Pizza delivery boys were kept busy for several hours while key members of the GOP sat around a table and attempted to salvage the Boehner plan for deficit reduction. At (literally) the end of the night the planned vote on the measure did not materialize and the measure itself was headed for a re-write for the second time this week. Meanwhile, the debt limit clock ticked mercilessly on and will now run out of ticks to tock on Tuesday. House minority leader Pelosi remarked that the Republicans have taken the US “to the brink of economic chaos.”
As of now, Mr. Boehner’s proposals are some two to six votes away from getting approval by his own party’s membership. At the end of the day, and just six months into being, the speakership of Mr. Boehner is now thought to have suffered a lethal wound and few believe that he will be able to continue to lead his caucus after such an epic failure as we have seen over the past couple of days. Beware the Hobbits…
Weekend voting is what the current stalemate appears to be headed toward. However, the US Treasury is not sitting around waiting for the drama to take it by surprise; it is already contemplating how to prioritize various payments it needs to make in the days immediately following the deadline. Others, namely practically every Wall Street banking head, have issued urgent pleas to the US President and Congress to do that which must be avoided. Mr. Obama has been on the silent side over the past couple of days, but he is set to address the debt ceiling issue this morning. Markets can hardly wait.
A week from now the snapshot of the day in government intake versus expenses might show a $7 billion kitty available to pay $12 in committed spending. Fascinating factoid #86: The US Treasury has less cash on hand than Apple Computer – some $3 billion less. The trick will be how to short each/all/any of the recipients of said payments: will it be defense vendors? Medicaid? Federal workers? The unemployed? Any of these payees are likely to do more than merely grumble at the reality of getting less (or nothing) than they expect to get. Trouble is; when someone does not pay you, you send the repo man out to attach their assets. What do your repo from Uncle Sam? The Lincoln Memorial?
Spot gold dealings opened with minor losses this morning, shedding $2.20 to start with a bid-side quote of $1,615.00 per ounce, Participants appear unwilling to give up much if any of the fear premium currently baked into the golden pie so long as the debt ceiling free-for-all rolls on in Washington. Unlike the lawmakers, market-makers and investors do no have the luxury of ‘voting’ (with their pocketbooks) over the weekend; they must thus decide how to close the books later today and walk away with a sense of being safe for whatever comes on whatever day before Monday out of Capitol Hill. Thus, the tilt in the market will likely still point towards higher values, or maybe even new records, as the weekend begins.
Silver started off the session with a loss of 8 cents per ounce and a quote at $39.65 in New York. The white metal’s players also appear reluctant to walk away from the $40 price tag just yet, even if the market is still exhibiting a corrective bounce in an otherwise downward-flavored trend. The platinum-group complex, on the other hand, headed lower for different reasons this morning, but lower nevertheless. Platinum and palladium each declined $5 to open at $1,778 and at $820 respectively.
Rhodium was the only one to show no change in value; it was still quoted at $1,950 the ounce.