After a meeting between President Trump and Democrat leadership on Monday failed to make any progress towards a deal to keep the federal government, market focus is the likely government shutdown tonight starting at 12:01am ET.
A shutdown will trigger Trump threatened mass firings (“we are going to cut a lot of the people that… we’re able to cut on a permanent basis”), airport chaos (TSA agents are forced to work without pay), national parks closures, IRS help desk closure, and a stop to publishing Federal economic data which the Federal Reserve and Wall Street use to assess the state of the US economy.
The Bureau of Labor Statistics (BLS) laid out their closure contingency plan. The BLS will cease operations and their workforce of 2,055 will drop to one full-time employee. Markets are anxious for this Friday’s September jobs report. A contingency plan for the Department of Commerce which publishes the quarterly GDP numbers and the Personal Consumption Expenditures (PCE) index has not been released yet.
The longer the stoppage goes on, the greater the future economic data could be impacted. Senate deliberations are ongoing, and the Senate has a last-minute vote tentatively scheduled for today.
President Trump announced new tariffs on Monday night, 10% on softwood timber and lumber and a 25% tariff on “certain upholstered wooden products” which will take effect on October 14. Trump says the furniture-making business in North Carolina has been “completely lost” to China and other countries.
Homebuilders warned that these lumber tariffs could deter investments in new homes and renovations. Canada will be hit hard by the new tariffs as the largest US wood supplier. Canada is already subject to 35.2% US tariffs.
Trump also announced he would impose 100% tariffs on foreign films, posting “Our movie making business has been stolen…”
Visa (V) said they will start testing using stablecoins instead of pre-depositing cash in local accounts as a way for businesses to fund international payments. Businesses are being emboldened to use stable coins after the US passed the Genius Act which set clear rules for stablecoin issuers. Visa’s move could make cross-border transactions faster and unlock cash businesses would otherwise have locked up in multiple currencies worldwide.
Corporate earnings include Paychex (PAYX) premarket and Nike (NIKE) after the bell.
The economic calendar focus is JOLTS Job Opening and CB Consumer Confidence @ 10:00am ET. Other data includes HPI and S&P/CS Composite-20 HPI @ 9:00am ET, and Chicago PMI @ 9:45am ET.
Fed speakers include Boston’s Susan Collins @ 9:00am ET and Chicago’s Austan Goolsbee @ 1:30pm ET.
Volatility ticked down on Monday and remains moderate. The ES 5-day average daily range is 55.25 points.
Whale bias is bullish into the US session open on significant overnight large trader volume.
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