What’s On Our Minds:

The federal government will enter its third day under a partial shutdown on Monday after the Senate failed to break an impasse on Sunday.  On Monday, roughly 800,000 federal workers woke up locked out of their jobs.  This turmoil in D.C. has investors wondering what may happen to the stock market if this political stalemate persists over a long period.

While this post is not meant to predict what may happen during this shutdown period and past performance is not indicative of future results, historically, stocks have traditionally shrugged off the pessimism brought on by previous government shutdowns.

The partisan tug-of-war currently occurring in Washington is without a doubt disconcerting, but we continue to remind our clients and friends that there is no need to panic.  In the past, government shutdowns have been fleeting events that have left no economic scars.  All in all, volatility may tend to increase around these events, however, historically, shutdowns have had little lasting impact on markets. Remember, stock prices are almost random over short periods of time and it is important to focus on the long-term prospects of your portfolio.

Source: LPL Financial

Last Week’s Highlights:

The stock market didn’t miss a beat last week.  It was an abbreviated week of trading due to the MLK holiday on Monday but market indices charged higher. Both the S&P 500 and the Dow Jones are up by more than 5% this year after just 14 days of trading.  Overall, there was giddy optimism among investors as corporations are still counting all the extra cash on hand that the reduced tax rate will make available to them.

Looking Ahead:

79 companies from the S&P 500 will report their 4^th quarter earnings this week.  There will also be some important economic metrics released – existing home sales will be released on Wednesday, the Leading Economic Index will be reported on Thursday, and GDP from last year’s 4th quarter will be released on Friday.