For most of us, life will largely go on as usual. Approximately two-thirds of government workers deemed “essential” will continue to come to work, without pay, and “non-essential” employees will take a half day today to prepare for their furlough. If this shutdown persists for longer than a couple days, history suggests a negative and varied impact on the market as illustrated below, largely dependent upon the length of the shutdown.
Our outlook for the investment markets has not changed. We believe a government shutdown and the accompanying rhetoric is likely to be a catalyst for volatility, particularly with the debt ceiling debate right around the corner. Both these issues are likely to be resolved shortly for while there is precedent for the government closing down, there is none for a U.S. debt default and we believe even the most polarized politicians in Congress will want to avoid that scenario.
As we continue to seek and evaluate high quality companies that are leaders in secular growth industries, broader weakness in the stock market may prove to be an opportunity to make additional investments. We are confident that our overall positioning, including allocations within fixed income and gold in particular, will mitigate risks in our client portfolios if we do face a period of weakness in the stock market.
As always, we welcome client feedback and communication so please reach out to us if you have any questions about how your portfolio is currently positioned.