Government Shutdown {A Repeat}

Came across this oldie about the Government Shutdown related to the Affordable Care Act back in 2013.  I'm going to reprint parts of it below because things are no different now than they were back then in terms of how this plays out as political theatre.  Substitute Wall for Affordable Care act and you'll see why I don't think things are all that different. The most important point is the paragraph on American Kabuki.  The original article can be found here.

Government Shut Down......Or Why I Seem to Be the Only Person in the World Not Worried About This!!!!

From 10.01.2013

"So both the financial and regular news industry have nothing else to discuss than the government shut down today and the subsequent debt ceiling debate.  You would think from their constant braying on the subject that an asteroid was approaching earth, ready to extinguish life as we know it.  I'll tell you right now that based on what we currently know this shouldn't be a big deal for the economy.  There's one way it could be.  I'll get to that at the end of the bullet points.

Economic Debate:   American Kabuki.  A Kabuki dance is an activity or drama carried out in real life in a predictable or stylized fashion {thanks Wikipedia for the definition}.  We've seen this act before and it always ends up with the political folks who've taken away the punch bowl getting hurt.  In this case as is usual, it's the Republicans.  Look we live in a country where nearly half of us receive some type of governmental aid.  This includes everything from social security to farm subsidies as well as unemployment benefits.  You can't cut off this economic spigot too long before there's some form of blowback out in the hinterlands.  At the same time certain Republicans backed themselves into a corner with their objections to the Affordable Care Act so that it was next to impossible for them back down prior to the shut down.  Now that we've actually gone over the cliff so to speak, expect the grown-ups in both political parties to take charge and get a deal.

Wall Street is Concerned-Not!  Pundits will tell you that the markets are very concerned about this.  .. The reason for this is that Wall Street assumes a deal is going to get done.....Underneath the hood economic conditions continue to improve.  That should be supportive of equities as long as this doesn't last too long....

The Caveat:  Humans Sometimes Don't Behave Rationally.  The above assumes that a deal on both the debt ceiling and budget gets done in I'll say the next two-three weeks.  It doesn't have to happen all at once but I'm basing these probabilities on all of this being out of the way by mid-October.  If for some reason these issues go longer than this, if for example the Republicans are willing to commit something close to political suicide over Obamacare {The Affordable Care Act} then all bets are off and you could see potential problems.  Probability suggests that won't happen.  Probability also suggests that stocks are a better buy on any further sell off arising from the shut down and debt ceiling debates."

Back Wednesday.

*Long ETFs related to the S&P 500 in client and personal accounts.