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On Catching wild pigs, Quacera Radar Blog, October 22, 2013

 

You can easily catch wild pigs by finding a suitable place in the woods and putting corn
on the ground. The pigs find it and begin to come every day to eat the free
corn. When they get used to coming every day, you put a fence down one
side of the place. When they get used to the fence, they begin to eat
the corn again and you put up another side of the fence until they get used to
that and start to eat again. You continue until you have all four sides of
the fence up with a gate on the last side. The pigs, which are used to the free
corn, start to come through the gate to get it. You then slam the gate on
them and catch the whole herd. The wild pigs are trapped and they run
around and around inside the fence but they finally give up and go back to
eating the free corn. They are so used to it that they have forgotten how to
forage for food anyway so they accept their captivity.

It was amusing this past weekend to read a review of Greenspan’s new book. In it
he states that he was surprised, on studying the data, that his math models, on
which he based all of his decisions, did not accurately reflect how people
actually carry out their lives. He went on to say he was shocked to find
that entitlements (free corn) relieved people from the responsibility or need
to save and this reduction in savings makes us more vulnerable to financial
shocks while reducing the amount of capital available to be re-invested in
economic growth. He goes on to proclaim – at this late date – that increasing
entitlements are causing the stagnant GDP growth we are experiencing at
present. Unfortunately we are past the point of no return. More people are
getting some form of free corn than not and they know who to vote for to keep
it coming. This will not change until it stops, dead, like it did in China, Russia and every other country that has tried it.

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Can the Fed Prevent Deflation? Quacera Report, April 29, 2013

 

The Fed and Treasury are using the printing press in an attempt to keep prices up which they believe will keep the economy from falling into depression. For its part the Fed is buying MBS & Treasuries from the banks, which in turn receive FedBucks to increase their reserves. The purpose of this game is to allow the banks to lend. The flaw is that there are fewer borrowers than in pre-2008 America because the whole economy then was built on debt bloated over-capacity. Too many houses, shopping malls and car dealerships, etc. that existed only because of the over stimulated economy that had been created by the previous Fed stimulation excursions. So where has this gotten us? On its way to $4 Trillion, the Feds balance sheet is loaded with assets it says it can just allow to run off if inflation gets out of control. The Treasury has forced our National Debt to increase by almost 45% since 2008 in the same quest. And prices or employment or any other measure by which these agencies want to measure their success, have failed. Japan has been trying this with similar success since 1990 and in its desperation has now entered what we believe will be the final phase of its Yen destruction and the demise of its economy. For our part, we only react to our signals and the spreadsheet below shows the only real thing that measures the success or failure of current policy – price.

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From time to time, Quacera will be long or short some or all of the securities mentioned in this report. Neither the information nor any opinion expressed constitutes an offer or an invitation to make an offer, to buy or sell any securities or other financial instrument or any derivative related to such securities or instruments (e.g., options, futures, warrants, and contracts for differences). This report is not intended to provide personal investment advice and it does not take into account the specific investment objectives, financial situation and the particular needs of any specific person. Investors should seek financial advice regarding the appropriateness of investing in financial instruments and implementing investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. Any decision to purchase or subscribe for securities in any offering must be based solely on existing public information on such security or the information in the prospectus or other offering document issued in connection with such offering, and not on this report. If this information is used to enter an investment or take a position, it may be impossible to duplicate the actual signal price shown in the report. Prices are subject to change and therefore results will vary from those tracked in the reports.

Securities and other financial instruments discussed in this report, or recommended by Quacera LLC, are not insured by the Federal Deposit Insurance Corporation and are not deposits or other obligations of any insured depository institution. Investments in general and, derivatives, in particular, involve numerous risks, including, among others, market risk, counterparty default risk and liquidity risk. No security, financial instrument or derivative is suitable for all investors. In some cases, securities and other financial instruments may be difficult to value or sell and reliable information about the value or risks related to the security or financial instrument may be difficult to obtain. Investors should note that income from such securities and other financial instruments, if any, may fluctuate and that price or value of such securities and instruments may rise or fall and, in some cases, investors may lose their entire principal investment. Past performance is not necessarily a guide to future performance. Levels and basis for taxation may change. Foreign currency rates of exchange may adversely affect the value, price or income of any security or financial instrument mentioned in this report. Investors in such securities and instruments effectively assume currency risk. Materials prepared by Quacera LLC are based on public information. Facts and views presented in this material have not been reviewed by, and may not reflect information known to, professionals in other business areas of Quacera LLC. To the extent this report discusses any legal proceeding or issues, it has not been prepared as nor is it intended to express any legal conclusion, opinion or advice. Investors should consult their own legal advisers as to issues of law relating to the subject matter of this report. Quacera LLC research personnel’s knowledge of legal proceedings in which any Quacera LLC entity and/or its directors, officers and employees may be plaintiffs, defendants, co-defendants or co-plaintiffs with or involving companies mentioned in this report is based on public information. Facts and views presented in this material that relate to any such proceedings have not been reviewed by, discussed with, and may not reflect information known to, professionals in other business areas of Quacera LLC in connection with the legal proceedings or matters relevant to such proceedings. Any information relating to the tax status of financial instruments discussed herein is not intended to provide tax advice or to be used by anyone to provide tax advice. Investors are urged to seek tax advice based on their particular circumstances from an independent tax professional. The information herein (other than disclosure information relating to Quacera LLC and its affiliates) was obtained from various sources and Quacera LLC does not guarantee its accuracy. This report may contain links to third-party websites. Quacera LLC is not responsible for the content of any third-party website or any linked content contained in a third-party website. Content contained on such third-party websites is not part of this report and is not incorporated by reference into this report. The inclusion of a link in this report does not imply any endorsement by or any affiliation with Quacera LLC. All opinions, projections and estimates constitute the judgment of the author as of the date of the report and are subject to change without notice. Prices also are subject to change without notice. Quacera LLC is under no obligation to update this report and readers should therefore assume that Quacera LLC will not update any fact, circumstance or opinion contained in this report. Neither Quacera LLC nor any director, officer or employee Quacera LLC accepts any liability whatsoever for any direct, indirect or consequential damages or losses arising from any use of this report or its contents.

 

 

 

 

 

Quacera Daily Report, December 20, 2012

 

Today’s report shows that we have continued the uptrend representing hope that the Federal Government will solve its self inflicted problem. For all of the talk between the parties, one might get the impression that the Budget Reconciliation Act of 2011 that put the wheels on this run-away train came out of the blue; that the fiscal insanity perpetrated on the taxpayers by the occupants of the White House and Congress has happened to them through no fault of their own.

These people built this contraption in their own garage, each trying to put in place punishments for the others’ constituencies. They now come before the public in all their feistiness, proclaiming the other side needs to flinch or our economy and western civilization will be doomed as a result.

Like all of the other pandemics proclaimed in the recent past this one is life threatening only in the minds of its creators and has been touted as such to appeal to the factions it has created.

The facts are relatively more simple: We have a government that has pandered to every voting bloc in the political spectrum. Whether it’s the something-for-nothing crowd, big banks and corporations that do business with Uncle Sugar or any of the myriad pleaders at the public trough, all of them have a stake in keeping the money flowing. The problem is that, like Greece, Japan and Spain or Italy, the game is up. Promises made to gain votes will not be fulfilled simply because we are approaching the point where the camel is overloaded and one more straw will likely cause it to fall to its knees.

In this context, any rally in the markets can only be suspect. That this one comes during the exasperating negotiation phase leads us to believe that it will be volatile and will end when an agreement is reached.

Our S&P Early Warning has crossed into positive territory and our Daily Signals are growing more positive. We suspect that this Congress will punt to the next and the "solution" will not occur until well into 2013. This should keep hope alive and markets upbeat for the time being.

C  Output Files 121912 s&p 001 crop

From time to time, Quacera will be long or short some or all of the securities mentioned in this report. Neither the information nor any opinion expressed constitutes an offer or an invitation to make an offer, to buy or sell any securities or other financial instrument or any derivative related to such securities or instruments (e.g., options, futures, warrants, and contracts for differences). This report is not intended to provide personal investment advice and it does not take into account the specific investment objectives, financial situation and the particular needs of any specific person. Investors should seek financial advice regarding the appropriateness of investing in financial instruments and implementing investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. Any decision to purchase or subscribe for securities in any offering must be based solely on existing public information on such security or the information in the prospectus or other offering document issued in connection with such offering, and not on this report. If this information is used to enter an investment or take a position, it may be impossible to duplicate the actual signal price shown in the report. Prices are subject to change and therefore results will vary from those tracked in the reports.

Securities and other financial instruments discussed in this report, or recommended by Quacera LLC, are not insured by the Federal Deposit Insurance Corporation and are not deposits or other obligations of any insured depository institution. Investments in general and, derivatives, in particular, involve numerous risks, including, among others, market risk, counterparty default risk and liquidity risk. No security, financial instrument or derivative is suitable for all investors. In some cases, securities and other financial instruments may be difficult to value or sell and reliable information about the value or risks related to the security or financial instrument may be difficult to obtain. Investors should note that income from such securities and other financial instruments, if any, may fluctuate and that price or value of such securities and instruments may rise or fall and, in some cases, investors may lose their entire principal investment. Past performance is not necessarily a guide to future performance. Levels and basis for taxation may change. Foreign currency rates of exchange may adversely affect the value, price or income of any security or financial instrument mentioned in this report. Investors in such securities and instruments effectively assume currency risk. Materials prepared by Quacera LLC are based on public information. Facts and views presented in this material have not been reviewed by, and may not reflect information known to, professionals in other business areas of Quacera LLC. To the extent this report discusses any legal proceeding or issues, it has not been prepared as nor is it intended to express any legal conclusion, opinion or advice. Investors should consult their own legal advisers as to issues of law relating to the subject matter of this report. Quacera LLC research personnel’s knowledge of legal proceedings in which any Quacera LLC entity and/or its directors, officers and employees may be plaintiffs, defendants, co-defendants or co-plaintiffs with or involving companies mentioned in this report is based on public information. Facts and views presented in this material that relate to any such proceedings have not been reviewed by, discussed with, and may not reflect information known to, professionals in other business areas of Quacera LLC in connection with the legal proceedings or matters relevant to such proceedings. Any information relating to the tax status of financial instruments discussed herein is not intended to provide tax advice or to be used by anyone to provide tax advice. Investors are urged to seek tax advice based on their particular circumstances from an independent tax professional. The information herein (other than disclosure information relating to Quacera LLC and its affiliates) was obtained from various sources and Quacera LLC does not guarantee its accuracy. This report may contain links to third-party websites. Quacera LLC is not responsible for the content of any third-party website or any linked content contained in a third-party website. Content contained on such third-party websites is not part of this report and is not incorporated by reference into this report. The inclusion of a link in this report does not imply any endorsement by or any affiliation with Quacera LLC. All opinions, projections and estimates constitute the judgment of the author as of the date of the report and are subject to change without notice. Prices also are subject to change without notice. Quacera LLC is under no obligation to update this report and readers should therefore assume that Quacera LLC will not update any fact, circumstance or opinion contained in this report. Neither Quacera LLC nor any director, officer or employee Quacera LLC accepts any liability whatsoever for any direct, indirect or consequential damages or losses arising from any use of this report or its contents.

 

 

Trapped

 

Markets trade on anticipation of the future. Most analysts consider the time it discounts is roughly 6 months to a year. Monday stocks continued to discount all of the good it expects to come out of Fed stimulus plans and the effect of an agreement on the fiscal follies in Washington and by extension, the economy. Liquidity is good for stocks, so it is not surprising that our current situation is considered to be positive. History has something to say about this as well. As with every currency that ever disintegrated as it became trapped in inflation, stocks participated in most of the fun. House prices also zoomed and mortgages were all paid off with the rotting specie. Bankers and politicians proclaimed and celebrated their success and assured the citizens that Nirvana had truly been reached. Officials were certain of their ability to wind down strategies and restore equilibrium. The trick was to figure out exactly the right moment to pull the trigger. They rarely succeeded.

Right now the Federal Government spends $6 Billion per day more than it receives in taxes. The top 5% of wage earners have income of just over $2.5 trillion and currently pay roughly $500 Billion in Federal income taxes. This leaves $2 Trillion untaxed or $5.5 Billion per day. Let’s assume the government takes an additional 60% of that or $3.3 Billion per day. This still leaves us $2.7 Billion short. Obama is on record as saying that he is willing to cut $1 trillion in spending over 10 years or $2.75 Million per day. Where then does the other $2.425 Billion come from? Well, the 6% to 50% of income earners generate AGI of an additional $4.3 trillion over and above the income of the top 5%. This gets us down to families making about $35,000.00 per year and they currently pay $660 Billion in Federal income taxes leaving $9.9 Billion per day to tax. The math is simple: the Federal government would have to raise the rate on people who make between $35,000.00 and $155,000.00 per year by an average of 23% and then we can have a balanced budget - for one year, because this amount of government weight on the back of the economy will collapse it, thus requiring more stimulus. The trap is working fine so far.

Why QE forever?

 

It was panic induced. It was also a concession to demand from those who believe that expanding an unlimited balance sheet will do no harm. Most of the stimulus money has gone into savings when Ben & Timmie intended it to go into spending. $3 Trillion in un-backed ‘asset” purchases by the Fed and $4 Trillion in deficit spending from the fiscal authorities have not done as expected, even though throughout history large expansions of money supply have produced precisely the result seen so far. Will adding to the supply of the world’s reserve currency in another massive printing program do the trick? One thing is for sure: the supply of goods will not grow fast enough to sop up the cash. Commodities should increase in price, so pork, chicken, beef, oil, gold, silver and a host of other commodities will rise until that supply shows up – if ever. The risk is that lenders, on whom banks and governments rely to help buy sovereign debt and who are clearly worried about losses, are becoming circumspect. Losing 70% of their loan principal in Greece was one thing but Greek debt calculates as a rounding error when compared to the massive Treasury debt on the books and the soon-to-be-created ECB load. Unemployment has to fall from the 15% level evidenced in the BLS’s U-6 figure. It has to come down from the 20% levels seen in Europe. GDP growth has to be able to sustain levels above 2.5% to have a meaningful impact on employment. In order to avoid continuation of this liquidity trap, governments will likely press the accelerator even more and we all know that when speed exceeds limits control becomes a huge risk factor and can end badly. There seem to be no Cops on patrol and the road is banked in the wrong direction. The not-unusual remedy to mitigate too much government debt is to inflate it away. Many pundits say that stocks are a good hedge against inflation but that only becomes true after the inflation subsides. Stocks may run up for a while in the oxygen deprived atmosphere of euphoria we are now seeing but do we really think that stocks are cheap/ Or even fairly valued in the current economy? We certainly will soon see and it would be smart to become as cautious as the world’s lenders as we wait.

Bush Tax Cuts?

 

Arguments have gone on and on about the viability & effects of the so-called “Bush” tax cuts. Readers know that we favor tax cutting on numerous grounds not the least of which is the evidence that shows that one year after taxes are raised, revenues drop absolutely or back to their previous level depending on the size and type of increase. Conversely, when rates are reduced there is an immediate increase in government revenues. The point is that increasing tax rates, which some think brings about “fairness” and the other pabulum spooned out as proof of a politicians’ earnest desire to help us, is merely a ruse to gain votes. The so-called “Bush” tax cuts take their name from the fact that they were enacted when he was the occupant of the White house and had proposed reducing the government’s burden in his first budget proposal. Article 1, Section 7 of the Constitution reads: “All bills for raising revenues shall originate in the House of Representatives; but the Senate may propose or concur with Amendments as on other bills.” This, commonly known as the origination clause, clearly spells out who actually does the revenue raising, spending and budget producing. It goes on to explain how laws can be enacted if the Executive disagrees and the remedies put in place to allow a conclusion to be reached. Much has been said in the press about the causes of our current state of affairs and the ex-President comes in for the lion’s share of the blame because the congress enacted His tax cuts and these lower rates are blamed implicitly. Enacted by Congress in 2001 and increased in 2003, these cuts resulted in Federal tax revenues rising* from $130.836  Billion in 2003 to $154.709 Billion in 2008, an 11% boost prior to the recession. In addition, as the table below illustrates, it was the top income earners who paid more taxes and the percent of taxes paid by the bottom 50%, their AGI adjusted share of taxes were reduced while the percentage of the bottom 50%’s Adjusted Gross Income tax rate remained virtually the same.

In every category, the top 25% saw their tax payments and rates increase up and until the recession in 2008 – 2009. The primary contribution to the deficits, averaging $1.2 Trillion per year since 2009, does not arise as a result of lowered tax rates or revenues but because the Congress of the United States has spent it. The Congress authorized increases in spending to stimulate the economy; pay for wars and increase entitlements. All of this was done with the agreement of both Presidents or within the context of Article 1, Section 7.

* Tax Policy Center, The Urban Institute and Brookings Institution

docs/Bush Tax Cut Tables 2003 - 2009 Tax Foundation.pdf

Neither the information nor any opinion expressed constitutes an offer or an invitation to make an offer, to buy or sell any securities or other financial instrument or any derivative related to such securities or instruments (e.g., options, futures, warrants, and contracts for differences). This report is not intended to provide personal investment advice and it does not take into account the specific investment objectives, financial situation and the particular needs of any specific person. Investors should seek financial advice regarding the appropriateness of investing in financial instruments and implementing investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. Any decision to purchase or subscribe for securities in any offering must be based solely on existing public information on such security or the information in the prospectus or other offering document issued in connection with such offering, and not on this report.

Securities and other financial instruments discussed in this report, or recommended by Quacera LLC, are not insured by the Federal Deposit Insurance Corporation and are not deposits or other obligations of any insured depository institution. Investments in general and, derivatives, in particular, involve numerous risks, including, among others, market risk, counterparty default risk and liquidity risk. No security, financial instrument or derivative is suitable for all investors. In some cases, securities and other financial instruments may be difficult to value or sell and reliable information about the value or risks related to the security or financial instrument may be difficult to obtain. Investors should note that income from such securities and other financial instruments, if any, may fluctuate and that price or value of such securities and instruments may rise or fall and, in some cases, investors may lose their entire principal investment. Past performance is not necessarily a guide to future performance. Levels and basis for taxation may change. Foreign currency rates of exchange may adversely affect the value, price or income of any security or financial instrument mentioned in this report. Investors in such securities and instruments effectively assume currency risk. Materials prepared by Quacera LLC are based on public information. Facts and views presented in this material have not been reviewed by, and may not reflect information known to, professionals in other business areas of Quacera LLC. To the extent this report discusses any legal proceeding or issues, it has not been prepared as nor is it intended to express any legal conclusion, opinion or advice. Investors should consult their own legal advisers as to issues of law relating to the subject matter of this report. Quacera LLC research personnel’s knowledge of legal proceedings in which any Quacera LLC entity and/or its directors, officers and employees may be plaintiffs, defendants, co-defendants or co-plaintiffs with or involving companies mentioned in this report is based on public information. Facts and views presented in this material that relate to any such proceedings have not been reviewed by, discussed with, and may not reflect information known to, professionals in other business areas of Quacera LLC in connection with the legal proceedings or matters relevant to such proceedings. Any information relating to the tax status of financial instruments discussed herein is not intended to provide tax advice or to be used by anyone to provide tax advice. Investors are urged to seek tax advice based on their particular circumstances from an independent tax professional. The information herein (other than disclosure information relating to Quacera LLC and its affiliates) was obtained from various sources and Quacera LLC does not guarantee its accuracy. This report may contain links to third-party websites. Quacera LLC is not responsible for the content of any third-party website or any linked content contained in a third-party website. Content contained on such third-party websites is not part of this report and is not incorporated by reference into this report. The inclusion of a link in this report does not imply any endorsement by or any affiliation with Quacera LLC. All opinions, projections and estimates constitute the judgment of the author as of the date of the report and are subject to change without notice. Prices also are subject to change without notice. Quacera LLC is under no obligation to update this report and readers should therefore assume that Quacera LLC will not update any fact, circumstance or opinion contained in this report. Neither Quacera LLC nor any director, officer or employee Quacera LLC accepts any liability whatsoever for any direct, indirect or consequential damages or losses arising from any use of this report or its contents.

 

 

 

 

 

Quacera Daily Signal Changes September 14, 2012

 

No matter how long one practices the art of Stock picking and prognostication, there will always be new lessons to learn. Since 1913, when the Federal Reserve was created by Congress, there has been an unwritten rule: In order to maintain its apolitical independence, Boards of Governors always refrained from making any decisions that might be considered favoring one party over another. Yesterday that precept was broken in favor of what may prove to be its undoing. QE3, we believed, was going to be held back until after the upcoming elections in November. We erred badly in making our prediction and in so doing we both showed a flaw in our thinking but confirmed the most basic tenet of our asset management process. Never let opinions get in the way of the results of fundamentals or analysis. Fortunately for our clients, we did not bet our opinions in this case either but strengthened our resolve to worry deeply as we climb the uncertain market wall.

Yesterday’s explosion generated 7 signal changes but only one, TIP, was confirmed. The market is now discounting the inflationary aspects of QE3. Time will tell us how long or if ever the actual big inflation being anticipated will reverse the still negative drag of our on-going debt destruction. Watch this space.

docs/Daily Signal Changes September 14 2012.pdf

04027eb1-10e8-4eb5-acdf-4814558ddfca

From time to time, Quacera will be long or short some or all of the securities mentioned in this report. Neither the information nor any opinion expressed constitutes an offer or an invitation to make an offer, to buy or sell any securities or other financial instrument or any derivative related to such securities or instruments (e.g., options, futures, warrants, and contracts for differences). This report is not intended to provide personal investment advice and it does not take into account the specific investment objectives, financial situation and the particular needs of any specific person. Investors should seek financial advice regarding the appropriateness of investing in financial instruments and implementing investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. Any decision to purchase or subscribe for securities in any offering must be based solely on existing public information on such security or the information in the prospectus or other offering document issued in connection with such offering, and not on this report.

Securities and other financial instruments discussed in this report, or recommended by Quacera LLC, are not insured by the Federal Deposit Insurance Corporation and are not deposits or other obligations of any insured depository institution. Investments in general and, derivatives, in particular, involve numerous risks, including, among others, market risk, counterparty default risk and liquidity risk. No security, financial instrument or derivative is suitable for all investors. In some cases, securities and other financial instruments may be difficult to value or sell and reliable information about the value or risks related to the security or financial instrument may be difficult to obtain. Investors should note that income from such securities and other financial instruments, if any, may fluctuate and that price or value of such securities and instruments may rise or fall and, in some cases, investors may lose their entire principal investment. Past performance is not necessarily a guide to future performance. Levels and basis for taxation may change. Foreign currency rates of exchange may adversely affect the value, price or income of any security or financial instrument mentioned in this report. Investors in such securities and instruments effectively assume currency risk. Materials prepared by Quacera LLC are based on public information. Facts and views presented in this material have not been reviewed by, and may not reflect information known to, professionals in other business areas of Quacera LLC. To the extent this report discusses any legal proceeding or issues, it has not been prepared as nor is it intended to express any legal conclusion, opinion or advice. Investors should consult their own legal advisers as to issues of law relating to the subject matter of this report. Quacera LLC research personnel’s knowledge of legal proceedings in which any Quacera LLC entity and/or its directors, officers and employees may be plaintiffs, defendants, co-defendants or co-plaintiffs with or involving companies mentioned in this report is based on public information. Facts and views presented in this material that relate to any such proceedings have not been reviewed by, discussed with, and may not reflect information known to, professionals in other business areas of Quacera LLC in connection with the legal proceedings or matters relevant to such proceedings. Any information relating to the tax status of financial instruments discussed herein is not intended to provide tax advice or to be used by anyone to provide tax advice. Investors are urged to seek tax advice based on their particular circumstances from an independent tax professional. The information herein (other than disclosure information relating to Quacera LLC and its affiliates) was obtained from various sources and Quacera LLC does not guarantee its accuracy. This report may contain links to third-party websites. Quacera LLC is not responsible for the content of any third-party website or any linked content contained in a third-party website. Content contained on such third-party websites is not part of this report and is not incorporated by reference into this report. The inclusion of a link in this report does not imply any endorsement by or any affiliation with Quacera LLC. All opinions, projections and estimates constitute the judgment of the author as of the date of the report and are subject to change without notice. Prices also are subject to change without notice. Quacera LLC is under no obligation to update this report and readers should therefore assume that Quacera LLC will not update any fact, circumstance or opinion contained in this report. Neither Quacera LLC nor any director, officer or employee Quacera LLC accepts any liability whatsoever for any direct, indirect or consequential damages or losses arising from any use of this report or its contents.

 

 

 

 

 

 

 

 

The Whoops factor!

 
Treasury Announces Marketable Borrowing Estimates
7/30/2012

View the Sources and Uses table Here

Washington, D.C. -- The U.S. Department of the Treasury today announced its current estimates of net marketable borrowing for the July – September 2012 and October – December 2012 quarters:

  • During the July – September 2012 quarter, Treasury expects to issue $276 billion in net marketable debt, assuming an end-of-September cash balance of $60 billion. This borrowing estimate is $12 billion higher than announced in April 2012. The increase is primarily due to lower receipts, higher outlays, redemptions of portfolio holdings by the Federal Reserve System, and higher issuances of State and Local Government securities.
  • During the October – December 2012 quarter, Treasury expects to issue $316 billion in net marketable debt, assuming an end-of-December cash balance of $40 billion.

During the April – June 2012 quarter, Treasury issued $172 billion in net marketable debt, and ended the quarter with a cash balance of $91 billion. In April 2012, Treasury estimated $182 billion in net marketable borrowing and assumed an end-of-June cash balance of $95 billion. The decrease in borrowing was driven by higher net issuances of State and Local Government Series securities partially offset by higher-than-projected outlays.

This puts the debt ceiling deadline to the end of November or else the Treasury will run out of cash by Thanksgiving. All this assumes that the income projections - which have consistantly been wrong on the low side - are correct now.

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