The lights are off

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The US government partially closed at midnight on Friday. Oh no! So it happened again. The most powerful country in the world did not manage to renew another short-term government funding extension. Since 1976, there have been almost 20 previous occurrences. However the world or rather the markets never collapsed. Who cares then especially in the current bullish environment? After all, we have been trained to believe that geopolitical turmoil is merely an opportunity to pick up bargains.

This is 18th time since the modern budget process began with the Budget Act of 1974 that the federal government has entered a shutdown. On average, the 17 previous shutdowns lasted just under 7 days, though they have been longer in recent decades.

The four shutdowns since 1990 have lasted slightly under 11 days on average. The longest shutdown in history, lasting 21 days, came in 1995-1996. Most of these shutdown were not severe, with 10 of the 17 lasting five days or fewer, and eight lasting three days or fewer.

Data show that markets have seen modest weakness during shutdowns, with the S&P 500 SPX, -0.67% falling an average of 0.6% over the period of the closure, according to data from LPL Financial.

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