Why this US authorities shutdown is completely different for markets

Jim Cramer was on CNBC this morning highlighting that the commerce is all the time to purchase US authorities shutdowns and market selloffs. He highlighted the historical past and it is unassailable.

I’ve written the identical factor 100 occasions over time.

Right here is why this time could be the exception:

The selloff is not actually concerning the shutdown. This shutdown will get solved like all of the others and it could possibly be as quickly as in the present day. Perhaps it drags on and the market freaks out extra, I do not know however I do know that it’s going to get sorted and will not be as unhealthy because the market fears.

However the query to essentially contemplate is that this: Is that this Congress going to be run by DOGE? By the deficit hawks? By the Tea Social gathering?

The baseline for myself and most market contributors is that Trump’s precedence is the inventory market, not the deficit:

You might even argue that this week’s developments strengthen that as he is aiming to eradicate the debt ceiling altogether.

However I am undecided that is Elon Musk’s precedence and he is bullying the GOP by way of threatening primaries. An enormous a part of US development previously two years was working 7% deficits whereas a lot of the world was bringing down post-covid spending.

The danger right here is that we get some sort of hawkish congress, or no less than a number of true believers that maintain every thing up. Given the composition of Congress, it does not take many votes as long as Democrats keep united.

Now what do I believe?

Congress goes to move a company tax minimize, to hell with the deficit. However till this week, I believe that was 95% priced in and there are dangers.

This text was written by Adam Button at www.ubaidahsan.com.



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