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Monthly Journal: Traders' Insights Wanted!
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SpyderCall joined discussion · Jan 18, 2023 11:35

No-News Events?

No-News Events?
Don't Let the News Media Sway Your Opinion Too Much.
On constant occasion, the media bombards investors with endless amounts of information and opinions. Most of the time, it can be difficult to translate the jumble of media opinions into an investment or trade idea. Other times, it can seem like equity markets are reacting to news contrarily to how you would expect it to react.
Currently, in the media, just like many times in the past, we are seeing headlines about the US Congress having trouble reaching a debt ceiling agreement. Or there is a potential government shutdown because Congress can not do their job. The situation this time around will be a bit more complicated since Senator McCarthy was voted out of his position as Speaker of the House.
No-News Events?
There Has Never Been a Government Shutdown
All of the talking heads on the news are going to make this sound like a major market moving event. It will have major potential consequences in equity markets. This is absolutely true if Congress could not reach an agreement to pay off its debt obligations. But this has never happened before. America has never experienced a default, and it seems like they never will. The US will always have at least enough money to pay the interest of the debt to avoid a default.
Decades ago, potential government shutdowns were non-existent. But nowadays, it seems like Congress is about to shut down just about every time the subject comes to a vote. It's like a game to them.
If the government truly did shut down for an extended period, then it could possibly lead to another credit downgrade of the US economy, which would likely have very negative consequences in equity markets. How do you think potential investors in American debt will react when they hear that the US government will not be paying their debt?
Conclusion
In my opinion, headlines of potential government shutdowns are no-news events. The media will hype up or sensationalize these news stories, which likely causes some bearish sentiment.
The truth is that there has never been a true, extended government shutdown. Congress always comes to an agreement at the last moment. And this makes perfect sense because if Congress can not come to an agreement on debt obligations, then they are not doing their job mandated by law, and it's not likely that they will get reelected. It would be career suicide or political suicide. They definitely do not want to lose their job in politics. So they always come to an agreement at the end.
Anytime I hear a news story about the US government shutting down, I pay no attention to it until it actually happens. Every time they talk about a potential government shutting down, it always avoided, and equity markets are unaffected.
There is always a first for everything. Do you believe the government will shut down? If so, how do you think it will affect equity markets?
As always, I am not a financial professional, and this is not investment advice. Be careful and be patient. Dont anticipate the market. Rather, participate in the market. Give your investments time. Don't be greedy. Don't invest in anything you don't understand. Don't put all of your eggs in one basket. Don't listen to the hype. Don't fomo or panic into or out of trades. Do your own due diligence. And just follow the trends. A trend is your friend. Good luck trading.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only. Read more
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SpyderCall
Trade the trends via technical, fundamental, and macro analysis. Day Trades, swing trades, and long-term investments.
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