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Government shutdown: Reasonable expectations

I speculate a few reasonable expectations that we should have regarding the shutdown. First, I think that next week futures market for the S&S and Dow will give us great insight into what we should expect. If for example, the markets remain bullish, we can assume that the storm will clear soon. This assumption, however, lacks the money market indicator [riskfree rate & 10-year treasuries] of the capital markets, i.e., action in the bond market. I think that being cautious of the fact that foreign capital flows are expected to increase as expectations of deficit spending rise which will make the markets appear as though they are on an uptrend.

If the markets start to form a downtrend, the bond prices rise we should be fair in assuming that investors are not anticipating the government to open anytime soon. The rise in the Vix and increase in spreads of options should be another indicator of what people are thinking and expecting.

This information is purely speculative, I do not advise or recommend this as advice to anyone and do not take responsibility for any losses or damage.

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