Darius III encounters Alexander at the Battle of Gaugamela, detail from mosaic in the House of the Faun, Pompeii
The AP reported today that the administration's annual midsummer budget update — usually scheduled for mid-July — has been put off until the middle of next month, "giving rise to speculation the White House is delaying the bad news at least until Congress leaves town on its August 7 summer recess".
The delay is raising worries that the budget update will reveal what we already know -- "higher deficits and unemployment and slower growth than projected in President Barack Obama's budget in February and update in May". The AP story suggests that the release is being delayed because it could complicate his efforts to get his signature health care and global-warming proposals through Congress.
Investors need to worry about market implications.
More economic weakness would depress stock markets and drive hot money into dollars and Treasuries as safe harbors. That has been the usual play on news of economic weakness. But everyone already knows that the economy is weaker than the Obama administration forecasted.
Besides, the current meme is the continuing growth of China, accompanied by hot money flowing into speculative markets like commodities. Maybe the risks of a surprising budget update lie in a different direction.
Real news would be to reveal an even worse position than anticipated with the Federal budget. If worries arose about the ability to fund the deficit, investors would flee Treasuries, sell the dollar, and seek safety in the traditional safe haven -- gold.
The delay is raising worries that the budget update will reveal what we already know -- "higher deficits and unemployment and slower growth than projected in President Barack Obama's budget in February and update in May". The AP story suggests that the release is being delayed because it could complicate his efforts to get his signature health care and global-warming proposals through Congress.
Investors need to worry about market implications.
More economic weakness would depress stock markets and drive hot money into dollars and Treasuries as safe harbors. That has been the usual play on news of economic weakness. But everyone already knows that the economy is weaker than the Obama administration forecasted.
Besides, the current meme is the continuing growth of China, accompanied by hot money flowing into speculative markets like commodities. Maybe the risks of a surprising budget update lie in a different direction.
Real news would be to reveal an even worse position than anticipated with the Federal budget. If worries arose about the ability to fund the deficit, investors would flee Treasuries, sell the dollar, and seek safety in the traditional safe haven -- gold.
