Shutdown results

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Last Thursday, the U.S. Government finally ended its 16-day shutdown. The shutdown’s resolution came following Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell reaching an agreement for funding the Government and suspending the debit limit, for the time being. Evidently, the shutdown left U.S. President Obama wounded, but not broken. A Gallup poll on Thursday showed that the negative U.S. citizen sentiment sent approval rates of Obama’s work down to 42%, however, it seems like the real loss was of the Republican Party. 

The party failed to meet its goals of halting the affordable healthcare act, while causing much of a hassle to everyone involved. In an interview to Cincinnati radio station WLW, the Republican speaker John Boehner was quoted saying: “We fought the good fight. We just didn’t win”, as lawmakers readied to pass the historical bill.
The compromise achieved only buys time, as it merely reopens the government until January 15th, and suspends the debt ceiling until Feb 7th. This does seem like a good opportunity to examine intermediate results, but surprisingly, equity markets are generally better off now than they were at the start of the Shutdown. Following the slight equity rally, right after the end of the shutdown, the Nasdaq Composite Index closed Thursday’s trading at around 3,863 points, concluding to a 1.8% increase since the beginning of the Shutdown. The S&P 500 presented an even more impressive 2.8% increase since the beginning of the month, as it rose to an all-time high on Thursday. Crude Oil, on the other hand, did not express the same bullish enthusiasm as the lowered demand due to the Shutdown led its trading to $100.7 a barrel, $1.6 lower than the start of the month.

On a nation-wide scope, the Shutdown definitely left its toll on the U.S. national accounts. JP Morgan has cut the U.S. Q4 GDP forecast to 2% from 2.5% last week, while Morgan Stanley expected that 0.4% will be skimmed off the headline figure. Meanwhile, with the debt ceiling off the table, speculator activity in the U.S. market can return to discuss the Fed’s tapering. 

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