Federal Employees Feel the Pain

Many Federal employees are likely busy this morning canceling autopay on bills such as their mortgage and car payments, as they woke this morning to find that their regular scheduled paychecks were not deposited into their bank accounts. This is the turning point where tension over the shutdown will likely get real. You can rest assured that many federal employees will be calling their state representatives to demand a solution. Once families’ livelihoods are truly at stake, the intensity behind the arguments will heat up. So be prepared for whatever that brings. At this point, both sides have dug in so deep that it would appear weak for one to back down. As a result, we can plan that President Trump will act unilaterally by declaring a national emergency. That will most certainly lead to lawsuits. However, it could put an end to the shutdown and allow federal employees to get back on track financially.

This morning’s news headlines are surrounding the release of December’s Consumer Price Index (CPI) report, which showed that consumer inflation continued to tame. This has been one of the ongoing struggles the Federal Reserve has faced. The stubbornly low levels of inflationary growth keep the Fed in somewhat of a double bind where they need to increase short term interest rates but risk creating a deflationary environment if they push too high too quickly. Given continued advancements in technology, I’m not sure we will ever face massive inflationary concerns. However, with two of the greatest economic risks being inflation and deflation, it’s a difficult balance for the Fed to maintain.

With stocks remaining in a strong upward trading channel, we will maintain our locking bias.