Latest / Markets with Megan: A Quick Financial Markets Update / Shutdown Showdown in DC: Now What? | S2 E085 | 10-01-25

Transcript

Shutdown Showdown in DC: Now What? | S2 E085 | 10-01-25 · Markets with Megan: A Quick Financial Markets Update

• 0:00
  MeganHorneman: We're in day one of the government shutdown, and this is a special impact report for Markets with Megan.
• 0:06
  MeganHorneman: If you like this podcast, you can subscribe, hit that alarm bell, share it with friends, family, or colleagues.
• 0:12
  MeganHorneman: But we wanted to come to you today to discuss the government shutdown that began at 12.01 today.
• 0:19
  MeganHorneman: And first of all, we want to start by sympathizing with the many families that are sitting in a very uncertain territory right now.
• 0:27
  MeganHorneman: The furloughs, the working without pay, and then the threats back and forth of potential firings can be very unnerving for Americans.
• 0:35
  MeganHorneman: So we want to start by giving our sympathy there.
• 0:38
  MeganHorneman: But this podcast is about markets and it's about investing.
• 0:41
  MeganHorneman: So we're going to focus on what that government shutdown means for investors.
• 0:46
  MeganHorneman: And unfortunately, this is not uncharted territory.
• 0:49
  MeganHorneman: We've had about 20 different government shutdowns if you go back to night into the 1970s.
• 0:55
  MeganHorneman: This is the time of year when we have to pass continuing resolutions to keep the government funded.
• 1:00
  MeganHorneman: And this is where both parties, this is this has gone across both parties throughout history, try and hold up to get what they want in this, especially since next year is a midterm election.
• 1:13
  MeganHorneman: So let's focus on what we've seen historically from government shutdowns.
• 1:17
  MeganHorneman: The last government shutdown that we had was in 2018.
• 1:21
  MeganHorneman: So it may seem scary right now, but it because it has been a while since we've had one.
• 1:26
  MeganHorneman: But there have, like we said, almost 20 of them that we've seen since the 1970s.
• 1:30
  MeganHorneman: And on average, they last about nine days.
• 1:34
  MeganHorneman: There have been longer ones, there's been much shorter ones.
• 1:37
  MeganHorneman: But on average, a government shutdown lasts about nine days.
• 1:40
  MeganHorneman: When you look at the market performance during these government shutdowns, there's really not much of an impact.
• 1:47
  MeganHorneman: We don't want to disregard that this time, maybe this time will be different, but we can look at history to say that investors look through the short-term disruption from a media standpoint, because as we said, these typically last on average nine days.
• 2:03
  MeganHorneman: So the US dollar does tend to weaken a bit if um when the when the government does shut down.
• 2:09
  MeganHorneman: It weakens more if the shutdown's five days or longer, it falls about 0.5%.
• 2:14
  MeganHorneman: It's relatively flat if it's a short, short shutdown under five days.
• 2:19
  MeganHorneman: The SP 500, if it's a longer shutdown above those five days, it tends to decline about 0.7%.
• 2:25
  MeganHorneman: And again, it's also relatively flat when you look at it at the shorter term time frames.
• 2:32
  MeganHorneman: You do tend to see consumer confidence actually it can be weak in the three months before a shutdown, but gets better after the shutdown.
• 2:42
  MeganHorneman: And the one thing that we can show as well is that the markets are higher in the one month after the government um shutdown ends.
• 2:50
  MeganHorneman: They most investors tend to see if there's weakness here, that it's a potential buying opportunity.
• 2:55
  MeganHorneman: Because in the end, the government eventually does come together and get the government reopened.
• 3:01
  MeganHorneman: So at this time, we're not making any changes to portfolios.
• 3:05
  MeganHorneman: We're not getting concerned about this for the long run.
• 3:08
  MeganHorneman: Um, we have that cash in portfolios.
• 3:11
  MeganHorneman: If there is some sort of a market pullback, that we should go ahead and add some exposure because we're long-term investors.
• 3:18
  MeganHorneman: And long-term investors try and drown out some of the political noise because political cycles and political terms, especially presidency and even from a congressional standpoint, tend to be much shorter than when you look at the long-term investing cycle.
• 3:34
  MeganHorneman: Now, the one thing from our perspective that that impacts this podcast is as long as the government shut down, we won't have that daily economic data to give you.
• 3:43
  MeganHorneman: But we weren't, we won't be gone.
• 3:45
  MeganHorneman: Um, we're gonna still come back.
• 3:46
  MeganHorneman: We're gonna maybe come with a question of the day from investors, and it can span from anything from the shutdown to the Federal Reserve to the economy to the dollar.
• 3:55
  MeganHorneman: But we'll come back and we'll give you regular podcasts so that we make sure that you're aware of what's going on on a regular basis and if there's any changes you should be looking at for your portfolios.
• 4:06
  MeganHorneman: That's all we have today.
• 4:07
  MeganHorneman: Thank you.
• 4:08
  MeganHorneman: And if you want a history of our podcast, you can go to marketswithmegan.fm.