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Is This Time Different? The Shutdown, The Honey Badger Market, And Everyday Americans

But you know, it's like Lincoln said, this is government "of the people, by the people, and fuck the people."

Ok look, “honey badger don’t care” seems to be the narrative for markets when it comes to the U.S. government shutdown.

And that’s only fitting, because “honey badger don’t care” is generally how the market has approached every, single geopolitical hurdle we’ve encountered since Brexit.


To a certain extent, this is emblematic of the dissensus-driven vol. selling regime, the noisy status quo, and the BTFD mentality instilled by central banks which now runs on autopilot.


That said, what we’re seeing in D.C. is disconcerting, especially in light of the fact that the situation seems to be more contentious than usual this time around thanks in no small part to a certain “very stable genius” and, perhaps more to the point, his advisers (we’re looking at you, Stephen Miller).

Here’s how Bloomberg’s Richard Breslow put it last week:

So how are markets reacting? With remarkable oblivion. After all, we’ve been trained to believe that geopolitical turmoil is merely an opportunity to get ahead of the next round of central bank asset buying. At some point, investors may indeed learn that utter dysfunction in the world’s hegemonic superpower has consequences not easily swept under the carpet of positive carry.

Indeed. But shutdowns haven’t generally resulted in too much market turmoil over the years so if you’re the type who likes simplistic narratives, you could simply say: “this hasn’t generally mattered for markets before, so why should it matter now?”

Here’s a handy table from BofAML:


There are some caveats here. Here’s BofAML describing why this time is at least a little bit different:

There have been 12 government shutdowns since the early 1980s with the shortest lasting 1 day and the longest 21 days (Table 2). These shutdowns have occurred under a split government, meaning that the two parties controlled at least one chamber of Congress or the White House. The current shutdown is unique since the Congress and White House are controlled by the Republicans. More than half of all government shutdowns ended within 3 days but the last 3 shutdowns have averaged over 14 days. If recent history is any guide, we could see a resolution within a few weeks. However, the unprecedented nature of the current shutdown (i.e. one party control) and polarization of the two political parties makes it difficult to handicap when a resolution will materialize.


Now recall what we said on Sunday evening in our weekly preview:

Objectively speaking (and we don’t often speak objectively about Trump) this was a poor political gamble for the President. Americans have come to expect ineptitude from lawmakers and approval ratings reflect how low the bar truly is. From a reputational perspective, Congress really doesn’t have much to lose here.

BofAML says something similar although obviously, they’re politically neutral in how they express it:

The approval polls have already been harsh on Washington. Even before the shutdown, only 1 in 5 Americans approve of the job that Congress has done and there is a historically low approval rating for President Trump. According to Gallup, when asked about the most important problem facing the country, 25% of Americans report it is due to a dysfunctional government (even before the shutdown). This only threatens to head higher – back in October 2013, this was as high as 33%.

We would once again reiterate that this was a poor gamble for Trump. While his approval rating is pitifully low, it’s still markedly higher than that for Congress. He’s got far more to lose here.

Of course the real “losers” from this don’t include Trump, or McConnell, or Schumer, or America’s reasonably well-to-do investor class.

Rather, the “losers” are everyday Americans whose faith in their elected officials’ capacity and willingness to govern has now eroded even further.

But you know, it’s like Lincoln said, this is government “of the people, by the people, and fuck the people.”




7 comments on “Is This Time Different? The Shutdown, The Honey Badger Market, And Everyday Americans

  1. But you know, it’s like Lincoln said, this is government “of the people, by the people, and fuck the people.”

    and the people won’t wake up until it’s too late.
    so so sad what it happening to the usa and how true the statement.

    have you all noticed how much hatred towards the .gov, .fed has been lately? almost scary.
    sad state of affairs for all.

  2. You have to wonder how long it will take the current batch of faux democracy US voters in both our so called ‘two party political system’ to figure out the country runs just as well – if not better – without the current gov. not being paid to run it. Clearly, it’s true regarding our do nothing Congress and President.

    Trump himself doesn’t care whether the US gov. pays him or not, because he has so many side revenues influence streams coming in from foreign govs. – Trump’s Pres. salary is just pocket change for him. Keeps him in Big Macs and diet cokes. Perhaps a golden shower when he is in Mar-a-Lago. I suspect he hasn’t slept this well for at least a year. You know considering that none of those pesky FBI and other agencies are getting their paychecks. Suits old Donny boy, just fine.

    Some claim Churchill said: “Many forms of Government have been tried, and will be tried in this world of sin and woe. No one pretends that democracy is perfect or all-wise. Indeed it has been said that democracy is the worst form of Government – except for all those other forms that have been tried from time to time.” Some also claim he said “The best argument against democracy is a five-minute conversation with the average voter.”

    Regardless of whom might have said these frequently quoted insights, the the take away should be that the central problem with democracy is the lack of qualified voters. While we may all have been created equally in scope of the law and justice, the overwhelming scientific fact is that we were all created very differently – with a huge variety of individual abilities and deficits of those abilities. We don’t let drivers on the road without a basic test of the knowledge of the rules of the road and their eyesight. We shouldn’t let voters vote without similar basic tests of their ability to make logical decisions based on the law and the candidates proven abilities.

    If the US wants to have a real democracy – it is going to have pre-qualify voters with regard to their knowledge of issues, candidate’s resumes and their historic positions and actions on the respective issues. It’s also going to have specific ability qualifications for elected office which would include related experience in elected office (except at very low levels), basic management training, basic knowledge of the Constitution, Bill or Rights, basic accounting and economics. Trump would not qualify due to his lack of knowledge of the Constitution and the nations laws. For higher office our qualifications should be no less than we would expect for any major CEO position – experience, knowledge of the business and the skills motivate those people under him. Again, Trump fails on the last one.

    • Dugger, I half agree with your thoughts on this subject. I like the half that requires candidates to be “qualified” through some system that would certify the truths from the bullshit, the real accomplishments or awards from the lies of achievements only in their own eyes (!), exposure of last five years minimum tax returns, signed agreements if elected to detach from personal businesses and income and nullify election if they do not, physical and mental exams, business failures i.e. bankruptcies, credit reports, written protests from potential voters who can certify the candidate should not be allowed for a specific reason; and other such ideas to control the quality and honesty of the person we are willing to put in the Oval Office. Setting up a Qualification Panel would require a bit of government knowledge, business success, HR experience, Health background, a little bit of many pieces, maybe a panel of a dozen up to twenty!

      The voters in this America will always be the entire scale of really smart to really dumb and they all live in America and should have the right to vote. The chance of electing a person like trump again would be considerably diminished by controlling the candidacy qualifications. We should not have a test that would disqualify any American from having a vote. Exceptions could be placed on institutionally insane folks, bless them. After all, using your thoughts about driver’s license test, there are millions on the road we all see every day and wonder how thy hell they got that license 🙂

      • Lots of ‘dumb’ out there, and a lot of them vote and we’re looking at the result over the past weekend. Still FOMO has a lot of them buying into the market as it spirals higher and higher. Thanks for that, since every time I sell some equity, someone has to be there to buy it from me. r.

        • at least seedy presidential campaign contestants will be of higher quality so less chance of repeating this past year (I pray) and leaving the dumb to lead their lives otherwise and how they are treated or used would be up to you and others — keep in mind as you sell to them, Karma is a Bitch.

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