law.

“We’ve got a name for it in the House: it’s called the Senate surrender caucus,” said Representative Tim Huelskamp, Republican of Kansas. “Anybody who would vote for that in the House as Republican would virtually guarantee a primary challenger.”

Now in fact, this Representative talk is bluster. Based on the public statements of Republican representatives, Democrats are highly confident that 19 to 21 Republicans in the House would go along with Democrats, which is enough to secure the passage of a clean continuing resolution and debt ceiling relief. But Boehner has clearly all this time felt the need to win some additional Republicans over before calling for a vote. Boehner has further, in the eyes of Democrats, dealt with Democrats in bad faith before. As Karen Tumulty wrote in the Washington Post:

Right up until the final days before the fiscal year ended Sept. 30, Obama and Democratic leaders believed that House Speaker John A. Boehner (R-Ohio) would find a way to avert a government shutdown by passing a stopgap spending bill.

Boehner, they thought, had assured them as much over the summer. That was when Reid agreed, with the White House’s assent, to set spending levels in the short-term funding bill at sequestration levels, rather than the higher amount that liberals and many in the House were hoping to see.

Translation: Boehner asked for concessions from Senate Democrats, Reid and Obama reluctantly agreed (and other reports indicate that Reid had to push hard to secure the cooperation he needed from fellow Senators), then Boehner said he couldn’t deliver on what he proposed and asked for more. That sort of retrading does not go over well in negotiations.

Even thought the Treasuries are not at immediate risk of default if the October 17 date comes and the deal is not finalized (and remember, that can happen simply due to procedural issues even if Obama and Boehner sign off on an outline agreed by Reid and McConnell), there can still be plenty of disruption and collateral damage if the deal is not looking like it will be in hand either by or very shortly after October 17. The Times explains:

Officials in several states said a default would mean unprecedented but unknown consequences to federal programs that are administered by the states, like Medicaid and food stamps. They also said that a market collapse could undermine state pension plans. And higher interest rates from a default on federal bonds could make short-term borrowing more difficult and costly for states…At the same time, asset managers and banks began taking steps to be ready if the Treasury Department is unable to pay back its short-term debt on time. And world leaders expressed concern about the impact on their countries…

Wall Street sentiment may be in evidence even before a vote, when the Treasury Department sells new 13- and 26-week bonds. If investors are hesitant to buy them, it could set a negative tone for the day, as was the case after an auction last Tuesday. George Goncalves, a Treasury strategist at Nomura Securities, said investors might not immediately panic if all signs were pointing toward a positive vote.

So while the magnitude of the possible damage means it looks unlikely that the Tea Party can cow Boehner into delaying a vote. But the timing is still getting very tight even if Reid and McConnell sign off on terms early today. And any delay past the 17th won’t just fray nerves, it will further damage America’s already falling standing in the rest of the world.

and....

http://thehill.com/homenews/senate/328431-reid-mcconnell-deal-would-raise-debt-ceiling-to-feb-7

An emerging deal to reopen the government and raise the nation's debt ceiling until February gathered political momentum Monday evening after Senate Republicans signaled they would likely support it.

Lawmakers and aides said the legislation would fund the government until Jan. 15 and extend the nation’s borrowing authority until February but leave ObamaCare largely untouched.

One senior Senate aide said it would raise the debt ceiling until Feb. 7 while another said Feb. 15 remains a possibility.

It would also establish a Senate-House budget committee to craft a replacement for the automatic spending cuts known as sequestration, which would have to report its work product to Congress by Dec. 13.

Senate Republicans, who have seen their party’s approval rating plummet during two weeks of a government shutdown, are eager to accept a deal as long as it keeps spending levels consistent with the 2011 Budget Control Act in place.

“Most everybody that’s on our side of the aisle in the United States Senate feels the $987 [billion spending level] is the thing that can’t be moved,” Sen. Chuck Grassley (R-Iowa) said in reference to prolonging current spending levels.

The big question is whether a package to fund the government and raise the debt ceiling can pass muster in the House.  

Speaker John Boehner (R-Ohio) was briefed on the deal Monday, and members of his conference were taking a wait and see attitude.

“When we see it, we'll know what it is. Do you know what it is yet?” Rep. Pete Sessions (R-Texas), chairman of the House Rules Committee, asked reporters as he left Boehner's office.

“As soon as we see something in writing, then we can understand how we can thoughtfully understand what we'll do with it,” Sessions said.

House Majority Leader Eric Cantor (R-Va.) wouldn't comment on the emerging Senate deal, but he told reporters House Republicans will meet Tuesday morning “to discuss a way forward.” "Possible consideration of legislation related to the debt limit" was added to Cantor's daily House schedule for Tuesday.

That meeting of House Republicans could be a lively one, given the friction that has developed between House and Senate Republicans over the last several weeks.

Many Senate Republicans are angry with Sen. Ted Cruz (R-Texas) for pushing the strategy adopted by House Republicans to demand changes to ObamaCare in exchange for funding the government.

They’ve also been frustrated with Boehner and other GOP leaders for not standing up to their conference.

House Republicans are just as frustrated with their Senate counterparts, who they see as rolling over to Democrats.

“It's just kick the can down the road,” Rep. Joe Barton (R-Texas) said of the evolving Senate deal.

He said he hopes to hear at a Tuesday conference meeting that “House Republicans will hold the line” and insist on more immediate spending cuts.

Funding the government to Jan. 15 is a concession from Democrats, who had wanted an earlier deadline to make it more likely they could negotiate higher spending levels in a budget for most of 2014.

Under the current budget law, spending for 2014 will automatically be reduced by $19 billion to $967 billion 15 days after Congress adjourns, which is expected to be about Jan. 15.

Senate Democrats have pushed for sequestration to end, bringing the yearly discretionary budget to $1.058 trillion while Republicans have pushed to keep the $967 billion total while shifting cuts from defense programs to social programs.

A few parts of the deal remain in flux.

The deal does not make any significant changes to ObamaCare, and would not delay or end a tax on medical devices that is opposed by members of both parties.

Democratic aides said Reid would only accept reforms to ObamaCare, such as repealing or delaying the tax, if Republicans gave them something in return.

The deal does include the more modest change of verifying the income claims of people applying for insurance subsidies. Democrats said they could agree to that change because it would merely enforce existing law.

The deal also includes a delay until 2015 of an ObamaCare reinsurance tax that is opposed by unions.

Under the healthcare reform law, states are required to set up a transitional reinsurance program aimed at stabilizing premiums. As part of that transition, companies providing healthcare will be required to pay $63 per covered person in 2014, as well as lower fees the following two years.

This concession in particular could be tough for House Republicans to accept.

Senate Majority Leader Harry Reid (D-Nev.) and Senate Republican Leader Mitch McConnell (Ky.) expressed confidence they would finalize a deal soon.

“We hope, with good fortune and the support of all of you, recognizing how hard this is for everybody, that perhaps tomorrow will be a bright day,” Reid said on the Senate floor. “We’re not there yet. We hope it will be.”

“It’s safe to say we’ve made substantial progress and we look forward to making more progress in the near future,” said McConnell.

Senate conservatives, however, appeared divided.

Sen. Rand Paul (R-Ky.), a leading Tea Party voice, called for action to end the shutdown, and pledged not to slow down floor procedures.

“I think we need to get an agreement and open government back up,” he said.

Cruz declined to say whether he would attempt another filibuster to block the emerging deal.

“We’ll have to wait to see what the details are,” he said.

The Senate Republican Conference had been set to meet Monday evening to review the tentative compromise but will instead meet Tuesday morning when more lawmakers will be available to attend.

Sen. John McCain (R-Ariz.) said the party’s brutal poll numbers had made it clear to many of his colleagues they need to accept a deal and end the shutdown as soon as possible.

When asked why he was confident, he pointed to a piece of paper in his hands and read, “74 percent of Americans disapprove of the way Republicans in Washington are handling the nation's budget crisis. That's why!”

Reid and McConnell would need the cooperation of their respective conferences to get the deal passed by Friday.

They plan to use the 14-month debt-limit extension, which Senate Republican blocked, Saturday as a vehicle. The existing language would be replaced by any agreement Reid and McConnell finalize.

and.....

http://www.zerohedge.com/news/2013-10-15/fourth-day-hope-imminent-deal-should-be-sufficient-new-record-high-close

Fourth Day Of Hope For "Imminent Deal" Should Be Sufficient For New Record High Close

Submitted by Tyler Durden on 10/15/2013 07:04 -0400

If mere hope of an "imminent" deal starting on Thursday and continuing through Monday, withno actual deal but who cares about details, was enough to push the DJIA up by 600 points, then all it would take to set a new record market high today, is for another day to pass - one day before the October 17 X-Date when one Senator can filibuster the US through the deadline on their own, and when the House still has to have a voice on what the Senate has been doing - without an actual debt deal. After all, the market is so "centrally-planned" all that is needed is knowledge that Bernanke will get to work, and is getting to work to the tune of $85 billion a month, mixed in with some hope. And with today's "market for idiots" facilitating POMO of over $5 billion which guarantees a green close, all that is needed is a complete failure in talks for the SPX to go limit up on even more hopes things will be fine any second now... if not right now.

In actual economic news (remember those?) The German ZEW current conditions index dropped from 30.6 to 29.7, pushing the EURUSD lower by nearly 100 pips. But don't worry: Future expectations, i.e. "hope", soared from 49.6 to 52.8, the highest since April 2010. See the pattern here?

Going back to the US where we actually may get macro data today for the first time in days, in the form of the NY Fed and Factory Orders, which will be bullish no matter what the actual print, the one thing to note is that Citigroup (which will release about $1 billion in reserves), Coke and J&J are all reporting, and the only thing that can send stocks to a true breakout record high as opposed to the boring old plain record, is if all three miss epically. At least the market will be able to stop pretending it cares about any actual fundamentals, and that only the Fed's liquidity tsunami, pardon "earnings multiple" is what matters.

US Government Shutdown Update:

US Senate majority leader Reid commented said he and Republican McConnell have made "tremendous progress" towards debt limit and government funding deal, but we are not there yet. Reid said "that perhaps [today] will be a bright day". According to sources, the leaders are discussing raising the debt ceiling through to mid-February, and the government would reopen through to the middle of January.

US President Obama raised concerns in a phone call with Senate Minority Leader Mitch McConnell about Republican efforts to limit the Treasury Department's flexibility in managing the debt ceiling.

Senate negotiators were said to make progress on deal and that a White House meeting was deemed not necessary. There were comments from US Senator Barrasso that Senate Republicans will meet tomorrow at 1100EDT.

Market Re-Cap

With risk appetite buoyed by comments from US Senate majority leader Reid that he and Rep. McConnell have made "tremendous progress" towards a debt limit and government funding deal, equities traded in the green across the board. Markets were also lifted by strong, European macro-economic data in the form of ZEW from Germany and the Eurozone with both sentiment figures beating expectations. Today also saw the release of UK CPI, which was higher than expected (2.7% vs Exp. 2.6% Y/Y), but market reaction was somewhat muted given the focus on the US.

Indicators of increased risk appetite can be seen across other asset classes, in FX USD/JPY reversed overnight losses to trade flat, but crucially above the 100DMA line, while EUR/CHF is trading higher by over 45 pips supported by talk of European names buying with stops tripped above 0.9130. At the same time the USD-index has seen gains today (+0.25%), which in turn weighed on EUR and GBP pairs, technical indicators however, show the USD-index 100DMA has crossed the 200DMA to the downside illustrating a longer term downward trend. Elsewhere, in fixed income products bund futures remain lower with the overall stock strength emanating from the progression in US debt ceiling talks and with ZEW coming in at the highest reading since April 2010. Worth noting in terms of notable stock movers, Burberry shares fell over 5% after it was reported that the CEO is to leave the company to join Apple.

Looking ahead US Empire Manufacturing is the main data release for the rest of the session while a number of large cap companies' report earnings with the likes of Citigroup, JNJ, Intel and Yahoo to come. Markets, of course, will also continue to keep a close eye on any developments from Washington.

Overnight bulletin from Bloomberg and RanSquawk

Treasuries fall as Senate leaders are poised to reach an agreement as early as today to end fiscal standoff; now must sell the plan to lawmakers before U.S. borrowing authority runs out this week.
US Senate majority leader Reid commented said he and Republican McConnell have made "tremendous progress" towards debt limit and government funding deal.
German ZEW Survey (Economic Sentiment) (Oct) M/M 52.8 vs. Exp. 49.6 (Prev. 49.6); highest since April 2010.
US participants will pay close attention the earnings releases from a number of large cap companies, including Johnson&Johnson, Coca-Cola, Citigroup, Intel, and Yahoo!.
Treasury bills maturing Oct. 31 yielding 32bps; touched 37bps
Oct. 10; Oct. 17-24, Nov. 7 bills yielding 21bps-26bps
EUR/USD plunged as the ZEW gauge of current conditions fell to 29.7 in Oct. from 30.6 in Sept., lower than forecast; future expectations rose to 52.8 from 49.6
Merkel moved toward picking her third-term ally the opposition Social Democrats cited common ground after eight hours of coalition talks
Germany’s power grid operators boosted the surcharge consumers pay for renewable energy by 18%, adding to pressure on Merkel to act against rising electricity bills
Australia’s central bank said interest-rate reductions are affecting the nation’s economy, while retaining the option to loosen policy further to spur growth, minutes of the Oct. 1 meeting released today showed
Abe marked the opening of Japan’s parliament with a pledge to create a virtuous circle of higher employment and spending and to boost Japan’s role in global security
IG volumes on MarketAxess Holdings Inc.’s electronic system are on pace to exceed $400b in 2013 after surging 45% to $44b in September from a year earlier, equal to 14.3% of all market activity, including business done over phone, vs 12.2% last year
China and the U.K. will introduce direct trading between the yuan and the pound, helping London steal a march on Frankfurt and Paris to become Europe’s hub for the Chinese currency
EU finance ministers grappled with how to protect the credibility of next year’s bank reviews as the countdown began for the ECB to assume oversight over euro-area lenders
Sovereign yields mostly higher, peripheral spreads narrow. Nikkei rises 0.3%, leading most Asian markets higher. European stocks, S&P 500 futures gain. WTI crude, gold and copper fall

Asian Headlines

S&P said China economic slowdown is to weaken companies' credit whearas Nomura commented that China likely to tighten policy after November plenum. The Chinese Academy of Social Sciences commented that China 2013 GDP may grow 7.7%.

EU & UK Headlines

German ZEW Survey (Economic Sentiment) (Oct) M/M 52.8 vs. Exp. 49.6 (Prev. 49.6) - highest since April 2010.

German ZEW Survey (Current Situation) (Oct) M/M 29.7 vs. Exp. 31.3 (Prev. 30.6)

UK CPI (Sep) Y/Y 2.7% vs. Exp. 2.6% (Prev. 2.7%)

UK CPI Core (Sep) Y/Y 2.2% vs. Exp. 2.0% (Prev. 2.0%)

UK RPI (Sep) Y/Y 3.2% vs. Exp. 3.2% (Prev. 3.3%)

UK ONS House Prices (Aug) Y/Y 3.8% vs. Exp. 3.4% (Prev. 3.3%) - UK avg. house-price index rises to record high of 185.5.

Eurogroup's Dijsselbloem said the Irish and Spanish budget outlook has improved & the Eurogroup is to discuss Irish and Spanish exit in November.

Italy's 2014 budget targets budget deficit of 2.5% of GDP according to a draft. The draft said Italy targets deficit of 1.5% of GDP in 2015 and near zero in 2016 and Italy's 2014 budget seeks solidarity surcharge on high cost pensions.

EU finance ministers are expected to give final approval for a new banking supervisor for the Euro zone today, according to officials.

US Headlines

S&P said Yellen's nomination is near-to-intermediate term positive and that Yellen is not as dovish as people think. Citigroup and State Street are said to discuss ways to impose limits on client's use of short term US T-bills as collateral for loans and trades according to people familiar with the situation.

Equities

Equities trade with significant gains in the European morning as markets are lifted by the potential of an US government agreement in the debt ceiling and budget debate. Gains were led by basic materials and financials, which benefited from credit spread tightening as market participants reduced risk premia following the developments over in the US overnight. In terms of notable stock movers, Burberry shares fell sharply after it was reported that the company's CEO is to step down in mid-2014 to take up a new position with Apple.

US participants will pay close attention the earnings releases from a number of large cap companies both before and after Wall St trade.

The USD-index has seen strength in the European morning, trading higher by 0.28%, with the USD/JPY trading above the 100DMA line after paring losses seen overnight. EUR/CHF is trading higher by over 45 pips supported by talk of European names buying with stops tripped above 0.9130. The USD strength has been broad based and weighed on EUR and GBP pairs, technical indicators however, show the USD-index 100DMA has crossed the 200DMA to the downside illustrating a longer term downward trend.

Overnight AUD strengthened following the RBA minutes where the central bank didn’t close off chances of a rate cut but said that a cut was not imminent, which suggests the RBA is unlikely to cut at the November meeting.

Commodities

SPDR Gold Trust said its holdings fell 0.21% to 889.13 tonnes on Monday from 890.98 tonnes on Friday.

China August gold output at 37.978 tonnes, according to the China Gold Association.

Heading into the North American open both precious metals and energy see losses with gold printing a three month low as a result of USD strength. Separately, Macquarie Q4 brent target falls USD 2 to USD 108 and keeps its 2014 forecast as USD 112.

We conclude as usual, with Jim Reid's narrative of the key overnight events

As we now roll past two weeks of the US government shutdown, optimism is back that we're on the brink of a deal. Indeed such hope has been enough to send the S&P 500 (+0.41%) to within 16points, or less than 1%, of its prior record of 1725 set on the 18th of September. Latest reports suggest that Senate leaders Harry Reid and Mitch McConnell are closing in on a bipartisan agreement which is likely continuing to be negotiated as we type. Details of the plan have been slow to emerge, but are reported to include a bipartisan agreement to reopen government until mid-January next year and to extend the debt ceiling until mid-February. This will allow some time for budget talks before a new round of sequestration budget cuts take effect in January, according to the Washington Post. Under the current budget law, spending for 2014 will automatically be reduced by $19bn to $967bn in mid-January. Democrats are pushing for a stop to sequestration and bringing budgeted spending to $1.06 trillion. The setting up of a bicameral budget conference, which will report to Congress mid December, is also on the cards.

Significantly, the broad elements of Obamacare are not expected to be changed, and Senator Reid commented that Democrats have not made any significant concessions in negotiations thus far. A delay or removal of medical device taxes is not part of the Reid/McConnell proposal, but a change in the verification of income claims for people applying for insurance subsidies has apparently been agreed by both sides. Republicans are also requesting that there be limits placed on the “extraordinary measures” that can be used by Treasury in the event the US reaches the proposed mid-February debt ceiling deadline.

Risk assets rallied strongly during the US session yesterday as both Reid and McConnell expressed optimism that a deal was within striking distance. There was even some expectations that a deal could be struck before a meeting between Congressional leaders and President Obama which was originally scheduled for 3pm USEST Monday. This meeting was later postponed to allow Reid and McConnell to “continue making important progress”, according to a White House statement.

Looking at overnight markets, Asian equities are up about half a percent to a percent across the region. US 10yr treasury yields have reopened 3bp higher at 2.715% after being closed for trading yesterday. The better risk sentiment is seeing S&P 500 futures add 0.10% although this is down from early highs of +0.3%, after reports that the White House are concerned that Republican efforts to limit Treasury’s use of “extraordinary measures” will limit the Treasury’s flexibility.

So while markets are increasingly pricing in a positive outcome to the Senate talks, it’s important to keep in mind that Reid and McConnell have had a chequered history of late. Though the two Senate leaders were instrumental in resolving the 2011 debt ceiling stalemate, the relationship between the two has been described as frosty at times. Bloomberg notes that the two have spent much of this year clashing over Obama’s second term nominees, spending and tax reforms amongst other issues, with some disputes being acrimonious enough that other senators has to step in to resolve them. DB’s Frank Kelly believes that if a bipartisan deal comes out of the Senate, it would pass with a strong bipartisan vote. What remains unknown is whether Senators Cruz or Lee might try to delay the final vote to later this week, after the default date, by using parliamentary tactics to slow the process down. House Majority Leader Eric Cantor wouldn't comment on the Senate negotiations, but a meeting of House Republicans has been called for Tuesday morning USEST “to discuss a way forward”.

In Europe, the first day of the Eurogroup/ECOFIN meeting passed with several headlines of note. The EU’s Ollie Rehn described the Irish and Spanish programmes as “on track for a successful conclusion” and there was talk that Ireland would be able to exit its programme by the end of the year, possibly without a precautionary credit line. 10yr Irish government bonds were quoted at around 3.67% yesterday (-3bp). There was brief discussion about extra funding needs for Greece, but the amounts being suggested were relatively low, at less than EUR10bn. Finally, there was further talk about the need to shore up European bank capital ahead of the ECB’s asset quality review. This perhaps explained some of the underperformance of the European iTraxx subordinated financials index, which was unchanged yesterday, versus a 1.5bp and 5bp tightening in the broader European iTraxx and Crossover indices respectively.

Coming back to the US, the bank earnings season rolls on today with Citigroup’s Q3 results expected prior to the opening bell. Bloomberg consensus is expecting adjusted EPS of $1.04/share on revenues of $18.7bn – these estimates have come down markedly over the last couple of months and are about 2% below Q3 2012’s actual results. Markets will be closely watching the momentum in the mortgage businesses, particularly after the slowdown in refinancing volumes and cost cuts reported in the JPM and Wells Fargo results late last week. There will also be plenty of focus on trends in the fixed income business where some analysts expect a 20% YoY drop in revenues generally across the US bulge brackets. Some reports (FT) have suggested that Citigroup has been disproportionately affected by the volatility in emerging fixed income markets.

Across the rest of the day ahead, investors will be waiting in anticipation of any deal or otherwise from the ongoing Senate talks. Also interesting to watch is the reaction from House Republicans after their huddle in the morning. The key data releases today are the German ZEW survey, UK CPI, US Empire manufacturing and US factory orders. Apart from Citigroup, other large corporates reporting results today include Coca-Cola and Johnson & Johnson before the US market open, followed by tech giants Yahoo! Inc and Intel after the US close. Chairman Bernanke speaks at the Mexico Central Bank, though it does not appear that he will be taking Q&A.

Source: RanSquawk, Deutsche Bank, Bloomberg

Catharsis Ours

Tuesday, October 15, 2013

Government shutdown - Day 15 October 15 , 2013 .....Fourth day of imminent deal talk with no actual deal announced , roundup on US news , Overnite news , data and developments from Asia and Europe !