Our next meeting has many implications. Traders/Investors are hearing about the possible September taper, or a more hawkish tone from the . I am one of those that believe the will not be hawkish at all, and most likely be more dovish.
For one Bernanke is leaving. Ben does not want to change course of direction. Bernanke has been the guy and will be remembered as the guy. Ben will leave the in February 2014 without any changes in the Feds modus operandi.
Two... The US Debt Ceiling is going to be debated as we approach the 17 Trillion debt limit. The will not add fuel to the fire by mentioning tapering going into a dangerous political event. If anything Bernanke will sound very dovish and keep the market tilted higher.
Now for the US debt ceiling. Congress, most notably the house of representatives are planning nuclear fiscal action if each other sides can't agree on budgets and debt limits. Republicans are ready to shut down the government and talk tough. These harsh words could cause the market to waiver and fall, probably not as much as 2011, our previous debt limit debate. I do expect the US Dollar DXY to have greater implications this time around. The timing of the dovish remarks will probably push the dollar to the lower smaller channel inside the wider multi-year . As we near the debt limit 17 Trillion I expect the US Dollar to move quickly to the upper resistance and most likely outside the smaller channel. This overshoot of the resistance, and if it hangs above the line for a week or two, will cause the market to revert back to the bottom multi-year channel. If Janet Yellen takes over the Federal Resever, we will probably see much more in 2014. This will cause the Dollar to sink fast and Gold , oil , copper , food to rise quickly.
So this is my roadmap going into the next 15 months. Will evolve investment strategy and update charts if events were to change.
** >>> I'm rethinking the comment** Starting to see a long 14 year cycle on . Period of low U.S. bond rates and low . Wouldn't be surprised to see us kickback a little if we run to 85+ and resume a move to 90 DXY level.
I think we are still in play as per this chart. Our entry into UUP could definitely be preserved. If this falls at this pivotal fib line, which it's holding so far, then we don't really see much support until the 79.00 even range which will put our UUP at 21.5. That could be amazing entry into 23 UUP jan calls at .06-.08 each
Estimating exactly when the Treasury Department will be unable to pay all the bills coming due if Congress fails to raise the nation's legal borrowing limit is notoriously difficult.
That's why, in an analysis released Tuesday, the Bipartisan Policy Center put the "X date" between Oct. 18 and Nov. 5.
Treasury Secretary Jack Lew has warned that by mid-October the agency will have only $50 billion in cash on top of incoming revenue.
That may sound like a lot. But, as the Bipartisan Policy Center details, it won't last very long.
If the "X" date turns out to be Oct. 18, Treasury would run about $106 billion short of the money it owes between then and Nov.15. That means it wouldn't be able to pay the equivalent of a third of all the bills due during that period.
Timeline: 3 crazy years of fiscal follies ... and counting
Here's why: Treasury handles about 80 million payments a month. Those payments are not evenly spaced out so on some days more is owed than on others. And the revenue flowing into federal coffers is unpredictable and varies from day to day.
Payments include IRS refunds, Social Security and veterans benefits, Medicare reimbursements for doctors and hospitals, bond interest owed investors, payments to contractors and paychecks for federal workers and military personnel.
If Congress fails to act in time, Treasury will have to make difficult -- and legally questionable -- decisions about who should get paid and who should be stiffed. It may decide to pay some bills in full and on time and not others.
Or it may decide to delay all payments due on a given day until it has sufficient revenue on hand to pay in full. A report by the Treasury inspector general has said that this might be the most plausible and least harmful approach.
But under that scenario, delays would grow over time from a day or two to several weeks. For example, the payments due to seniors, veterans and active duty military personnel on Nov. 1 wouldn't go out until Nov. 13.
In any case, the expectation is that the agency will try to prioritize payments to bond investors over everyone else, lest the financial markets go haywire. Politically, of course, that carries risk, said Steve Bell, the senior director of the Bipartisan Policy Center's economic policy project.
"There's a political danger you'll be accused of paying bondholders over Social Security recipients," Bell said.
On both Oct. 23 and Nov. 14, $12 billion in Social Security benefits come due, while another $25 billion comes due on Nov. 1, according to the analysis.
Related: Just the facts on Washington' s budget brawl
Meanwhile, on Oct. 24, Treasury will have to roll over $57 billion in outstanding debt and another $115 billion on Oct. 31. Normally that's not a problem, because U.S. Treasury auctions attract a lot of buyers willing to purchase bonds at low rates.
But if those rollover dates come after the "X" date, and the perception is that the United States is defaulting on some of its obligations, Treasury could have trouble finding enough buyers or investors could demand higher interest rates.
The debt ceiling is currently set at $16.7 trillion. That ceiling was reached on May 19, and ever since Treasury has been using a host of special measures to keep the country's borrowing at or below that ceiling. But those measures will be exhausted by mid-October, according to Treasury.
If lawmakers want to raise the ceiling enough to get past the 2014 midterm elections in November, the Bipartisan Policy Center estimates they will have to raise it by $1.1 trillion to $17.8 trillion.
Kaine said Reid is considering offering an amendment that would provide only enough funding to keep the government operating through Nov. 15, instead of the Dec. 15 date contained in the House-passed bill.
Kaine said Democrats hope that a shorter time-frame for temporary spending might better foster negotiations on finding a substitute to the across-the-board spending cuts that began in March.
Those indiscriminate spending cuts, which hit defense and domestic programs alike, are deeply opposed by Democrats in the Senate and House.
Once the battle over government funding bill is resolved, Congress will quickly focus on another potential fiscal crisis - a possible and unprecedented U.S. government default unless it agrees to raise the $16.7 trillion U.S. debt limit by sometime next month or early November.
Republicans are expected to place a number of demands on any bill to increase the debt limit, including one to delay for a year implementation of Obamacare, which is now set to begin to fully kick in next month.
Problem is we don't have until Nov. Treasury will not have the cash flow nor the emergency reserves to push us past Oct. 31st.