Today is the day when, if one listens to Obama whose idea it was in the first place, an unprecedented $85 billion spending cuts will be sequestered, unleashing famine, pestilence, the apocalypse and grizzly bears (as all park rangers will be dead from starvation). Which is why we applaud the administration’s desire to preempt this tragic for the nation outcome, by issuing,in one day alone: February 28, $80 billion in Treasurys sending debt to (obviously) what is a new all time high $16,687,289,180,215.37.

In other words, the entire apocalyptic impact of the sequester for 2013 was offset by one day’s debt issuance.

Oh, and we didn’t label this post Friday humor because it rightfully falls under the Friday grotesque, surreal tragedy category.

But there are some notable events coming up.

The general feeling is that most of the market’s attention has shifted to a few events next week. This Tuesday evening, Obama is slated to give his State of the Union address; however, this isn’t expected to be a major, market moving event, especially since most of the agenda (helping the middle class, making college more affordable, investing in the country’s infrastructure, etc.) has been talked about on a couple of different occasions. More importantly, keep an eye out for headlines from the Eurozone Financial meeting this Monday and Tuesday as well as the G20 meeting on Thursday and Friday. More specifically, investors will be on the look out for any sort of commentary regarding FX, the ESM, or sovereign banks.  On a more granular level, investors will also be scanning the tape later in the week for headlines from AAMRQ and LCC on any sort of final decision regarding a merger that could result in the world’s largest airline. Plans originally were for votes to occur on Mon w/an announcement Tues, but AMR needed more time to finalize details and an announcement could come later this week.

Also of note: Apple is presenting at a Goldman conference out in San Francisco. Given the decline in that stock (and the latest talk about what the company will do with the cash) that should be very interesting.

Previously, when calculating debt/GDP metrics for the US, we naturally assumed some GDP growth in Q4. Following today’s GDP data we now know what Q4 GDP is. We also know that, at least on a preliminary basis, it posted a decline on an annualized basis. This means that we now have an official print for US Debt/GDP as of December 31, 2012. The numerator, or debt: $16.432 trillion, or the debt ceiling, which as we know was breached on the same day, and which has yet to be formally raised. The denominator, or GDP: $15.829 trillion. This means that the formal debt/GDP is now 103.8% and growing fast.

Indicatively, this has risen from 76.5% on the day of Obama’s first inauguaral address.

And for those who, erroneous, allege that Q4 GDP declined due to US government “austerity”, here are the facts: in Q4, the US added some $312 billion in debt. And more to the point, the US government spent a grand total of $907.9 billion in the same quarter. This compares to $877.1 billion a quarter earlier: $30 billion less.

Some “Austerity.”

The United States has nothing left to pressure Tehran over its nuclear programme except for war, and if it chooses conflict Iran could close a key energy chokepoint, its envoy to Baghdad told AFP on Thursday.

 Ambassador Hassan Danaie-Far insisted in an interview that Tehran retained the right to close the Strait of Hormuz, through which a third of the world’s traded oil passes, in response to any aggression, military or otherwise.

“What else (US President Barack) Mr. Obama can do?” Danaie-Far said through an Iranian embassy translator.

“The only remaining card on the table is war. Is it to their benefit? Is it to the benefit of the world? Is it to the benefit of the region?”

The diplomat said that if it faced a “problem,” Tehran would be within its rights “to react and to defend itself.” >> Read More

The White House is currently valued at $294.9 million, up 7 percent since president Obama took office in January 2009, according to Zillow.

 Prices of homes in Washington D.C. have been up 13.6 percent for the same period.

The White House was worth $275.6 million when the president first moved in. It’s value peaked at $299.9 million in July 2006.

In August 2012, it reached its “most recent low” of $271.1 million.

Zillow determines the value of the White House using its proprietary Zestimate algorithm which considers a home’s worth through public data and recent sales. >> Read More

Why won’t you negotiate on debt ceiling now when you’ve done it three times in the past and Reagan, Bush and Clinton have all done so and you yourself voted against a debt ceiling hike as a Senator?

Obama: But its never been done this way before…

The U.S. government may default on its debt as soon as Feb. 15, half a month earlier than widely expected, according to a new analysis adding urgency to the debate over how to raise the federal debt ceiling.

The analysis, by the Bipartisan Policy Center, says that the government will be unable to pay all its bills starting sometime between Feb. 15 and March 1.

he government hit the $16.4 trillion statutory debt limit on Dec. 31 , but the Treasury Department is able to undertake a number of accounting schemes to delay when the government runs into funding problems.

The Treasury has said that the accounting schemes, known as “extraordinary measures,” ordinarily would forestall default for about the first two months of the year, though officials were clear that they could not pinpoint a precise date because of an unusual amount of uncertainty around federal finances.

“Our numbers show that we have less time to solve this problem than many realize,” Steve Bell, senior director of economic policy at the Bipartisan Policy Center, said in a statement. “It will be difficult for Treasury to get beyond the March 1 date in our judgment.” >> Read More

We are sad to bring you the tragic news that Tim “TuboTax” Geithner, who has long made clear his plans to leave some time in early 2012, will be out before March. From Bloomberg:

• GEITHNER SAID TO PLAN DEPARTURE BEFORE DEBT CEILING RECKONING

We are also confident readers will somehow be able to overcome the unprecedented sadness at this particular rat’s departure from the Titanic, metaphorically speaking of course.

And while Timmy’s replacement (assuming it is of the Homo Sapiens genus and species) is still unknown, we know what some of the prospects think about serving the public:

 

 

American Express Kenneth Chenault had been approached for job, has indicated he isn’t interested

 

Administration officials had approached American Express Co. Chief Executive Officer Kenneth Chenault about joining Obama’s second-term cabinet, possibly as Treasury secretary. Chenault isn’t interested in leaving his private sector job, according to a spokesman.

From SocGen:

  

The scaled-down deal passed in the Senate addressed the fiscal cliff but did nothing to address longer term fiscal health of the nation. This puts the US rating at risk for a downgrade. However, credit rating agencies may decide to wait and see what emerges from the subsequent talks. There is an implicit new cliff at the end of February related to the sequester and to the expected exhaustion of extraordinary measures related to the debt ceiling. This date is expected to be used by Republicans as leverage for spending cuts. President Obama has already signaled that a new round of spending cuts – those related to the sequester as well as entitlement spending – will have to be matched by additional revenue increases. Therefore entitlement and tax reform are likely to be at the center of discussions over the next two months.

And recall from Moody’s in September:  

Budget negotiations during the 2013 Congressional legislative session will likely determine the direction of the US government’s Aaa rating and negative outlook, says Moody’s Investors Service in the report “Update of the Outlook for the US Government Debt Rating.” >> Read More