US DAILY DEFICIT

The Us Daily Cash deficit for 5/30/2013 was $2.0B bringing the monthly deficit to $122B with one day to go. through 30 days last year was at $129B, so a $7B improvement all else equal. The 5/31 numbers (we will get them Monday) have a lot of uncertainty. A final interest payment goes out that should be $5-6B, as well as normal operations…all else equal, we would probably run about an $8B deficit and end up at $130B. However, there are a lot of payments due 6/1 that probably went out today…my guess is anywhere from $15B to as much as $30B + if a large Medicare payment gets pulled forward as well.

Cash improved by about $5B today, despite the deficit thanks to the first definitive evidence to date of “extraordinary measures.” It’s a classic pattern…basically they pulled about $7B of intergovernmental off the books…pretending it no longer exists for the time being, yet promising to “pay” it back once the debt limit is raised. With intragovernmental down $7B….they find themselves $7B under the debt limit…so of course they issue $7B of “real” debt in exchange for real cash. I don’t fully understand the technical rules… there are limits… but it is all quite silly if you think about it. What with the pretending to temporarily write off the money we are pretending we owe to ourselves and such….par for the course I suppose.

So…expect large deficits 5/31 and 6/3…and a lot more “extraordinary measures”

The US Daily Cash deficit for 5/29/2013 was $1.9B bringing the May 2013 Deficit through 29 days to $120B, just $4B under May 2012 through 29 days. Revenue is up 6% and outlays are up 2% with 2 business days remaining.

With the deficit, cash is back down to $14B from $16B yesterday with somewhere between $30B and $50B of outlays due to go out Friday.

Deficit:

The US Daily Cash Deficit for 5/24/2013 was $4.4B bringing the May 2013 deficit through 24 days to $122B bringing 2012 and 2013 into a virtual tie with four business days remaining. My baseline expectation is for 2013 revenue to grow by 12% and cost to be flat. but with four business days remaining in May, we see revenue up only 6%, with cost up 3%. I expect revenue to continue gaining ground over the final 4 days due to favorable timing. Cost is a bit of a surprise, but what’s a % or two? Expect a moderate surplus Tuesday followed by moderate deficits Wednesday and Thursday…Friday should be a large deficit…how large we will have to wait and see.

Debt Limit/Cash Crash:

Cash fell another 4B down to $12B…quite a plunge from the 4/30 balance of $214B. No evidence of extraordinary measures yet, but expect it soon. Over the weekend I did some research and took a look at the last few debt limit battles. I discovered multiple instances of large single day cash infusions from “extraordinary measures” including $55B on 5/31/2011 and another $55B more recently on 1/31/2013. So…there is evidence that treasury can and will pull $50B or so out of its magic hat in time to avoid a default on the large cash draws expected 5/31 and 6/3. Hooray for Treasury….and their shady accountants!! Assuming we get through this gauntlet…and I think we have to assume that…expect moderate deficits throughout early June, with revenues seeing a sharp uptick around mid month. I have seen multiple articles say that the $60B Fannie infusion will be paid before 6/30….so if that pushes through, June could technically post a surplus in the $100B ballpark. Again…hooray for the shady government accountants!!