Down we go again! 

Now traders are focused on what’s going on in Washington as yet another vote to fund the Government has failed and now Congress has 16 hours remaining to do its job. But, of course, they can’t do their job when people who aren’t even in power yet are causing chaos – so here we are. 

There’s another vote this morning but last night’s vote was 174-235 and that’s not even close to the 2/1 majority they need to pass a funding bill, is it? 38 Republicans and pretty much all of the Democrats voted against the Trump-approved bill last night. The new legislation came in at 116 pages, down from the 1,547 pages in the original bill. As with the initial proposal, the bill would have extended government funding until March 14. 

If no bill is passed and signed into law by President Biden by 12:01 a.m. Saturday, the federal government would partially shut down, furloughing hundreds of thousands of federal workers, though critical services would continue to function. The defeat of the bill put the path forward back in limbo. All day, the leaders of different Republican factions filed into Johnson’s office, only to emerge hours later unable or unwilling to answer questions about what’s next.

Even if a measure passes the House, it would need to be approved by the Democratic-controlled Senate. Angry Democrats signaled Thursday they are in no mood to play ball after Trump and his billionaire ally Elon Musk on Wednesday torpedoed the deal Johnson and other congressional leaders struck earlier this week.

The Futures are down around 1% as of 8:30 and, as you can see, the Russell has already given up all of its November gains (and it has been our primary short – so we’re kind of pleased about that!) and the Dow isn’t far behind – 500 points, in fact…

Personal Income just came in for November at 0.3%, below 0.4% that was expected by Leading Economorons and WAY BELOW the 0.7% that made no sense in October. Personal Spending came in at 0.4% and that was below 0.5% expected but a big jump up from 0.3% in October and, most importantly, when Spending is more than Income – Consumers are slipping further into debt and that is, as they teach us in Econ 101 – NOT GOOD!

Fortunately, PCE Prices were up just 0.1% and that’s down from 0.2% in October and Core PCE was also 0.1% in November, down from 0.3% in October so either that’s a win for the Fed or a sign the economy is crashing – let’s shut down the Government and find out!!!

The markets are taking the slowing prices as a good sign and we’re coming off the lows in the Future – even though we still have the looming shut-down to deal with. Fortunately, our Member Portfolio were expecting to see a 10-20% correction in the market between Thanksgiving and Q1 Earnings and this is only 5% – so far – so we’ll just have to get some popcorn and enjoy the action.

Have a great weekend, 

• • Phil