Bad Swap

The budget deal is washing markets back and forth in the range but something important is coming out of it. The Administration is hoping to gain near term capital but may be making a mistake. Treasury Sec.Geithner's work in the last debt ceiling fiasco was never acknowledged. The administration is now swapping an austerity battle for a debt ceiling war in Feb/March.

This is a bad swap in our opinion. Threat of default is a difficult canard to throw oneself on. Whomever assumes the Treasury Sec. role will have little power and face emboldened opposition. The near term should remain positive but the weeks between President's Day and St Patrick's Day are shaping up to be brutal.

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