The US partial government shutdown continues now onto it’s 11th day with negotiation after negotiation. These negotiations involve multiple, overlapping budget issues and deadlines that are fast approaching, but the issues won’t necessarily be resolved in one fell swoop.
What we know from past shutdowns is that the U.S. equity market has been resilient and markets elsewhere also tended to be little affected. In the 17 shutdowns since 1976, the S&P 500 typically pulled back fractionally just before, during, and right after the shutdowns and usually gained back its lost ground soon thereafter.
The market has realized, as should we, that the media is having the most fun with this. The media loves perceived crisis and tends to instill anxiety and exaggeration in what is really going on (think back to high school gossip). There is no real scenario where the government shuts down forever and so let’s hope that they can work this out soon so that the media can move right along.
On Tuesday evening I met a friend at Canoe Restaurant and within moments of sitting down we were evacuated and heading down 54 flights of stairs due to a fire alarm (I was sweating in style wearing 5 inch heels). Just like the US government shutdown, the evacuation came as a surprise to us all, it really sucked at the time and everyone there was talking about how big of a deal it was. After it was over, the stairs left us with some residual lactic acid build up to deal with for about 2 days and now things are back to normal.
Enjoy the weekend.
Investment & Wealth Advisor
Chaaban Wealth Management Group