Government Shutdown, on Trump’s 100th Day

The final nail in the Trump rally coffin could come on Friday, April 28th.

And once again, our fate is in the hands of the Federal Government.

It’s an unfortunate situation for America. But as an informed investor, I want to give you the tools to thrive, no matter what happens in Washington…

It’s that time of year again, when Congress waits until the last possible minute to pass a spending bill to fund the Federal government. And April 28th marks the final day for Congress to get this done.

If no agreement is made, April 29th would be more notable for the first day of a government shutdown, than a strong bookend to Trump’s first 100 days in office.

On the surface, a government shutdown means a few things: millions of government workers could be sent home without pay, the Small Business Administration and FHA would stop loaning money, and some subsidy checks would stop flowing to specific sectors.

When added up, a government shutdown is expected to cost the American people over $1 billion a day in wages and production, all while Congress still collects their $174,000 salaries.

But that’s not what Wall Street cares about. To Wall Street, a government shutdown has much greater consequences than $1 billion a day — which to them is just a drop in the bucket…

To them, this issue is more about political dysfunction, and the future of the Trump rally.

Over the past 6 months, Trump has brought a sense of optimism to the economy that hasn’t been seen in recent administrations. His Make America Great Again message has promised lower taxes, less regulations, and more jobs — all favorable to the economy.

And so far it’s worked… for Wall Street. Investors have shown support for this agenda by since piling into the stock market. Since Trump’s election, the Dow is up a whopping 13%, thanks in most part to this positive economic outlook.

But as of today, Trump’s 96th day in office, none of these promises have come to fruition. And investors are starting to worry that some of these promises may never get done — or even not to the extent that was originally promised.

Think about that. The Trump rally is essentially a massive bet that the gridlock gripping Washington will finally break. But the recent inability to produce concrete results is putting tax reform, deregulation, and repatriation all in jeopardy.

The March health care debacle is much to blame.

Republicans were unable to rally together in order to pass a viable replacement for ObamaCare, which has severely brought into question the ability of Republicans to pass laws. After all, they do control the Senate, House of Representatives, and White House…

The Trump administration needs a win, and avoiding a government shutdown is their next opportunity.

As an investor, I want you to be prepared no matter which way Congress goes. This is why I’m laying out both scenarios — either the bill passes and the government continues as is (believe it or not, that’s the good scenario), or a spending bill is not passed and the government is forced to shut down.

Spending Bill Passes– The Republican led Congress saves us from a government shutdown and proves their ability to effectively pass laws. This clears the way for Trump’s lower tax and deregulation agenda to get underway, which is good news for the Tump rally.

Government Shutdown– The government fails to pass a spending bill, which causes Wall Street to lose faith in this government — hammering the final nail into the Trump rally coffin. In this scenario, tax and regulation reform seem more unlikely, which could signal the end of the Trump rally.

We’ll have to wait and see how this all unfolds between now and Friday. However, it’s important to note that we’re at a critical point here for the overall market. And we’ll want to keep a keen eye on price action in the following week. This could set the tone for the markets for the rest of 2017.

As the situation evolves, I’ll be sure to bring you more opportunities to capitalize on the Trump rally’s new direction.

Here’s to growing and protecting your wealth!

Zach Scheidt

Zach Scheidt
Editor, The Daily Edge
EdgeFeedback@AgoraFinancial.com

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