Jim Cramer was on CNBC this morning clarifying that the trade is always to buy the US government shutdown and sell the market. He noted the history and it is not impossible.
I have written the same thing a hundred times over the years.
Here's why this time could be an exception:
The sale is not just about the closing. This closure will be resolved like everything else and could be as soon as today. It might drag on and the market goes out more, I don't know but I know it will be sorted and it won't be as bad as the market fears.
But the question that should be seriously considered is: Is this Congress going to be run by DOGE? With the deficit hawks? With the Tea Party?
The bottom line for me and most market participants is that Trump's priority is the stock market, not the deficit:
You could even argue that this week's developments reinforce that as it aims to eliminate the debt ceiling entirely.
But I'm not sure if that's Elon Musk's priority and he's bullying the GOP through threatening primaries. A large part of US growth in the past two years was running 7% deficits while much of the world was scaling back post-covid spending.
The danger here is that we get a kind of hawkish conference, or at least a few true believers who hold it all up. With the way Congress was made, it won't take many votes as long as the Democrats stay united.
Now what am I thinking?
Congress is going to pass a corporate tax cut, to hell with the deficit. But until this week, I think that was 95% priced in and there are risks.
