May 29
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5/24/2013 Daily US Cash Deficit

By | Daily Deficit

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.

05-24-2013 USDD

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!!

 

May 25
0

5/23/2013 Daily US Cash Deficit

By | Daily Deficit

Deficit:

The US Cash Deficit for 5/23/2013 was $7.0B bringing the May 2013 cash deficit through 23 days to $117B vs. $116B a year ago. With five business days to go, I suspect we will see some marginal improvement on the revenue front, but nothing impressive. On the cost side…it is a bit surprising that cost is up…I would have expected flat, or even down a % or so. Due to 6/1 being on a Saturday…quite a bit of June cost is going to get pulled into May 31….I’m just not sure how much. At first I was thinking $15-20B…Active duty salaries, military retirement, and a handful of other items that typically go out the first of the month. However, I think there is also a good chance that $15B+ of Medicare payments get pulled forward as well. I think my last estimate for the May deficit was $140B…I’m going to bump that up another 10 to $150B…with the qualifier that if the medicare payments get shifted…it could be $15-20B higher still. Whatever happens…if anyone remembers last month’s $117B surplus….it is now effectively gone 🙁

05-23-2013 USDD

Debt Limit:

Now…on to the pending debt limit battle. Everyone seems to be content to wait until after summer vacation to fight this battle. They may be right, but I need to point out that the “Cash Crash” continues…with the cash balance dropping another $9B to $16B yesterday after topping out at $214B on April 30th. Just for reference, $16B is about the average amount of outlays on a given day…average revenues so far in May are about $10B.

05-23-2013 USDD-Cash

So far…no sign of extraordinary measures, but if they don’t do something soon, there is no way they have the cash in hand next Friday to pay the bills. Between now and 6/3….they better find about $50B somewhere, or Congress’s summer vacation is going to be ruined. Of course…that makes me fairly confident they will pull it off, but as discussed yesterday, the fact that they are cutting it this close is very confusing to me.


May 24
0

5/22/2013 Daily US Cash Deficit

By | Daily Deficit

The US Cash Deficit for 5/22/2013 was $7.8B on the expected Social Security payments of $12.1B. This brings the May 2013 deficit through 22 days to $110B. This is $6B over where May 2012 was through 22 days, but you must take into account May 2012 was one day of the week behind 2013…thus While May 22 2013 is a Wednesday…May 22 2012 was a Tuesday. Tuesdays usually have light revenue, and of course The 2-4th round of Social Security payments are paid on Wednesdays, so we would expect 2012 to be a tad light on both revenues and outlays…more or less catching up tomorrow.

05-22-2013 USDD

On the cash side….cash is down another $6B to $25B…still no evidence of “extraordinary measures”. Note that next Friday May 31 will likely post a $25B+ deficit…with another $25B Monday June 3. They better get a move on….

05-22-2013 USDD-Cash

The above chart shows the US Daily Cash Balance from April 1 through Yesterday. Note the spike up over $200B at the end of April….followed by a plunge as we hit May. Now, I have to say…it seems unlikely to me that the Treasury won’t find a way to pull the rabbit out of its hat between now and June 3 and find a way to make the cash payments…likely through extraordinary measures.

However….for the life of me, I don’t understand why they are cutting it so close…when the expired debt limit law seemed to give them the flexibility to stock up on cash…instead they made a point…going out of their way to pay down debt before 5/19, and ended up with less than $40B cash in hand when the debt limit was locked down. I don’t know if they are incompetent, daredevils who have that much confidence in their forecasts, or…if they are planning to start threatening default much earlier than anyone else thinks…to force everyone to put their cards on the table and deal.

May 23
0

5/21/2013 Daily US Cash Deficit

By | Daily Deficit

The US Cash Deficit for 5/21/2013 was $5.2B bringing the May 2013 deficit through 21 days to $103B. Once again, 2012 and 2013 are more or less aligned, with each having 15 business days M-F. Just as last week…nothing very impressive here. Revenue up 1%, cost up 2%. All this is a far cry from what we saw last month with revenues spiking 26%. We do see tax deposits withheld up 10%, consistent with what we have been seeing all year, but this has been offset by decreases elsewhere, notably unemployment deposits from the states, federal reserve earning, and TARP. With 7 business days remaining, May is looking like a rather unimpressive follow up to a spectacular April.

05-21-2013 USDD

On the Debt limit, cash was down $6B to $31B. No sign of “extraordinary measures” yet…just a dwindling cash balance and a lot of payments due by May 31.

May 22
0

5/20/2013 Daily US Cash Deficit

By | Daily Deficit

The US Cash Surplus for 5/20/2013 was $3.6B on typically strong Monday revenues, pushing the may 2013 deficit through 20 days to $97B. Net revenues are now showing a $10B improvement over 2012, but this is likely to come down a bit after the Tuesday report is released this afternoon and the months more or less synchronize again.

05-20-2013 USDD

It does now appear that the official debt limit is locked in at $16.699T, with a cash balance of $38B. Between now, and June 3 when the first round of June social security payments goes out ($25B), I am expecting a cash deficit of $75-$90B. There was no movement yesterday, but what I expect to happen is “intragovernmental” debt, currently at $4.869T to decrease, and then for treasury to sell external debt for cash. …this is the signature of “extraordinary measures”. So…if I have this right, treasury will magically make $50B of “intragovernmental” debt just disappear over the next two weeks. If there was ever any doubt over whether or not “Intragovernmental” debt was real or just a figment of our imagination….this should pretty much clear it up.