Government Shutdown!

The VIX was up 10% yesterday and 10% on friday. Now it is at a high level. After the markets closed, the S&P was down only 0,6%. The S&P now have a quarterly gain of 4,7%. I will follow the vix very close this week. Normally, when the vix is so high, we will see a big sell off in the stock market. Washington D.C have a huge impact of the worlds stock exchange now.

The federal government will shut down for the first time in 17 years as the Congress failed to break a bitter budget standoff over the presidents health care law. Asian markets rise despite shutdown.

This is the first US government shutdown in 17 years. Next date to have a look at is October 17. USA won`t have enough money to pay all of it`s bills sometimes between Oct. 22 and Oct.31. 800.000 federal employees is out of work today. Millions of people are to work without pay. The US army will still be at work. The police will still be on the streets. Markets seem unbothered by that.

As the shutdown in well know, investors will focus on thirt-quarter earnings reports. According to Factset data, the stock prices of the S&P stocks rise and the earning growth are trending in the opposite direction. The estimates for the third quarter call for only 3,2% growth. Down from 3,8% in the second quarter. Stock prices follow earnings, so that can prove problematic!

News today: ISM Manufacturing PMI at 10:00am. Tomorrow, Fed chairman Ben Bernanke will speak at 3:30pm. Looking forward to that. It seems like the vix are rising too late compared to S&P. As you can see below, the vix is now below 17, but looking back to may this year they goes in opposite direction.

VIX 30.09.2013

SPX 30.09.2013

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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