00:00 Speaker A
So, um, shutdown. What are we thinking about the shutdown? Cuz as we've been saying, usually the market does okay through a shutdown. This morning things are down. It seems like this shutdown is causing a little, I mean there are always jitters at the beginning, but this one seems a little unique also.
00:19 Speaker B
Yeah, I mean, listen, you can't ignore the market backdrop, right? As as you and you covered just before, look, the markets are at pretty much all-time highs, tension is high. We have earnings just around the corner. So, I mean it's not so bad that the market's sort of reacting this way. Uh but, you know, historically again, if we look at these, if we look at these shutdowns, looking at the last 10 of them, markets tend to fair pretty well even if they last longer. Now, of course, the last one which was the longest, that had some interesting uh events around it, right? You had the market already tanking, you had the Fed raising rates.
00:54 Speaker A
This was back in December of 2018.
00:55 Speaker B
2018. You had already the Fed raising rates and then last minute shifting. So that kind of affected how the market reacted. But ultimately, even if you look six months out after all of these have ended, we see generally positive results. So you can't ignore that. But there are some differences here too, like the furlos and things like that.
01:17 Speaker A
Right. If they end up making the furlos firings, does that change the equation? Is that enough? I mean, we're we already have concerns about the job market. ADP this morning was pretty lousy.
01:29 Speaker B
Yeah, yeah. Well, it definitely has it will have impacts on the economic numbers, whether it faces the market, that's a whole other question. I think we got a lot of shock and awe earlier this year with doge and layoffs and things like that. So the market may be a little bit sort of hardened to that reality, but these numbers, you cannot ignore these numbers. And uh we have to see how, you know, how they're going to play out and how the Fed is going to respond to that. I mean, clearly the markets are now factoring in uh factoring in more more aggressive fed rate cutting. Uh that should be put some downward pressure on yields, but uh you know, government shutdown should put upward pressure on longer yields, right? Which a lot of people aren't talking about yet. I haven't seen that happen quite yet.
02:18 Speaker A
So we've been talking about what this all means for the Fed because of not and the market for not having certain economic reports, right? We're not going to have the jobs report on Friday likely. If this lasts longer, CPI is due for October 14th, I believe. But around mid October, we also start to get earnings.
02:37 Speaker B
So the market presumably will then just be taking its cues from that.
02:42 Speaker A
Correct.
02:42 Speaker B
I mean, that'll be the ultimate arbiter, as it should be, right? We're we're going to, you know, we get we start with the financials and the financials will hopefully tell an interesting story because they had some great beats last quarter. Uh I think markets are starting to hope for the best, like the whisper numbers are a lot higher than the published numbers. Uh but that could be the real tell-tale about how the rest of the earning season goes. We have maybe two weeks before we start getting those numbers. And that really, I think that's really going to sort of set the pace.
