By Brian Maher
This post Beware the Ides of March appeared first on Daily Reckoning.
Trump’s speech last night sure set the river ablaze…
Tax cuts, deregulation, infrastructure spending, defense spending — American Greatness on a dozen fronts — and something for everyone!
The Big Board blasted 303 points skyward today… all the way past 21,000… for the first time ever.
Dow 20,000, we hardly knew ye.
And the dollar had its best day in six weeks. Treasuries slumped as yields on the telltale 10-year topped 2.45%. Gold slipped 3½ bucks.
All hale and hearty signs of an economy building steam.
But hard schooling has conditioned us to meet good news with mild alarm. Matching H.L. Mencken’s definition of a cynic, when we smell flowers… we start looking around for a coffin.
Today’s the first of March, two weeks from March 15… the ides of March…
Beware the ides of March, the soothsayer Spurinna allegedly warned Caesar about his approaching doom. He didn’t.
David Stockman doesn’t claim to be a soothsayer. But he’s a crackerjack analyst with 40 years of government and market experience. And David too says to beware the ides of March:
“What people are missing is this date: March 15, 2017.”
Why March 15?:
That’s the day that this debt ceiling holiday that Obama and House Speaker Boehner put together right before the last election in October 2015. That holiday expires. The debt ceiling will freeze in at $20 trillion. It will then be law. It will be a hard stop.
The Treasury will have roughly $200 billion in cash. We are burning cash at a $75 billion-a-month rate. By summer, they will be out of cash.
Then what?:
Then we will be in the mother of all debt ceiling crises. Everything will grind to a halt. I think we will have a government shutdown. There will not be Obamacare repeal and replace. There will be no tax cut. There will be no infrastructure stimulus. There will be just one giant fiscal bloodbath over a debt ceiling that has to be increased and no one wants to vote for.
Here David draws a dark sketch. And March 15 is just two weeks away. Does the debt ceiling raise the curtain on “one giant fiscal bloodbath,” as David fears?
We don’t know. And David says the crisis won’t necessarily strike March 15. He says it’ll probably start “slowly at first” followed by “accelerating intensity” as the Treasury runs short on cash.
We’ll see.
But there may be other reasons to beware the ides of March…
The Fed’s Open Market Committee concludes its two day meeting March 15. Do they raise rates? Last week, the fed funds futures indicated just a 20% chance of a hike. But after Trump’s stemwinder, today they’re flashing a 69% chance.
But Bloomberg says the timing of the next rate hike is a “balancing act.” Raise too soon and it could strangle growth in its crib. Raise too late and it could give inflation too much running room.
And some signs indicate inflation is percolating …read more
Source:: Daily Reckoning feed
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