There is a whole list of legislation that needs to be passed such as a bill raising the debt ceiling, spending bills to keep the government open, renewal of key programs that will expire and budget resolution. They have got to get a lot done in September. If this uncertainty continues, or if it doesn’t happen, I think we all agree that we will start seeing some more volatility in the market.
This time is sounding very similar to September of 2013 where we had the government shutdown at the end of September, the mid-October debt ceiling debate, the discussion regarding a new fed chair, the tapering talk, and dealing with Syria, that is similar to the current North Korea issues. The market pulled back 4% that September. They eventually got their act together and we did not default on our debt, leading to the market rally through the end of the year. However, it is important to keep in mind that this uncertainty definitely has an effect on the market.
When Congress gets to work this week they have a lot to look at. There are some topics that are always controversial, such as the discussions on debt ceiling and budget reconciliation. The House has 12 working days and the Senate has 16 working days until the end of September.
The Consumer Financial Protection Bureau was created in order to try and help consumers. However, it has done anything but that. It has, in fact, made the whole process harder and more expensive. Now, in addition to the debt ceiling discussions, these issues have risen. From a market standpoint all these items have to be passed before they can even get to the tax reform discussion, which we think, day to day, is the most impactful item we are following.
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