June 2013

The US Daily Cash Surplus for 6/18/2013 was $5.7B as we got our first good glance at June “taxes not withheld” at $12.3B. There are still a few days of heavy inflows on deck, but at this time, we are down $6B, or 20% from last June. That’s not a good sign, but I’ll give it a few more days before I call it.

As it stands…the charts don’t look that bad…let’s walk through it. Net revenues are up $9B, which sounds good, but it’s only a 5% increase…our baseline is at 12%. Cost, on the other hand, look to be down an amazing $46B. Of that…$30B is timing related to 6/1 payments going out in May. $12B is related to social security payments…that should catch back up tomorrow…and the rest is because I have an additional business day (6/19) for 2012. This more or less sync’s up the months/days and since June 2013 is going to have one less business day anyway….I feel this is a more accurate presentation of the data.

All this leads to an apparent $55B YOY improvement in the deficit, and we haven’t even received the $60B payment from Fannie Mae yet. But if we back out the cost timing and social security payment, and we are really looking at a $13B improvement so far….not impressive at all compared to what we saw between January and April. We have 8 business days to go….it will be interesting to see where we end up. Two disappointing months in a row (backing out one off revenues and outlays) is not a trend line we want to be on but it is looking more and more likely.

The US Daily Cash Surplus for 6/17/2013 was $62.7B on typically strong Monday revenues plus nearly $43B of corporate tax receipts. Note that this was not unexpected…we see this surge on the 15th of every quarter end month…this time delayed by a couple of days due to the weekend. Now…no getting around it…a 62B surplus is big…but what really matters is how we look compared to last year. As it stands, corporate taxes are up YOY by 9%. It’s definitely a good number, but considering that our five month average coming into June was 20% YOY…it is definitely a break in the trend. The month isn’t over…but if the historical trend holds….we can expect less than  $1B to trickle in for the rest of the month in addition to the $62B already received…so absent a break in that pattern…9% is about where we will end up. The evidence is starting to mount indicating that the large revenue increases we saw from Jan-April are not going to be sustainable.

So with corporate taxes mostly behind us, up next are “taxes not withheld.” Remember..this is regular income and payroll taxes not withheld from paychecks like most people pay their taxes. This is going to be small business owners, investors….you 1%er type. This is where we saw a huge surge during the first part of the year….my hypothesis is that this was a one time spike due to the 2013 tax hikes. There are 4 months a year with large “taxes not withheld” spikes. January, April, June, and September. Don’t ask me why…but that’s the pattern. The rest of the months typically show less than $10B or so. If my hypothesis is correct….we should see a significant reduction in the YOY growth. In April the growth was 40%. June will provide us the first clean glimpse of 2013, unaffected by tax avoidance transactions. Right now, the YOY is -18%, but this is a rather small population. We should see most of the receipts come in this week. The YOY increase through 5 months was 29%…a significant deviation from that trend would provide pretty solid evidence to confirm the hypothesis….we’ll know by the end of the week.

Finally, just wanted to note that cash in hand has now grown to $113B though we are still up against the debt limit. This is quite a turnaround after bottoming out at $11.5B just two weeks ago in 6/3. Expect this to grow a bit more, especially when that $60B Fannie Mae payment comes through. Then, expect a downward plunge for July-August. A flat September might just squeak is by into the new FY in October. After that, a debt limit rise will be essential due to a low cash balance and ~250B or so of expected deficits between October and November.