This Monday, we are faced with another week of Federal Government shutdown.
The political impasse in Washington, D.C. appears to be as intractable as ever. Last week the U.S. stock market actually held up pretty well. However, the longer this dysfunction goes on the more wearing it is on investors and the market.
It’s impossible to forecast the outcome. It is a reasonable expectation that there will be some sort of resolution. It’s just ugly getting there. Because of this most investors are holding tight. Over-reaction can be expensive as it may be difficult to buy back in at levels one may sell at if a resolution comes in sight.
Obviously, things can go terribly wrong; that is a possibility, but not most likely. We are watching events closely. So far we are with the majority, we believe that an 11th hour resolution will be found. One silver lining to this condition is that the Federal Reserve will continue easy money policies through this period in an effort to cushion the negative effects on the economic recovery.