I saw the headlines last night – The US Government Shuts Down. I went to bed, slept well, and then got up this morning to find the sky still in place. Surprisingly (or not), the market opened in the green quite strongly. Is it that the market sees the government shutdown for what it is, the result of petulant ideologues willing to risk harm to the country who, in the end, will not have advanced anything other than the notion they are dangerous.
For now, the market seems to care little for the buffoonery, but will that last? It depends on how long the children throw their tantrum. In 1996, the government shut down for 17 days, more or less. The market did just fine after that, and I suspect it will do just fine after this latest idiocy.
- Most financial advisers and institutional investors interviewed by Reuters on Monday are telling clients to hang tight – for now. Only a minority are putting clients on red alert and jumping into cash or other safe-haven assets.
Two months from now, after the children are put to bed for their misbehavior on the budget and the debt ceiling (those theatrics are coming soon), the market will look much different than it does today.
- The Chicago Purchasing Managers Index (PMI) for September rose to a reading of 55.7, which was above the consensus expectations for a reading of 53.8, and higher than last month’s reading of 53.0.
- The ISM (Institute of Supply Management) Manufacturing index shows that the manufacturing sector of the U.S. economy continued to improve in September.
The US economy is still moving forward, as is the global economy. Nobody likes where we are at, especially the folks who run the economic world. Perception and sentiment are big drivers of money allocation. Money moves when folks believe it will make more money wherever it is going. Retailers believe that the fall and winter shopping seasons will be good, so they are broadcasting that message to manufacturers.
- Japanese manufacturers’ sentiment improved sharply in the three months to September to a near six-year high, a closely-watched central bank survey showed.
- Service-sector sentiment also brightened slightly and big companies plan to increase capital spending, a sign robust personal consumption and a pickup in exports are solidifying a recovery in the world’s third-largest economy.
Hang in there folks. Keep your money working. Buy the low spots, sell when a bit higher, or hold on for the longer term. However you choose to make your money work, do it. Don’t be afraid of the future. All this noise right now will end, peace will come, and the market will settle into a long, slow run uphill.
- Auto sales in the U.S. are expected to post the first year-over-year decline in 28 months, but the industry is far from panicked. A calendar quirk had the Labor Day weekend included in sales tallies for August and September will have two fewer selling days than a year ago. Kelley Blue Book projects a seasonal adjusted selling rate of 15.2M units for the month.
- A far better tell on the direction of U.S. auto sales is the steady stream of reports of vehicle shortages due to hot demand.
Yup, that is the mid- and longer-term view for the market – hot demand. Keep that in mind.
Trade in the day; Invest in your life …
