The Record Nobody Wanted
The partial government shutdown has now lasted longer than any shutdown on record. (The previous record was 21 days in 1995-96). You can watch Fox News to find out why it’s Chuck and Nancy’s fault, or MSNBC and CNN to find out why it’s Trump’s fault. Considering how committed both sides are to their respective positions, it’s a little bit like Bill Murray’s old SNL bit, “Quien es mas macho?”
• Does it affect you? HuffPost, along with YouGov, did an extensive (and very interesting) survey about the shutdown, including who’s responsible, who’s playing politics, and whether one side or the other should compromise to settle it. (Results here: https://big.assets.huffingtonpost.com/athena/files/2019/01/14/5c3c0cb4e4b0e0baf53ea2c4.pdf) But we found two features quite striking. One, 24% of those surveyed say they are “personally affected” by the shutdown. 47% say they are not and the about 30% say they’re not sure. When that number increases, public pressure will as well. The second striking finding was how many American describe the shutdown as “somewhat serious” (25%) or “very serious” (50%). That’s 75% -- and it’s going up fast. Politicians may be playing with fire.
• Why it matters to investors: What we’re watching is whether Wall Street cares yet. So far, it’s not registering, with more attention focused on weak economic numbers coming out of China. But Seth Hanlon, from Center for American Progress, gave an estimate on CNBC that every two weeks lose a tenth of a percentage point on GDP. By Friday the shutdown will reach four weeks.
• Uncertain outlook: All the uncertainty about a variety of events—the partial government shutdown, the trade standoff with China, and the possibility of presidential impeachment, to name but three—Abby Joseph Cohen says market caution is warranted. At a conference in Philadelphia late last week, Cohen, an advisor to Goldman Sachs and formerly its Chief Investment Strategist, stressed that markets are not priced for what could unfold. Another participant tells WBP that one result of all this could be a widening of corporate bond spreads and a reduction of investment and consumption – pointing to the recent inversion of the yield curve, a traditional harbinger of recession.
• Yahoo Finance took a look at the best stocks to own during a government shutdown.
• Risky gambit? There were six members of the House who voted against guaranteeing that all federal workers would get full back pay when the shutdown ends. These representatives are all federal workers themselves, getting paid their full salaries. And yes, they say the government needs to keep track of how it spends money, but keep in mind this story was posted on Grit Post (https://gritpost.com/7-republicans-back-pay-workers/?fbclid=IwAR0-VSvdAC7hWe1ojQcY-Li1Ff5xhsHCaiGoDlSmtuQCmKf31Wvm4Pnj1OY), which describes itself as “real news for the working class.” This comes a CNN poll shows Trump's working class approval falling. All of the following are Republicans, who may have their support tested if the shutdown lasts much longer.
Justin Amash (Michigan)
Andy Biggs (Arizona)
Paul Gosar (Arizona)
Glenn Grothman (Wisconsin)
Thomas Massie (Kentucky)
Chip Roy (Texas)
Ted Yoho (Florida)
• The real challenge is this. During the 2016 campaign, it was said that Trump’s critics took him literally but not seriously and his supporters took him seriously but not literally. Right now he’s trying to take a campaign symbol – the wall – and make it literal.
• The “easy” out?: The President declaring a “national emergency.” But as they say, the tangled webs we weave. IF he does that, would it be a dangerous precedent for any president that follows him? Such as a Democratic president declaring a national emergency because of a mass shooting and then ordering a round up all semi-automatic weapons? It’s completely hypothetical, but no doubt Republicans are wary about setting such a precedent. The irony is that the Democrats may prefer this solution because it would end the shutdown and they can challenge everything Trump does in court.
• Prediction #1: We expect a solution before federal employees miss two paychecks. (The second missed paycheck would be due January 25th.)
• Prediction #2: There will be a memorable visual that will force action. It may be protestors outside of the Capitol Building or the White House; it could be long lines at airport security checks (like Atlanta, below); or it could be protestors trying to disrupt Congressional hearings. Whatever it is, no politician will be proud to own it.