Shutdown Looms

Equities start the day sharply lower as shutdown looms. I wish I could attach a music file to this recap because I’d have it play a really ominous sound like this when you opened it. Apparently our fantastic, highly competent leaders in Washington decided to watch the #BreakingBad finale instead of negotiating this weekend (can’t say I blame them) so here we sit on the precipice of the first gov’t shutdown in 17 years. Most of these things last a couple days, but the most recent one in 1996 lasted 21 so no one knows when it will end. That being said it will end, so if you are going to make a rash decision about owning stocks I’d probably look for a better reason than this. Say, remember when “taper” was a reason to sell stocks? Everyone spent all that time pondering when the Fed would lift stimulus and ring the bell for the top? Any chance they are going to do that in October now that politicians have decided to throw this little roadblock at us? Hmmm, probably not, and if they aren’t going to do it in October would they do it at Bernanke’s last ever meeting? The mind does wonder. So let’s sum up: Is a gov’t shutdown a good enough reason to sell stocks? Sure, for 1 or 2 days. Is it a good enough reason to reweight your entire portfolio and put it into cash? No. Was Walter White one of the best TV characters of all-time? Yes. Should you make crazy investment decisions if you are backed into a corner like he was? No.

After the open it was thin…thin like a supermodel coming off food poisoning (I guess that’s pretty thin). I haven’t seen a first hour like that in a LONG time; it felt like 5 people were trading the market. Stocks with $1 wide bid/offers and 500 shares traded, just a total strike. Chicago PMI beat but that fact was totally ignored. Hey Washington, nothing like making a great economic data point worthless, congrats on crushing the market! Why not start up a hedge fund, you guys have a knack for this short thing! We rallied off the lows as word came out Republicans were set to meet in the afternoon and by lunch we sat on 1,682, down 50bps. Not bad, overnight saw the market drop 1% so at least the morning wasn’t a total disaster. Couple winners of note: ISRG +2.3% and CMG +2.2%. CMG you say? Premium burritos? I coulda swore my boy Gundlach said it was a short and everyone thought Taco Bell was going to crush them under a Dorito shell piñata.


The afternoon saw us trade sideways as we watched the clowns in Washington do their thing. House: how about a CR where Obama has to sign up for Obamacare? Senate: try again. House: How about a CR where the medical device tax is repealed? Senate: try again. House: How about a CR where we put Iron Man in charge of the military? Senate: hmmm. (how awesome is RDJ? I love that guy). Back and forth they went and eventually we slid back to the lows, 1681, where we closed. Notable losers: FTR, JCP, IRM, CLF, and JCI. So what now? Where is this thing going? Well I’ll tell you, now we get to ignore every single piece of economic data, market commentary, and company report while we wait breathlessly for an American politician to say something meaningful. Sounds fun huh? Well it’s not, so let’s hope this is over soon. What an embarrassing way to end the 3rd Quarter.

Final Score: Dow -84bps, S&P500 -60bps, Nasdaq -37bps, Rus2k -4bps.


News Highlights:

We’ll end tonight with another crazy wingsuit video. Take a look at what Jeb Corliss calls “the hardest thing he’s ever done in his life” And this from a guy who flies 10 feet about the ground….

Have a good night.