VTS Community,

You all know I do prefer to keep politics out of our investing but when a big story like this comes up it’s unavoidable so let’s talk about it.

 

  The US government is shut down.

 

Republicans and Democrats have failed to reach agreement on a spending bill to fund the government.  This isn’t the first time it’s happened and it likely won’t be the last, but we’re in one now.  I’ll show you in a minute why this is likely not a big deal for the stock markets, but in this early stage of the shutdown there’s a lot of blaming of the other side.

 

–  Democrats say Republicans control the House, the Senate, and the White House and this government shutdown is due to a lack of leadership and failure to pass a budget.  A valid point.

–  The Republicans say the Democrats are to blame because they are tying agreement of a deal to an unrelated topic of protecting “The Dreamers” which are immigrants who were brought to the United States by their parents.  A valid point.

 

One thing that is interesting, the vote on Friday to keep the government open didn’t come down entirely across party lines.  To pass, 60 votes in the senate are required:

 

Even the majority leader Mitch McConnell voted no.  It was a bold move that he then made a speech blaming the other side for voting no but honestly I have no idea who’s going to get blamed for the shutdown and who’s going to come out looking good to voters in the upcoming mid-term elections.  All I know is it’s the governments job to pay federal employees and make sure there are no interruptions so in that sense it’s everyones fault.  Republicans and Democrats are arguing back and forth, and the President is Tweeting controversial things.  Welcome to 2018.

But I did say I would show you why it’s not likely a big deal for the stock market.  That’s because when we add up the damage done by the previous 18 government shutdowns since the early 1970’s, the stock market has been basically flat.

Long-term mean:  -0.6%

 

There will likely be regular votes at odd times of the day and night until this thing finally gets resolved.  I believe the first one is coming up at noon today.

It’s always very difficult when politics are involved because it is emotional, but we will maintain discipline and just trade the math.

We’ll take the signals as they come.  We’re in our safety positions across the board now but that may change on a day’s notice so stay tuned…

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