Tuesday, 1 October 2013

Will the market ignore a Government shutdown?

Dear Friends,

Judging by the reaction of the market, it does seem like a shutdown will not cause the market to collapse. By mid noon local time today, the US government has not come to a consensus.

Article in marketwatch states this is the first shutdown since 1996:
http://www.marketwatch.com/story/us-government-begins-partial-shutdown-2013-10-01-0103166

The word used to mute the market is that this is only a "PARTIAL" shutdown. Ha, the word used seems to try to suggest it is not that severe. This is obviously an act by the government to lessen the impact. It seems they are also scared of the backlash from the stock market.

To me a shutdown is a shutdown. The good thing is the market seems to have accepted the fact.

Europe is in the green now. Asia isn't panicking today. Shanghai composite, Nikkei, STI are all in the green. US's Dow futures and S&P500 futures are in the green too!

If you are worried about the shutdown impact, perhaps you might rethink. The market has perhaps price in the shutdown. So what with the shutdown? We all know it will not cause US economy to collapse. We all know that soon there will be an agreement reached.

Perhaps, our eyes need to shift to the other dateline 17th October - the debt ceiling dateline now? Don't be surprised that tonight the DOW will end in the green amid the shutdown! This impact on the stock market may have been over, and perhaps even sooner than what you think.

Regards
Daniel
www.danielloh.com

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