The Week Ahead: Oct. 28-Nov. 3, 2013

October 27, 2013 01:01 AM

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Budget and farm bill conferences highlight the week in Congres

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Conference committee sessions on the Fiscal Year 2014 budget and a new farm bill are key items on the congressional agenda for the week ahead.

First farm bill conference session takes place Wednesday. Not much news is expected out of the first gathering because it will largely consist of opening statements from the hefty number of conferees – so many that they are meeting in the House Ways and Means Committee room. But behind the scenes, Ag panel staffers and key lawmakers continue their attempt to reach an overall agreement on key portions of the farm program safety net, with the following four key issues: (1) Parameters of the Price Loss (Target prices) Coverage program; (2) Parameters of the Revenue (Ag Risk Coverage/Shallow Loss payment program); (3) Parameters of the Supplemental Coverage Operation (SCO) program; and (4) what appears to be the thorniest issue – whether to use planted or base acres in calculating payments. A compromise plan regarding planted/base acres has been discussed but no final decisions have been made – House farm bill participants easily dismissed a farm group lobbyist suggestion to go with base acres on establishing program payments, but allow for a base update. That would have easily favored corn and soybean producers who have seen significant increases in planted acres in recent years. Senate negotiators, sources say, continue to push for an "all-in" approach to safety net programs whereby producers would qualify for both revenue and price loss coverage, but if a producer wanted SCO, they could not qualify for revenue loss coverage as well. The key for an all-in approach would be the target price levels for commodities that the Senate goes along with. An all-in approach would also mean the Senate's favored revenue plan would have to be shaved back. Meanwhile, farm bill staffers have been meeting with Congressional Budget Office (CBO) staffers for weeks in scoring various and changing options. Also, Senate Ag Chairwoman Debbie Stabenow (D-Mich.) continues to push the mandatory funding ($800 million) for various farm bill-related energy programs. The funding was not included in the House-passed farm bill.


First budget conference session on Wednesday, Oct. 30. The 29-member budget conferees on Wednesday finally begin discussing a host of thorny issues in an attempt to come up with what most do not expect to occur, an agreement. Some Senate and House Democrats hope for a quick budget conference deal to prevent a deeper second round of sequester cuts and to avert another budget stalemate. But this Congress has shown they have a hard time doing anything quickly. "A deal that redid the sequester for a short period of time is something we could talk about," said Rep. Chris Van Hollen, the Maryland Democrat who serves as ranking member of the House Budget Committee. House Budget Chairman Paul Ryan (R-Wis.) suggested a deal to replace the waves of automatic spending cuts that will come under the terms of the 2011 Budget Control Act, but he also lowered expectations for a broader deficit reduction deal. Most do not expect what has been called "a grand bargain." But major differences linger. The GOP is willing to replace the sequester if it gets entitlement cuts, while Democrats reject such changes without tax hikes that are quickly rejected by Republicans. GOP lawmakers will not likely go along with the suggestion by some Democratic members to consider a separate sequester deal before turning to the deep divide between the two budget resolutions (HConRes 25, SConRes 8).

Timelines: Recent passed legislation directed negotiators to develop a budget framework by Dec. 13, which would give Congress a month to finish Fiscal 2014 spending bills before government funding authority ends and new sequester cuts take effect on Jan. 15. The debt limit hike deal goes until Feb. 7.

First big budget issue: level of discretionary spending for FY 2014. House Republicans back the $967 billion spending cap set in the 2011 debt deal, and Senate Democrats are coming in with a budget resolution with a top line of $1.058 trillion. They have said they are willing to compromise on that level but want to come up from both sequester level and the $986 billion annual level in the current stopgap that continues Fiscal 2013 funding. Van Hollen has been trying to revive his proposal (HR 699) to replace about a year of sequester cuts with cuts in agriculture direct payments and tax hikes on oil companies and individuals earning more than $1 million. But farm subsidy cuts are opposed by some rural lawmakers, and senior Republicans have stressed tax hikes are off the table. "We will not go about raising taxes in exchange for sequester relief," House Majority Leader Eric Cantor (R-Va.) said Oct. 23. While Republicans favor a sequester deal based on entitlement cuts such as Medicare means tests, key Democratic leaders insist that tax hikes accompany any such changes.

The House will be in session for three days, with its floor legislative agenda scheduled to end on Oct. 30.
The House also is scheduled to be out of session the week of Nov. 4. The House is scheduled to consider two securities-related bills, while the Senate is scheduled to continue debate on one of President Barack Obama's nominees to the National Labor Relations Board.

The House will begin the week considering several pieces of legislation under suspension of the rules. These include bills dealing mostly with veterans issues, including providing affordable housing (HR 1742) and educational assistance (HR 2481) for veterans. On Tuesday, House members are scheduled to consider additional legislation under suspension of the rules as well as a bill (HR 2374) to amend the Securities Exchange Act of 1934 to provide protections for retail customers. House leaders also plan to debate a joint resolution relating to the disapproval of the president's exercise of authority to suspend the debt limit. The House will conclude the week Oct. 30 with debate on legislation (HR 992) to amend provisions in the Dodd-Frank Wall Street Reform and Consumer Protection Act relating to federal assistance for swaps entities.

The Senate meets Monday after a week-long recess to continue on the nomination of Richard Griffin Jr. to be general counsel of the NLRB.

On the hearing front, the House Ways & Means panel will focus on the implementation of the Affordable Care Act; Senate Banking on the housing finance system; House Energy & Commerce on construction of gas pipelines from Canada or Mexico.

The week will see a still-staggered batch of economic data released as the recovery process from the partial government shutdown continues. The week will open with Industrial Production, Pending Home Sales and the Dallas Fed report Monday. Tuesday will see a barrage of data, including the Producer Price Index, Retail Sales, S&P Case-Shiller home price index, Business Inventories and Consumer Sentiment all released, followed by the ADP employment report on Wednesday along with the Consumer Price Index. But the big focus Wednesday will be on the afternoon conclusion of the Federal Open Market Committee (FOMC) which won’t make news unless the Fed opts to start tapering their asset purchases, something most have concluded they won’t do following the government shutdown. Post-FOMC, the watch will be on Thursday’s jobless claims and Chicago PMI data, with additional manufacturing updates on Friday via the PMI manufacturing index and the ISM manufacturing index. Beyond the reports, markets will watch Chinese economic updates and any hiccups out of Europe relative to their struggling economic recovery.

For agriculture, Monday will bring another weekly update on harvest progress from USDA, along with a big day Thursday for data. That day will see releases delayed by the shutdown, including Cattle on Feed, Cold Storage and Cotton Ginnings. The regularly scheduled Ag Prices report also comes out that day. But the real attention will be on the Weekly Export Sales report as that will contain totaled data for the weeks ending Oct. 10, 17 and 24, so it will be a mountain of data for markets to consider. Beyond that, harvest reports and weather as it relates to harvest progress will be key along with any demand news now that USDA is back to confirming "large" sales of commodities if they take place.

Monday, Oct. 28
The United Nations and Iran hold talks on that country's nuclear program.
Economic reports: Selected Interest Rates (Federal Reserve) | Industrial Production | Pending Home Sales Index | Dallas Fed Mfg Survey
USDA reports: Export inspections (AMS) | Crop Progress (NASS)

Tuesday, Oct. 29
Japan: IMF forum on "Abenomics" in Tokyo.
Federal Reserve: FOMC meeting begins, ends Wednesday.
Health care enrollment challenges: Committee hearing. House Ways and Means Committee.
EPA power plant regulations: Subcommittee joint hearing. House Science, Space and Technology — Subcommittee on Energy.
Oil or natural gas pipelines: Subcommittee hearing. House Energy and Commerce – Subcommittee on Energy and Power hearing on legislation (HR 3301) to require approval for the construction, connection, operation or maintenance of oil or natural gas pipelines at the boundary of the US for the import or export of those resources to or from Canada or Mexico.
Egypt policy: Committee hearing. House Foreign Affairs Committee.
Oversight and government reform bills: Committee hearing. House Oversight and Government Reform Committee.
21st Century Freight Transportation final report and recommendations: Subcommittee News Conference/Briefing. House Transportation and Infrastructure — 21st Century Freight Transportation Panel.
EPA regulations and coal industry: Subcommittee hearing. House Energy and Commerce — Subcommittee on Oversight and Investigations.
Future of Afghanistan and Pakistan: Subcommittee hearing. House Foreign Affairs — Subcommittee on Asia and the Pacific.
Consumer Financial Protection Bureau: Subcommittee hearing. House Financial Services — Subcommittee on Financial Institutions and Consumer Credit.
Economic reports: ICSC-Goldman Store Sales | Producer Price Index | Retail Sales | S&P Case-Shiller HPI | Business Inventories | Consumer Confidence
USDA reports: Weekly Weather and Crop Bulletin (WAOB) | Rice Stocks (NASS) | Peanut Stocks & Processing (NASS)

Wednesday, Oct. 30
FOMC meeting concludes: The 16-day government shutdown very likely delayed any tapering of asset purchases until 2014, according to many analysts. As usual, the Fed's commentary in the report will be dissected for any potential clues of Fed strategy ahead.
FY 2014 budget conference: Lawmakers confer on the budget parameters for Fiscal 2014, with many predicting an agreement will not be found.
Farm bill conference: The opening session begins, with lawmakers statements.
Transatlantic Trade and Investment Partnership: Committee hearing. Senate Finance Committee.
Energy reports: Weekly US underground natural gas stocks (EIA) | Weekly Petroleum Status Report (EIA) | Weekly ethanol plant production (EIA).
Economic reports: MBA Purchase Applications | ADP Employment Report | Consumer Price Index | FOMC meeting announcement
USDA reports: Broiler Hatchery (NASS) | Turkey Hatchery (NASS) | National Dairy Products Sales Report (AMS) | Announcement of Class & Component Prices (AMS)

Thursday, Oct. 31
Bank of Japan is widely seen maintaining its monetary policy stimulus.
Energy reports: EIA natural gas report.
Economic reports: Jobless Claims (Labor Dept.) | Chicago PMI
USDA reports: Export Sales (FAS) | Cattle on Feed (NASS) | Cold Storage (NASS) | Cotton Ginnings (NASS) | Agricultural Prices (NASS) | Chicken and Eggs (NASS) | Egg Products (NASS) | Livestock Slaughter (NASS)


Friday, Nov. 1
President Barack Obama meets with Iraq's Prime Minister Nuri al-Maliki.
Federal Reserve: Regional Fed presidents James Bullard, Narayana Kocherlakota, and Jeffrey Lacker make public remarks.
Economic reports: PMI Mfg Index | ISM Mfg Index | Motor Vehicle Sales
USDA reports: Peanut Prices (NASS) | Milk Production (NASS)


NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.





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