Asian countdown

[scandal 951]

Asian markets open in approx 4 hours ......

July 24, 2011, 12:08 p.m. EDT

Congressional debt-deal negotiations continue

By Deborah Levine, MarketWatch

NEW YORK (MarketWatch) — Negotiations between congressional Republicans and Democrats continued as Obama administration officials expressed confidence they’ll agree to a plan to increase the U.S. debt limit by late Sunday, in time to avoid roiling deeply worried financial markets around the globe that open just hours later in Asia.

Coming up with a plan very soon to make sure the U.S. meets its debt obligations is “the only option available,” Treasury Secretary Timothy Geithner said. “They’re going to increase the debt ceiling, and we will not default.”

Speaker John Boehner (R., Ohio) planned an update conference call with House Republicans for 4:30 p.m. Eastern, but it wasn’t clear if he planned to release an outline or details of a tentative deal, according to media reports.

Late Saturday, Boehner said he wanted to unveil such a plan by 4 p.m. Eastern to avoid potential havoc in Asian financial markets, which begin their trading week soon after.

Boehner said Sunday it’s too early to know if a bipartisan deal to raise the debt ceiling is possible, but if not Republicans will go it alone, according to media reports.

The White House has warned that the U.S. could default on Aug. 2 if the $14.2 trillion debt limit isn’t raised by Congress.

“To default would be a tax on all Americans and it would be devastating to the country,” Geithner said on ABC’s “This Week.”

[mawilson 2,133]

Asian markets open in approx 4 hours ......

If markets are worried, they have a funny way of showing it.

[scandal 951]

If markets are worried, they have a funny way of showing it.

They haven't been at all worried, yet. Till now no one rated the chance of no-deal as anything greater than remote.

But Friday closed before Boehner walked out and the talks completely broke down, so we haven't seen a market reaction yet to that latest impasse. The weekend talks (so far) aren't looking very good. If there is no deal this afternoon, we'll know in a few hours if HK, Singapore, Tokyo take this in stride or if the sell-off begins in earnest.

[mawilson 2,133]

But Friday closed before Boehner walked out and the talks completely broke down

That's true. I suspect the markets will still consider it a non-event.

[BishopM 114]

If history's tale of my 401(k) is any indicator, am going to cash out now and forget about trying to understand/survive the stock market.

I have enough for a hut in the hillz...that will do fine for a senile ol' bishop

That's true. I suspect the markets will still consider it a non-event.

Theater...perhaps?

[SMOKE 1,426]

If markets are worried, they have a funny way of showing it.

thats what i'm seeing too. everyone in washington knows if we default...we're all screwed. if a deal isn't done soon. there will be an extension. noone wants a default sitting in their lap...it will be handled.

[luckytxn 2,265]

If the markets reacts badly and a sell off begins then that just means a great opportunity for a buy afterwards.

[scandal 951]

If the markets reacts badly and a sell off begins then that just means a great opportunity for a buy afterwards.

Buy on the dip, huh? Sure. If it's just a dip.

It's not a sell-off in and of itself that concerns me. Markets sell off, it's part of what they do. It's the magnitude of a sell-off, its duration, and what it portends for the general economy and credit conditions. Sept 2008 isn't notable because the markets sold off. It's notable because credit froze up. Commercial paper wasn't trading, businesses couldn't get the liquid cashflow needed for daily operations, money markets were "breaking the buck". We were inches from an abyss. It's that kind of meltdown - or worse - that people are referring to when cataclysmic words are used.

What I think a lot of people don't understand is the relationship of US Treasuries to every other instrument that's out there. T Bills are the benchmark asset for which risk is spread to every other sovereign, corporate, muni, or agency debt. The entire bond market is tethered to US Treasuries, and so by extension are equity markets and other derivative markets (IR swaps, FX swaps, financial futures, etc.) If Treasuries default the entire structure has no "risk free" basis. How do you even do something like a simple Black Scholes calculation to price options, which depends on a risk-free interest rate, when there is no risk-free rate in the market place?

[웃 910]

Earnings season has been quite impressive.

[luckytxn 2,265]

Buy on the dip, huh? Sure. If it's just a dip.

It's not a sell-off in and of itself that concerns me. Markets sell off, it's part of what they do. It's the magnitude of a sell-off, its duration, and what it portends for the general economy and credit conditions. Sept 2008 isn't notable because the markets sold off. It's notable because credit froze up. Commercial paper wasn't trading, businesses couldn't get the liquid cashflow needed for daily operations, money markets were "breaking the buck". We were inches from an abyss. It's that kind of meltdown - or worse - that people are referring to when cataclysmic words are used.

What I think a lot of people don't understand is the relationship of US Treasuries to every other instrument that's out there. T Bills are the benchmark asset for which risk is spread to every other sovereign, corporate, muni, or agency debt. The entire bond market is tethered to US Treasuries, and so by extension are equity markets and other derivative markets (IR swaps, FX swaps, financial futures, etc.) If Treasuries default the entire structure has no "risk free" basis. How do you even do something like a simple Black Scholes calculation to price options, which depends on a risk-free interest rate, when there is no risk-free rate in the market place?

It is still going to be a dip. The only question will be how long of a dip. The buying on the downside if there is one means when the market does go up then there will be a sell off to capture profits. This will create another buying opportunity and so on. Unless you think there will be a massive sell off and then no one will ever buy again in the future. You believe that then stay out of the market. The U.S. will eventually make a deal even if it is late. (Which I doubt) The market will be happy again after the deal. So what.

We all know they will have another record deficit when all is said and done with. All they are looking at is who is going to be gorging at the trough and how much will be funneled to the politicians. Obama the Socialist is going to get his time to gorge. Life goes on.

[scandal 951]

Unless you think there will be a massive sell off and then no one will ever buy again in the future.

What I think is that you didn't understand what I wrote. My fear isn't that prices can fall and then rise. My fear is that the system we use to price our securities markets could come unglued altogether if the risk-free presumption of Treasuries is called into question. It's not a matter of something being $1 today, 50 cents tomorrow, then $1.20 next year. That's your "buy on the dip" scenario. It's a fear that something is $1 today and an UNTRADEABLE ASSET with no orderly market, or market makers willing to make a two-sided market in it for the forseeable future. And the impact such a situation will have on the real economy of companies who rely on liquid securities markets to provide their goods and services.

I am one of the ones that does not try to convert and proselytize to others. I will be glad to say the pray when it is called for and even talk about my faith if anyone is curious but mostly like the article said I try to lead by example only. I have even been called not a true Christian because I do not seek converts but I just turn the other cheek.

Turn the other cheek, huh? You talk the talk, yet you don't walk the walk.

Obama the Socialist

[scandal 951]

CME Eurodollar futures start trading at 5PM CT (90 minutes from now), Bond futures open at 5:30CT (2 hours and counting). They are usually very low volume on Sundays and trail the Asian open, but tonight could be different.

Debt Crisis Update: No Deal Likely by 4 p.m.

July 24, 2011 3:34 PM

ABC News' Jonathan Karl reports:

Asian markets? They are on their own. A Republican source tells ABC News negotiators do not expect to have a deal or even the framework of a deal on the debt ceiling by 4 p.m. today, as House Speaker John Boehner had said he wanted to steady jittery Asian markets when they open.

In fact, the source says a deal today is now looking unlikely.

The principals are speaking over the phone while the staffs work on the numbers. Congressional Democrats and Republicans continue to try to hash out a compromise, but they are not there yet.

Separately, the source says that the big "grand bargain" now looks, once again, to be "pretty dead" -- not buried yet, but not really breathing either. Despite the positive comments by Boehner and Treasury Secretary Tim Geithner this morning, the large deficit reduction plan seems to be too much, too late to accomplish by the Aug. 2 deadline.

"A deal is still elusive," said one top House Republican.

[luckytxn 2,265]

What I think is that you didn't understand what I wrote. My fear isn't that prices can fall and then rise. My fear is that the system we use to price our securities markets could come unglued altogether if the risk-free presumption of Treasuries is called into question. It's not a matter of something being $1 today, 50 cents tomorrow, then $1.20 next year. That's your "buy on the dip" scenario. It's a fear that something is $1 today and an UNTRADEABLE ASSET with no orderly market, or market makers willing to make a two-sided market in it for the forseeable future. And the impact such a situation will have on the real economy of companies who rely on liquid securities markets to provide their goods and services.

Turn the other cheek, huh? You talk the talk, yet you don't walk the walk.

We have a monetary system that is based on total fiat money. We are going to have to go through this. If history is repeated then this will happen again in the future but even worse. Of course we know history will repeat itself as it always does. Every politician playing this game knows this and knows how we can stop the bleeding but will not do so. They want this to happen so we are all powerless and have to wait till this game is played out.

Nice that the thought police are out in force again

[scandal 951]

Nice that the thought police are out in force again

No thought police. Think what you want, write what you want, even hypocritical self-contradictory things. Just don't mind if others point them out to you. We have the same freedoms you do. Carry on.

[Usui Takumi 1,562]

Just passing an extension will probably still damage the nation's credit rating.