End of the Quarter or End of the World?

tfmckeon's picture

Will the government shutdown be a catalyst for a sharp September selloff or just another non-event?

Yesterday marked the close of the third quarter of 2013.  With the federal budget hanging in the balance over the struggle to raise (or not) the debt ceiling and the full onset of the Affordable Care Act just one day away, some see the date as the end of the world. Some see it as a welcome opportunity to acquire health insurance coverage previously unavailable or too expensive. 

The U.S. has survived and thrived with the introduction of Social Security, Medicare, Medicaid and other important social programs and legislation. It will survive the introduction of the Affordable Care Act as well. 

What is less certain is how the nation, economy and capital markets will be impacted by a protracted government shutdown, as millions of paychecks vanish and critical functions cease. And what can make any rational citizen’s blood boil is that this is a completely manufactured situation, the result of petulant legislators and their irresponsible brinksmanship. 

All we know for sure is that the markets will fluctuate (they certainly did in September) and that investors will react to information about both the federal government “shut-down” and the roll-out of ACA so as to maximize their opportunities or limit their exposures.  

We don’t know if either drama is good for the country but we do know that the markets will adjust.  How, exactly, will soon be on display.