Dip Buyers Pounce on US Shutdown News: 3-Minute MLIV

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Transcript

00:00Are markets overreacting here to the possibility of an end to the shutdown?

00:05So it doesn't seem like this is really such a great catalyst for the size of the moves that we're

00:11seeing. Asian markets had a really good session. We had things like the cost be rising three percent.

00:16Everywhere you look you know it's very a risk on in a way that we don't always see. You've got all

00:20of the commodities are pushing higher as well. As you were saying Lizzie, equity futures are up too.

00:26I mean I and it or the only thing that's changing really is I suppose having an operational U.S.

00:32government and workers is better than not having one. And maybe you could go down a long extrapolated

00:37path and say we'll get some data and that will probably confirm that the Fed will need to be

00:41able to cut interest rates some more further down the line. But it does suddenly feel like that you

00:46know someone's waved a magic wand over the weekend and all of the worries that we had that were hanging

00:50over the market last week have gone away. I'm not sure that that sentiment is going to last all of

00:54that long into this into this week with all of the fragility and nerves that we saw particularly

01:00in the tech sector last week. So yeah maybe an overreaction. We just don't buy the dip Paul.

01:06Is it as simple as that. Mark's got beaten up last week coming on Monday morning. Catch a bit.

01:13Feel refreshed and going for it. And I do you know still believe that that dip buying mentality is

01:18very strong especially for the chip section. You can understand it. You know the market has rewarded

01:23that behavior all the way through this year so far. But on the other hand you know how much momentum

01:29and mileage can you get out of this one. There's still uncertainties about whether the vote will

01:33finally get done as well. But probably it feels like there's at least enough enough momentum behind

01:38it to realize that. Yeah. Paul we've had a series of guests on this morning. You say that history

01:44suggests we should look through government shutdowns from a market's perspective. What is the bar that gets

01:49these markets actually worried. How long does the shutdown have to last for the markets to actively

01:54trade on it. Yeah. So I guess we did the M.I. pulse survey last week and that found that it would need

02:00to continue to run for quite a lot longer before people genuinely got upset about it. On the other

02:06hand there has been quite a lot of signs of weakness in the U.S. economy coming through. I think that that

02:11K-shaped recovery or growth narrative is really starting to make itself heard because it seems like the

02:16the lower earning ranks of society are really having a tough time of it at the moment. And you

02:21can see that if you look at for example you know bad loans on cars and those kinds of things. If you

02:28look at some of the consumer sentiment data that we had at the back end of last week. And even if you

02:33look at some of the market metrics as well. Triple C spread starting to widen and showed like a little

02:38bit more anxiety. Some of the company earnings we heard from the fast food retailers a couple of weeks

02:42ago. They were talking about people not spending as well. So do you think that there is a little bit

02:46of a worrisome kind of undercurrent there. Whether that comes to us anytime soon and actually causes the

02:51markets to have an upset. You know I don't think so. Not when you've got the tech narrative and the

02:55buy the dip mentality. But it is something to keep in mind particularly when we've had the shutdown as well

03:00that added to that sort of picture. And so you know keep on watching those developments through the rest of this week.