INSIGHTS
OCT
7
WEEK AHEAD...
Week one of the shutdown will be upon the markets and us will continue to yawn. Is it because no believes that this will be a protracted period or they don’t care? We believe it’s because no one believes this will go on for very long. The shutdown of non-essential aspects of the US government for the short term will have a very small impact of the economy; maybe a quarter of a percent in lost GDP. The bigger issue as we have all heard about is the debt ceiling. With no one willing to negotiate a compromise to raise the debt-ceiling limit, our economy will be held hostage. Our opinion is that no one really knows what the impact will be if the US government defaults on even a small amount of debt. We also believe that that impact could be devastating and make the financial crisis look like a missed car payment.
Leaving the fate of the health of this country up to a group of people who could care less about the health of this country is a scary prospect indeed but at this point we have to. This is the spot where the President must play the role of a leader and stop playing partisan politics. He must act like the adult and get everyone together, lock them in a room and not let them out until the situation is resolved.
The President is very aware of his legacy; as all Presidents are, and the last thing he could ever want is to be that President that allowed his country to default on its obligations. That would be his lasting legacy.
Since the Government is basically shut down and not releasing data for us to mull we will go with what we have.
The Small business Optimism Index is an interesting number. It is considered a lagging indicator but the recovery we were supposed to have was supposed to start with small business and we never really saw a major rise here. It recovered slowly just like the economy and we expect it to soften up for the next few months.
We will have the Fed minutes and would love to see what they think about the government shutdown that was impending while they met.
Speaking of the Fed, we don’t see any tapering until January or February due to the shutdown. Without proper data, proper decisions can’t be made. We also feel that this is giving the markets a lot more support than initially thought.
We believe this could be one of the most important weeks in US history. The ability to solve what many feel is an intractable problem will be key for the President and Congress and the results will be felt long after they all leave Washington.
Leaving the fate of the health of this country up to a group of people who could care less about the health of this country is a scary prospect indeed but at this point we have to. This is the spot where the President must play the role of a leader and stop playing partisan politics. He must act like the adult and get everyone together, lock them in a room and not let them out until the situation is resolved.
The President is very aware of his legacy; as all Presidents are, and the last thing he could ever want is to be that President that allowed his country to default on its obligations. That would be his lasting legacy.
Since the Government is basically shut down and not releasing data for us to mull we will go with what we have.
The Small business Optimism Index is an interesting number. It is considered a lagging indicator but the recovery we were supposed to have was supposed to start with small business and we never really saw a major rise here. It recovered slowly just like the economy and we expect it to soften up for the next few months.
We will have the Fed minutes and would love to see what they think about the government shutdown that was impending while they met.
Speaking of the Fed, we don’t see any tapering until January or February due to the shutdown. Without proper data, proper decisions can’t be made. We also feel that this is giving the markets a lot more support than initially thought.
We believe this could be one of the most important weeks in US history. The ability to solve what many feel is an intractable problem will be key for the President and Congress and the results will be felt long after they all leave Washington.