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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Haim R. Branisteanu who wrote (15929)	11/16/2004 11:05:17 AM
From: mishedlo	Read Replies (2) \| Respond to of 116555

Yes, barring a collapse in jobs. Let's just see how many more of these the FED can put on before housing pukes. Mish

To: Haim R. Branisteanu who wrote (15929)	11/16/2004 11:16:44 AM
From: mishedlo	Respond to of 116555

UPDATE 2-US Treasury: Debt limit must be raised this week Mon Nov 15, 2004 06:02 PM ET (Recasts with Treasury, Hastert comments) By Laura MacInnis and Anna Willard WASHINGTON, Nov 15 (Reuters) - The U.S. Treasury Department on Monday postponed announcing a four-week bill auction to avoid piercing the limit on federal borrowing, and said Congress needed to raise the statutory debt ceiling this week. The offering delay had been expected after Treasury last week said it had no authority to issue the bills that would have settled on Thursday, the day extraordinary measures used to skirt the debt limit are set to run out. The Treasury Department said it was in talks with the House of Representatives and the Senate on the issue, and said it was essential lawmakers act as soon as possible to lift the limit. "It would be unthinkable that Congress did not pass the debt limit legislation," Treasury spokesman Rob Nichols told a press briefing. "I believe we have made clear the critical importance of Congress acting on the debt limit." Since early October, the Treasury Department has been hovering near its $7.384 trillion limit on federal borrowing. It has alerted Congress that accounting maneuvers to keep the U.S. below its debt ceiling would run out on Thursday. The most recent Treasury data showed U.S. debt subject to limit at $7,383,975,000,000 -- just $25 million or 0.0003 percent below the debt limit. Failure to raise the limit could lead to a government default on the debt its borrows, but Congress has never allowed this to happen. Lawmakers are expected to vote before Thursday to increase the debt ceiling, possibly by as much as $800 billion, a Senate aide said. The aide, speaking on condition of anonymity, said a Senate vote on increasing the limit could come before noon on Wednesday. The House of Representatives would then need to vote on the bill passed by the Senate for the increase to take effect. House speaker Dennis Hastert, an Illinois Republican, said he was keen to get the move out of the way. "Whatever we get done is fine. Just get it done," he said. The Republican-led Congress avoided increasing the borrowing limit before the Nov. 2 election as leaders did not want to have the politically sensitive vote. Democrats, who have been pushing hard for a stand-alone vote on the debt limit, will likely use the debate to attack President George W. Bush's economic policies, which they say have turned the fiscal surplus he inherited into a record deficit. Some Republicans wanted to tack the debt limit measure on to a huge spending package encompassing remaining unpassed spending bills for the 2005 fiscal year that lawmakers are working on. But other Republicans fear that could complicate the already tricky spending discussions. Hastert said it "makes the bigger bills harder to pass" if they have extras stuck on to them. Also, it is not clear whether the omnibus bill will be ready for congressional approval before Thursday. Treasury's Nichols said the department would make decisions day-to-day on further emergency measures required to keep the government's financing below the statutory limit ahead of the Thursday deadline. "As we are running up to that date, we are taking the prudent steps to protect the full faith and credit of the U.S. government," he said. "We are continuing to take those steps." (Additional reporting by Kristin Roberts, Editing by Chizu Nomiyama, anna.willard@reuters.com Reuters messaging: anna.willard.reuters.com@reuters.net; 1-202-898-8391))

To: Haim R. Branisteanu who wrote (15929)	11/16/2004 11:19:44 AM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Fed´s Moskow: U.S. current account gap unstainable Tuesday, November 16, 2004 4:04:47 PM afxpress.com Fed's Moskow: U.S. current account gap unstainable CHICAGO (AFX) -- A record U.S. current account deficit is an "unsustainable trend" that left unchecked, risks deeper damage to the U.S. economy, Chicago Federal Reserve President Michael Moskow said following a speech. The current account deficit, a broad measure of trade that includes investment flows, has swelled to a record 5 percent of U.S. GDP

To: Haim R. Branisteanu who wrote (15929)	11/16/2004 12:01:03 PM
From: mishedlo	Respond to of 116555

A snip from Brian Reynolds on corporate bond action. We wrote last week about how, when a company plans a stock buyback, it will normally borrow the money first, then announce a buyback once the funds are in hand and the bondholders are unable to do anything about it. We wrote how that has now changed and bondholders are acting as if they just don’t care, feeling that balance sheets have improved enough in recent years to withstand buybacks, with the results being that we've actually seen some companies announce buybacks, and then borrow the money, with bond investors lining up to provide funding. We saw a new twist on that yesterday: A junk-rated company announced that they will be accessing the bond market to fund their previously announced buyback. It was only two years ago when it was news if bondholders decided to let a company access the market for a life-saving rollover of maturing debt. Now, this company is totally confident that they can access the junk market solely to weaken their balance sheet in order to boost their stock price, and they could be correct. We’re not identifying the company because we don't want people to focus on this particular company; we want people to focus on the fact that bondholders are throwing money around like crazy. We need to watch for signs that bondholders will change their minds and pull in their horns. So far, though, there has been no reaction in the agency and swap markets to FNM’s lack of an earnings release and admittance that they may have to take a write down. So, until further notice, it looks like the trends we have been noting will likely continue.