Wall Street Greek: Yawn… the Government is Shutdown… so what

Yawn… the government is shut down. So what, said stocks this morning across the globe, ignoring the non-issue. However, our yawn could catch a fly if we keep our mouth open too long, because as the shutdown persists, it will have economic impact. And if it runs all the way up to the debt ceiling deadline, complete and perfect panic will follow today’s malaise.

Important Relative Reads:

Government Shutdown

Market ETF	October 1	Year-to-Date
SPDR S&P 500 (NYSE: SPY)	+0.3%	+18.3%
SPDR Dow Jones (NYSE: DIA)	+0.1%	+15.8%
PowerShares (Nasdaq: QQQ)	+0.3%	+21.4%

The first day of October stumbles in with stocks inching higher, but that’s saying something for October, a notoriously bad month for stocks. Let’s note also that the government is closed today, which weighed on stocks late last week but is a nonfactor so far today. The reason for the lack of action today on the government shutdown is because of investor understanding that a short-term shutdown is not important. However, if this issue persists for too long, and it just might, they will come running back for safety in gold and silver. And if this issue runs up to the debt ceiling deadline, they’ll be running over each other to get there.

Economic Events

ECONOMIC REPORT SCHEDULE
Economic Data Point	Prior Period	Expected	Actual
MONDAY
Chicago PMI	53.0	54.4	55.7
Dallas Fed Mfg. Survey	5.0	6.0	12.8
TUESDAY
ICSC Weekly Store Sales	-1.0%		+0.2%
-Year-to-Year Pace	+1.6%		+2.1%
Redbook Store Sales	+3.6%		+3.8%
Motor Vehicle Sales (Domestic)	12.6 M	11.9 M
-Total Vehicle Sales	16.1 M	15.5 M
ISM Manufacturing Index	55.7	55.0	56.2
PMI Manufacturing Index	53.1	52.9	52.8
Construction Spending	+0.6%	+0.4%	Gov’t SD
Gallup US Economic Confidence	-13		Delayed

-R symbolizes “revised”

The economic data is secondary today to the government shutdown issue, but it will not go unnoticed, however delayed it is digested. The weekly retail same-store sales data was improved, with weekly sales surfacing again on the ICSC’s meter. Year-over-year measures also showed a better pace of sales activity, but the ICSC still shows sales that are only keeping pace with inflation.

PMI’s Manufacturing Index was published this morning lighter than expected and short of the prior month’s result. However, at 52.8, it still reflects economic growth with a margin of comfort. Given the strength reported in yesterday’s Dallas and Chicago measures, there’s little worry for manufacturers and producers today. Let us also mention the good news from Ford (NYSE: F), which reported strong monthly sales this morning. The ISM Manufacturing Index only verified the strength in manufacturing, as it came in better than last month and better than the consensus. While new order data was running at a lighter rate of expansion for ISM than the prior month, it still showed stellar expansion and demand for goods.

An effect of the government shutdown, we will not hear from the government on Construction Spending today.

Overseas Markets

EUROPE	9:12 AM	ASIA/PACIFIC	CLOSE
EURO STOXX 50	+0.3%	NIKKEI 225	+0.2%
German DAX	+0.3%	Hang Seng	-1.5%
CAC 40	+0.5%	S&P/ASX 200	-0.2%
FTSE 100	-0.5%	Korean KOSPI	+0.1%
Bloomberg GCC 200 Mideast	+0.3%	BSE India SENSEX	+0.7%

International markets were unfazed by the threat of U.S. government shutdown. Of course, there is no real risk to other sovereign nations directly attributable to the U.S. political issue. Now, the debt ceiling is a completely different story. I first discussed the critical importance of the debt ceiling over a year ago before the rating agencies began talking about it, my most recent write-up on the subject is recommended reading (see link above).

Commodity Markets (9:06 AM)

WTI Crude	-0.6%
Brent Crude	-0.6%
NYMEX Natural Gas	+1.4%
RBOB Gasoline	-0.9%
Gold Spot	-2.5%
Silver Spot	-3.8%
COMEX Copper	-1.9%
CBOT Corn	-0.2%
CBOT Wheat	-0.3%
CBOT Soybeans	-1.2%
ICE Cocoa	-0.2%
ICE Sugar	-0.2%
ICE Orange Juice Conc.	-0.0%
CME Lumber	+0.0%
CME Live Cattle	-0.2%

Precious metals investors are not buying it; “it” being the media’s hype and hoopla about the famed government shutdown of the century. Precious metals are selling the news today, but bear witness dear readers. If this issue persists, they will come back as fast as they can, begging to be let in the door. At this point, everyone and his mother anticipates this non-issue will not result in too much economic disruption. But as time passes, we will start to receive reports about just how disruptive a persistent shutdown could be. As concerns about the economy surface on those reports, investors would sell off equities and commodities, but buy gold and silver and the security relatives like the SPDR Gold Trust (NYSE: GLD), iShares Silver Trust (NYSE: SLV) and the Market Vectors Gold Miners (NYSE: GDX).

Corporate Events

The third quarter only just closed, and so we are still receiving the stragglers of Q2 here. Still, the major motor vehicle producers are reporting their monthly sales today, and Ford (NYSE: F) came in with better than expected sales even despite calendar issues working against it. General Motors (NYSE: GM) reports its sales a little later this morning.

REPORTING EARNINGS
Company	Ticker
TUESDAY
Acuity Brands	NYSE: AYI
Actuant	NYSE: ATU
Ford Motor (Sales)	NYSE: F
General Motors (Sales)	NYSE: GM
Global Payments	NYSE: GPN
Synergetics	Nasdaq: SURG
Resources Connection	Nasdaq: RECN
Team Inc.	Nasdaq: TISI

MOST ACTIVE STOCKS
BIGGEST GAINERS	% Gain
Edgen Group (NYSE: EDG)	+56%
Lexicon Pharmaceuticals (Nasdaq: LXRX)	+29%
Rada Electronics (Nasdaq: RADA)	+11%
Myriad Genetics (Nasdaq: MYGN)	+12%
Ever-Glory International (NYSE: EVK)	+10%
Cree (Nasdaq: CREE)	+7%
Radiant Logistics (Nasdaq: RLGT)	+10%
TrovaGene (Nasdaq: TROV)	+8%
Pyramid Oil (NYSE: PDO)	+9%
Westmoreland Coal (Nasdaq: WLBPZ)	+7%
BIGGEST LOSERS	% Drop
Independent Bank (Nasdaq: IBCPO)	-27%
HyperDynamics (NYSE: HDY)	-18%
Broadway Financial (Nasdaq: BYFC)	-17%
Walker & Dunlop (NYSE: WD)	-13%
Andatee China Marine Fuel Service (Nasdaq: AMCF)	-11%
Diamond Foods (Nasdaq: DMND)	-7%
Sport Chalet (Nasdaq: SPCHB)	-8%
Point 360 (Nasdaq: PTSX)	-7%
Performant Financial (Nasdaq: PFMT)	-8%
SilverCrest Mines (Nasdaq: SVLC)	-8%

Other Reports for Your Review:

The Debt Ceiling Could Cost Alcatel-Lucent Dearly
Annaly at High Risk to Debt Ceiling

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.