U.S. gov't heading to a shutdown, plus weak equity appetite, $24B in childcare aid expiring, and 3 stages of life
The Sandbox Daily (9.25.2023)
Welcome, Sandbox friends.
Today’s Daily discusses:
U.S. government heads towards shutdown
J.P. Morgan institutional survey shows equity appetite remains weak
families confront expiration of $24 billion in childcare funding
3 stages of life
Let’s dig in.
Markets in review
EQUITIES: Nasdaq 100 +0.46% | Russell 2000 +0.44% | S&P 500 +0.40% | Dow +0.13%
FIXED INCOME: Barclays Agg Bond -0.79% | High Yield -0.14% | 2yr UST 5.125% | 10yr UST 4.542%
COMMODITIES: Brent Crude +0.15% to $93.41/barrel. Gold -0.56% to $1,934.8/oz.
BITCOIN: +0.11% to $26,282
US DOLLAR INDEX: +0.35% to 105.951
CBOE EQUITY PUT/CALL RATIO: 0.85
VIX: -1.74% to 16.90
Quote of the day
“The tape tells all, and our job is to learn how to listen properly.”
- Stan Weinstein
U.S. government heads towards shutdown
The clock is ticking on a government shutdown which will occur without budget action by Congress at midnight on October 1.
Fundstrat’s data science team composed a scan of past government shutdowns to examine their impact on markets.
The full chronological list since 1976 is below, with S&P 500 index returns before and after the government shutdown:
And here is the summary based on the above data, showing an average shutdown lasts 9 days with muted performance before and after the event itself:
Bottom line? While shutdowns create headline risk and leave foreign governments perplexed over U.S. policy-making practices and procedures, the shutdowns themselves have little impact on markets.
Source: FS Insight
Latest J.P. Morgan client survey shows equity appetite remains feeble
As equity markets are coming under pressure from renewed headline risks, it is worth noting that institutional clients of J.P. Morgan continue to express their view on markets as light on equity allocations/risk sentiment:
What’s more, only 27% of respondents plan to increase their equity exposure in the coming days or weeks – which is near the lowest levels of the current cycle.
Source: J.P. Morgan
Families confront expiration of $24 billion in childcare funding
Millions of families across the country anxiously await the end of pandemic-era childcare funding. The 2021 American Rescue Plan Act – which allotted $24 billion for childcare facilities to pay workers, cover expenses, and purchase supplies – is set to expire at the end of September.
With federal funding about to expire, parents worry that childcare costs are about to jump, or worse, thousands of facilities could be forced to close.
In 2022, the Labor Department estimated median inflation-adjusted childcare costs for a single child to range from more than $5,000 in rural areas to around $17,000 in cities. At the top of the range, that amounts to almost 20% of the median family income per child. Childcare often is the biggest budget line item for young parents.
At the same time, the think tank Century Foundation projects upwards of 70,000 childcare centers could be forced to close when the funding runs out, leaving approximately 3.2 million children without care.
If the sunset of the American Rescue Plan does lead to those outcomes, it could mean difficult days ahead for parents – specifically working mothers with young kids who are currently enjoying their highest-ever participation rate in the labor force:
Rising costs or closures could potentially force parents out of the workforce, affecting taxes and household spending.
Source: U.S. Department of Labor, U.S. Department of Health & Human Services, The Century Foundation, White House, Axios
3 stages of life
Time, money, and energy – the vast majority of people will never experience all three at the same time.
Choose carefully how you allocate each one.
Source: Ricardo and Lorena
That’s all for today.
Blake
Welcome to The Sandbox Daily, a daily curation of relevant research at the intersection of markets, economics, and lifestyle. We are committed to delivering high-quality and timely content to help investors make sense of capital markets.
Blake Millard is the Director of Investments at Sandbox Financial Partners, a Registered Investment Advisor. All opinions expressed here are solely his opinion and do not express or reflect the opinion of Sandbox Financial Partners. This Substack channel is for informational purposes only and should not be construed as investment advice. The information and opinions provided within should not be taken as specific advice on the merits of any investment decision by the reader. Investors should conduct their own due diligence regarding the prospects of any security discussed herein based on such investors’ own review of publicly available information. Clients of Sandbox Financial Partners may maintain positions in the markets, indexes, corporations, and/or securities discussed within The Sandbox Daily. Any projections, market outlooks, or estimates stated here are forward looking statements and are inherently unreliable; they are based upon certain assumptions and should not be construed to be indicative of the actual events that will occur.
These government shutdowns are a joke... they will eventually solve themselves as there are too much at stake if civil servants and general people don't get paid.
Love the infographic on time, money, and energy. As a financial advisor helping to make better decisions on how to allocate their time and money, that’s meaningful. Good stuff as always!