Will Shutdown Risk End This Year’s Equity Sector Rallies?

The economic repercussions have been limited so far, but if the shutdown drags on it’s likely that the headwinds will build and help strengthen the slowdown that was already underway in late-2018.

Unfortunately, there are still no signs that a political solution to the shutdown is near and so analysts are factoring in the potential for trouble.

“You can take the ruler out right now and calculate the exact impact from missed paychecks and contracts and you don’t have to go many months to get to zero growth,” advises Torsten Slok, chief international economist at Deutsche Bank. “But this is not just some linear event. It can get exponentially worse in very unpredictable ways, from government workers quitting, to strikes, to companies not going public. It’s no longer just a political sideshow, it’s a real recession risk.”

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Beating Buffett 10 months ago Member's comment

Yes, I believe it will do just that.