The Midweek Pulse Check – 10/9

Government Shutdown

The federal government shutdown at the beginning of this month after Congress failed to pass budget legislation. The House, led by Speaker Johnson (R), passed a funding bill before going on recess September 19th, making it impossible for negotiations or alterations to be had until the House comes back into session on October 13th. The Senate, as a result, is faced with two options: pass the bill as it stands or continue the shutdown.

Budgets require a super majority of 60 out of 100 votes to pass the Senate, which gives the Democratic minority the ability to block spending bills that do not have their support. Both parties maintain that the shutdown is about healthcare, though Democrats maintain they want an extension of healthcare tax credits for Americans while Republicans claim the Democrats are seeking free healthcare for illegal migrants.

President Trump has been playing hard ball with Congress, threatening to layoff employees and not guarantee backpay for federal workers. These actions would reverse the precedent of utilizing temporary furloughs and guaranteeing backpay to protect federal workers from the political posturing around the budget that has seemingly become a ritual in Congress. Currently, many critical functions remain on the job without pay while the government is shutdown, forcing thousands of federal employees to work without pay until Congress can pass a bill.

Gold hits record highs

Gold has hit record highs this week, surpassing $4000 per ounce for the first time. The price of gold has increased greater than 50% year-to-date, surpassing the S&P 500 (~15%), the NASDAQ (~19%), the German DAX (~24%), and the Japanese Nikkei 225 (~24%).

The last time gold prices hit 50% or greater 12 month returns was in 1979/1980, as well as briefly in 2006:

Peace in Gaza?

Israel and Hamas announced an agreement late on Wednesday that would pause hostilities and the freeing of remaining hostages in exchange for Palestinian prisoners. This comes almost exactly 2 years after the war began with the invasion of Israel by Hamas forces, which resulted in nearly 1200 deaths and over 250 hostages taken by Hamas.

National Guard Deployment

The Trump administration has deployed the National Guard in several cities, most notably Chicago and Portland. Typically such a move only occurs upon invite from the State governor and local officials. However this time the deployments are occurring in spite of opposition from city and state officials.

This comes after a speech to senior flag officers and NCOs where President Trump suggested US cities should be used as “training grounds” for the military. There have been reports that the White House is considering invoking the Insurrection Act to legitimately deploy active-duty military inside of the United States, which would be an escalation beyond using just the National Guard to protect federal agents and property.