The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Beginning of the end
The stories of shutdown negotiations over the weekend inspired risk-on in overseas markets and our futures markets. The S&P opened about +70 points and the market took back half those gains going into lunch. Risk-on returned in the afternoon and we exceeded the morning’s highs by 1 PM and broke over +100 in the final 90 minutes. Moods are much improved across markets.
It’s now assumed that the shutdown will end in a matter of days and markets don’t seem concerned with the details of the agreement, as long as there *is* an agreement. Economic data should publish within a few days of government reopening so we’ll get a flood of old data that should jostle markets substantially.
Consensus is that the economic data won’t show significant surprises. Consensus is that the economy has been tracking just as before. Obviously there’s significant risk if signs of labor market weakness or inflation show up. We will just have to see how the economy has been doing as well as how investors react.
It’s probable that if the data reveals what’s expected, the bulls will continue to run. Investors want to continue the bull market into year-end and they don’t need awesome data to do that. They just need signs that we’re not heading towards recession and that we’re not experiencing increasing inflation.
Let’s see what happens. The ball is in D.C.’s court. They’ve telegraphed that they’re ready to reopen the government. Markets are endorsing it. Time to do it.
See you tomorrow.
-Mike
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