It seems unlikely (to me, at least) that we will avoid another government shutdown as it looms just over the horizon with no significant attempts to avoid it in place. Indeed, Congress went home for the weekend, after pulling a short term continuing resolution which the crazies loaded up with all sorts of Christmas tree ornaments (over 100) including contentious issues like birth control, abortion, and more.
I have always been a macro investor, and in my reading about what happens during such things came across this, which I pass along in the FWIW category:
As you see, it says that there is no practical affect, short term (50% of the time the market is up, 50% down, roughly) and that longer term *(3 and 6 months) the market is usually up.
As I read the chart ( scroll halfway down the page: Section 3, titled “S&P returns during government shutdowns ) I note that the negative scenarios happen at times of economic stress: the oil embargo in the 70’s, the double-inflation-recessions early in Reagan’s term; I note negative signs in 1990 and 2018 which I cannot so easily explain.
My casual prediction is that we are in such an environment now, with the Fed raising rates to decades level highs, inflation abating somewhat, political fragility, truculent Congresscritters actually hoping for a shutdown, and (possibly) the end of the rebound post-covid boom and the economic stresses of the all-but-stopped housing market, downtown office building debt coming due, restart of student loan payments, and the exhaustion of savings/covid payments.
If all this sounds doom and gloom, well, it’s not meant to be. However for the last few months I have been arranging our investments (consonant with tax implications) away from the market and into fixed income offering pretty reasonable and reliable returns. YMMV. So a shudown - either way - won’t affect us much, but I still find it interesting enough to research and discuss.
So discuss.
