Latest / Markets with Megan: A Quick Financial Markets Update / Jobs Data, Fed Decisions, and Life After the Shutdown | S2 E094

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Jobs Data, Fed Decisions, and Life After the Shutdown | S2 E094 · Markets with Megan: A Quick Financial Markets Update

• 0:00
  Megan Horneman: The US government shutdown is finally over, and what does that mean for not only the equity markets but also the economy?
• 0:07
  Megan Horneman: It's Tuesday, November the 18th, and this is Markets with Megan.
• 0:11
  Megan Horneman: If you like this podcast, please subscribe.
• 0:13
  Megan Horneman: You can hit the alarm bell.
• 0:14
  Megan Horneman: Also, always share it with any friends, family, or colleagues that you think might be interested on those regular market updates when it comes to the economy, economic data, what does it mean for your investment portfolios?
• 0:28
  Megan Horneman: Let's dig right in today to our topic, which is the government has finally ended the longest shutdown in history.
• 0:34
  Megan Horneman: And what does that mean now as we go forward?
• 0:37
  Megan Horneman: Well, first of all, let's just look back at history.
• 0:39
  Megan Horneman: There's been four other government shutdowns that have been nowhere near where we were in the recent shutdown, but more than 15 days.
• 0:48
  Megan Horneman: We tried to look at something that was the closest in in length.
• 0:51
  Megan Horneman: And let's look at those four that were more than 15 days in length.
• 0:55
  Megan Horneman: What we saw for the dollar, for example, is that the dollar typically does decline on average about 1%, but it goes on to rise more than that, almost 2% when the government does reopen.
• 1:07
  Megan Horneman: When you look at the SP 500, that doesn't really seem to get too much of a movement when it comes to the dysfunction out of DC.
• 1:16
  Megan Horneman: You actually see the SP on average rise about 1%.
• 1:19
  Megan Horneman: It does go back to rise about 4%, though, when the government does reopen.
• 1:25
  Megan Horneman: Now let's look at the recent shutdown.
• 1:27
  Megan Horneman: The SP was up about 2%.
• 1:28
  Megan Horneman: So maybe we were borrowing a little bit of returns from the aftermath of the government reopening.
• 1:35
  Megan Horneman: From an economic perspective, it's a very mixed picture and not a clear one because typically shutdowns don't last a full economic quarter.
• 1:43
  Megan Horneman: So what we've what we did see is though any any pullback in personal spending or personal consumption that occurs during the pay during the shutdown tends to give it back in when the government reopens.
• 1:56
  Megan Horneman: And that may have a little bit to do with the fact that government workers there are not paid during the shutdown, but then paid that back pay when the the economy does reopen.
• 2:05
  Megan Horneman: What we expect now is the markets are going to focus on when and what economic data are we going to receive.
• 2:13
  Megan Horneman: We are set to get the September jobs report this Thursday, the 20th.
• 2:18
  Megan Horneman: So markets will be focused on that.
• 2:20
  Megan Horneman: But then what does it mean for the Federal Reserve?
• 2:22
  Megan Horneman: The Fed has a meeting in December.
• 2:24
  Megan Horneman: Coming into the shutdown, the expectation for a rate cut were about 100% of a probability.
• 2:31
  Megan Horneman: That's fallen all the way down to 40%.
• 2:33
  Megan Horneman: And that's because of the private data that we've seen during this shutdown has been mixed.
• 2:39
  Megan Horneman: You've had a labor market that's weakening but not really collapsing.
• 2:43
  Megan Horneman: And then you have some pressure on inflation.
• 2:46
  Megan Horneman: So this may cause the Fed to actually stay on hold.
• 2:50
  Megan Horneman: We actually think the Fed probably should stay on hold, barring any major collapse in the data we get this week, because there is time.
• 2:57
  Megan Horneman: They can wait one month and assess the economic data.
• 3:02
  Megan Horneman: There's going to be a while that we're catching up.
• 3:04
  Megan Horneman: And as I mentioned, we don't know exactly what and if all of the economic data that we will see that we that was supposed to take place during that shutdown.
• 3:14
  Megan Horneman: That's all we have.
• 3:15
  Megan Horneman: If you have any questions or you want a fit a further history of our um podcast, you can go to marketswithmegan.fm.
• 3:21
  Megan Horneman: Thank you.