The Week Ahead: Sept. 23-29, 2013

September 23, 2013 04:05 AM

via a special arrangement with Informa Economics, Inc.

Will GOP House conservatives force another government shut down?

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

Funding for Fiscal Year 2014, which begins Oct. 1, is the focus this week, as the Senate plans to take up a House-passed continuing resolution(CR/HJRes 59) that would keep the federal government in operation through Dec. 15 of this year but defund President Barack Obama's signature health care law. Congress must pass the continuing resolution to prevent a government shutdown before the Oct. 1 start of the new fiscal year. The Senate will reject the House approach, pass its own CR and send it to the House.

The Senate also could resume consideration of a bill (S 1392) to promote energy savings in residential buildings, which stalled during floor debate last week.

The House, originally scheduled to be out of session this week, instead plans to be in session Sept. 25 through the end of the week. The House likely will take further action on the stopgap funding resolution by week's end if Senate Democrats follow up on their promise to strip the health-care defunding portion from the continuing resolution.

Meanwhile, the House will send the nutrition-passed bill over to the Senate and that could prompt more action on the farm bill front for the House-Senate conference process which is expected to start in October. House conferees could be announce late this week or next week, according to some reports.

On Thursday, the House will debate legislation (HR 687) that would facilitate the efficient extraction of mineral resources in southeast Arizona by authorizing and directing an exchange of federal and non-federal land.

For the balance of the week, House Majority Leader Eric Cantor (R-Va.) said the House would be devoted to possible action on the debt ceiling and additional action on the CR. He also advised members that a weekend session is possible.

Congressional committee meetings will focus on topics including the US budget outlook, investment in transportation, employment and the effect of black carbon on global health.

Economic data will stay important, especially with the Fed holding off on tapering their stimulus efforts. And there is a lot of data flowing at the market in the coming week. Monday will open with the Chicago Fed update manufacturing and the PMI manufacturing flash report. Tuesday will see housing data in the form of the FHFA Home Price Index and the S&P/Case Shiller price reports, along with Consumer Confidence and the Richmond Fed reading on manufacturing. Wednesday’s report schedule includes Durable Goods and New Home Sales data, with Thursday bringing the next update on US GDP, weekly jobless claims and Pending Home Sales. The week wraps up with Personal Income and Outlays data along with Consumer Sentiment. Given the Fed’s "no decision," Fed speakers will also be watched closely. Speakers from various Fed Districts are on tap every day but Wednesday and their views will be watched as traders now try to gauge when the Fed may taper their asset purchase efforts. Besides data and the Fed, markets will watch the Mideast situation for any flare ups and there are expectations that President Obama could nominate current Fed Vice Chair Janet Yellen for the top post.

For agriculture, Monday will bring the weekly update on crop conditions and progress to maturity along with a reading of supplies of meats and other products in the nation’s freezers. Wednesday will see the release of the monthly update on food prices with Thursday’s Weekly Export Sales data once again potentially important. The USDA data week will cap off with the Hogs & Pigs report on Friday afternoon. Otherwise, traders will watch the weather situation, early harvest results and any daily demand news.

Market traders begin to assess whether or not a government shut down will occur, and if so for how long. The latest Barron's magazine includes an article that has this headline: Odds for a Government Shutdown: 100%. It adds that House Speaker John Boehner's (R-Ohio) "inability to control the Republicans' Tea Party faction could fuel a debt-ceiling crisis and the shutdown of the US government. The key issue: funding for Obamacare." Behind the GOP move: About 40 of the GOP's newest members were elected by their constituents specifically to stop Obamacare. "Although there is no chance of this happening while Democrats control the Senate, these legislators feel compelled to try, regardless of the broader economic consequences," according to the Barron's article. A growing number of government watchers and financial market analysts think there could be a two- or three-day shutdown before agreements are eventually reached.

The key issue at the end of the fiscal year funding debate will be the funding level for FY 2014. Republicans favor a sequestration-based figure, while Democratic leaders and the White House think that is too severe of a cut. The Senate will easily reject the House-passed CR, but then the Senate will approve their version with a likely higher funding level than the House-passed version. With time running out, the decision is whether or not the House passes the higher funding level of the Senate, or stick with the lower, sequestration-based funding. Observers saying a government shut down will be avoided predict a short-term CR at sequestration-based funding, with the same issues being pushed to later in the year.

House GOP debt limit bill could be released today. House Republicans as soon as today may release a plan to suspend the government’s legal borrowing authority until a date after the November 2014 election, at which point Congress would establish a new ceiling based on the amount of debt incurred. The proposal is being opposed by some in the GOP who prefer the debt limit be increased by a specified amount but it mimics the legislation Congress passed in January after lawmakers were confronted with several fiscal deadlines and could not agree on extending the government’s borrowing capacity. President Obama is insisting on a "clean" debt limit increase and he has ruled out negotiating over a jump in borrowing authority. At a House Republican conference Friday, leaders said the measure would maintain the post-sequester discretionary spending caps in the 2011 debt limit law. Instead of additional cuts in discretionary spending, it would take aim at mandatory spending on health care and other areas and possibly include means-testing for Medicare, something proposed in Obama’s FY 2014 budget. Other entitlement changes could include use of the chained CPI to curb the growth of Social Security cost-of-living increases, another policy change proposed in Obama’s budget. The bill would include legislation (S 15) that would require any major regulation promulgated by the administration to be approved by Congress before it could take effect. GOP leaders have also discussed using the bill to delay implementation of the health care overhaul for a period equivalent to the debt limit suspension and to mandate construction of the Keystone XL pipeline and other energy development initiatives.


Monday, Sept. 23
Japanese Prime Minister Shinzo Abe begins a visit to the US and Canada.
The Nasdaq Technology Index adds 15 stocks, including ARM Holdings and Ericsson, while dropping others.
Hedge-fund advertising can begin after an 80-year ban by US regulators. Private-equity and venture-capital funds can also pitch themselves in print, the Internet, and the airwaves.
Federal Reserve: Atlanta Federal Reserve Bank President Dennis Lockhart speech in New York. New York Federal Reserve Bank President William Dudley speech in New York. Dallas Federal Reserve Bank President Richard Fisher speech on banking and too-big-to-fail in San Antonio.
Economic reports:
Selected Interest Rates (Federal Reserve) | PMI Mfg Index Flash
USDA reports:
Export inspections (AMS) | Crop Progress (NASS) | Cold Storage (NASS) | Poultry Slaughter (NASS) | Wheat Data (ERS)


Tuesday, Sept. 24
Federal Reserve: Cleveland Federal Reserve Bank President Sandra Pianalto spech to open Chicago Fed payments conference in Chicago. Kansas City Federal Reserve Bank President Esther George introduces speaker at Chicago Fed payments conference in Chicago.
Omnibus budget resolution: Committee markup. Senate Rules and Administration Committee.
Political uncertainty and jobs: Committee hearing. Senate Budget Committee.
Financing for rebuilding infrastructure: Subcommittee hearing. Senate Commerce, Science and Transportation — Subcommittee on Surface Transportation and Merchant Marine Infrastructure, Safety and Security.
Energy reports: Weekly National Petroleum Report (API).
Economic reports: ICSC-Goldman Store Sales | S&P Case-Shiller HPI | FHFA House Price Index | Consumer Confidence | Richmond Fed Mfg Index
USDA reports: Weekly Weather & Crop Bulletin (WAOB) | Cotton Ginnings (NASS)


Wednesday, Sept. 25
France's budget details: France’s budget bill for 2014 is presented by finance minister Pierre Moscovici. This month the government cut its forecast for growth next year to 0.9 percent and said its public deficit would fall more slowly than previously expected.
Federal Infrastructure and Transportation Funding: Committee hearing. Senate Environment and Public Works Committee.
Retirement for baby boomers: Committee hearing. Senate Special Aging Committee.
Energy reports: Weekly US underground natural gas stocks (EIA) | Weekly Petroleum Status Report (EIA) | Weekly ethanol plant production (EIA).
Economic reports: ICI weekly money market mutual fund data | MBA Purchase Applications | Durable Goods Orders | New Home Sales
USDA reports: Broiler Hatchery (NASS) | Food Price Outlook (ERS) | National Dairy Products Sales Report (AMS) | Dairy Data (ERS) | Livestock & Meat Domestic Data (ERS)


Thursday, Sept. 26
Euro-Asia Economic Forum in Xi’an Shanxi province, expects 2,500 delegates (to September 28).
The World Trade Organization in Geneva sees the opening of the process for Yemen to join.
Federal Reserve: Federal Reserve Gov. Jeremy Stein speech on yield-oriented investors at symposium in Frankfurt, Germany. Minneapolis Federal Reserve Bank Narayana Kocherlakota speech to Rotary Club, Houghton, Michigan. Kansas City Federal Reserve Bank President Esther George speech on the economy in Denver.
CBO long-term budget: Committee hearing. House Budget Committee hearing on the Congressional Budget Office's long-term budget outlook. Witness: Douglas Elmendorf, director, Congressional Budget Office.
FISA legislation: Committee hearing. Senate Select Intelligence Committee hearing on Foreign Intelligence Surveillance Act (FISA) legislation.
Economic reports: Jobless Claims (Labor Dept) | Weekly Mortgage Rates (Freddie Mac) | Pending Home Sales Index | GDP | KC Mfg Index
Transportation: Grain Transportation Report (AMS).
USDA reports: Export Sales (FAS) | Monthly Milk Cost of Production (ERS)

Friday, Sept. 27

Spain, emerging from a severe recession, is expected to raise its forecasts for economic growth and employment.
Iranian nuclear talks: The International Atomic Energy Authority holds a new round of talks with Iran in Vienna. Discussions over the country’s nuclear programme are the first; such meeting since Hassan Rouhani became Iranian president.
Federal Reserve: Chicago Federal Reserve Bank President Charles Evans speech to monetary policy conference in Oslo. Boston Federal Reserve Bank President Eric Rosengren makes opening remarks to a New York Fed payments conference in New York. New York Federal Reserve Bank President William Dudley speech on the economy in Syracuse, New York.
Economic reports:
Personal Income and Outlays | Consumer Sentiment
USDA reports: Peanut Prices (NASS) | Agricultural Prices (NASS) | Peanut Stocks & Processing (NASS) | Quarterly Hogs & Pigs (NASS) |


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






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