{"id":68366,"date":"2023-10-03T18:25:17","date_gmt":"2023-10-03T22:25:17","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/kevin-mccarthy-is-out-after-averting-government-shutdown-the-u-s-got-something-worse\/"},"modified":"2023-10-03T18:25:20","modified_gmt":"2023-10-03T22:25:20","slug":"kevin-mccarthy-is-out-after-averting-government-shutdown-the-u-s-got-something-worse","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=68366","title":{"rendered":"Kevin McCarthy Is Out After Averting Government Shutdown. The U.S. Got Something Worse."},"content":{"rendered":"<div id=\"js-article__body\" itemprop=\"articleBody\" data-sbid=\"WP-BAR-0000760301\">\n<div data-layout=\"wrap\n              \" data-layout-mobile=\"\" class=\"\n        media-object\n        type-InsetMediaIllustration\n          wrap\n  article__inset\n        article__inset--type-InsetMediaIllustration\n          article__inset--wrap\n    article__inset--lead\n  \"><\/p>\n<p>        <!-- eventually when we know what this card will be we can change it and leave this one --><\/p>\n<figure class=\"\n        media-object-image\n        enlarge-image\n        img-wrap\n        article__inset__image\n      \" itemscope=\"\" itemtype=\"http:\/\/schema.org\/ImageObject\"><\/p>\n<\/figure><\/div>\n<p>Kevin McCarthy is out as House Speaker\u2014and the financial markets have a problem.<\/p>\n<p>Usually, we like to think that what happens in Washington stays in Washington, at least when it comes to the stock market. Over time, the S&amp;P 500 goes up, no matter who is in office. But what just happened in the House of Representatives is unprecedented. A House Speaker has never been ousted like this in the middle of a term, and it\u2019s unlikely a new one will be selected quickly. That means the government has avoided a shutdown only to see something potentially worse to replace it. <\/p>\n<div class=\"paywall\">\n<p>Don\u2019t think the markets haven\u2019t noticed. Bonds sold off as the<br \/>\n        10-year yield<br \/>\n       climbed to nearly 4.8% at 5:38 p.m., while the<br \/>\n        iShares 20+ Year Treasury Bond ETF<br \/>\n      (TLT) fell 2.2% during market hours. The<br \/>\n        S&amp;P 500<br \/>\n       dropped 1.4% and the<br \/>\n        Dow Jones Industrial Average<br \/>\n       declined 430.97 points, or 1.3%. It wasn\u2019t all because of the craziness in Washington, but it also wasn\u2019t not part of the reason for the selloff. <\/p>\n<p>\u201cIf you are wondering why the bond markets are out of sorts the past few weeks, look no further than the dysfunction in Congress,\u201d writes Jamie Cox, managing partner for Harris Financial Group. <\/p>\n<p>McCarthy\u2019s ouster might be unprecedented, but political chaos contributing to market volatility isn\u2019t. Most market strategists tend to look at how the stock market has performed when Congress is united or divided. Rarely, though, do they look at what happens when there is a narrow majority in the House and Senate. Periods of \u201ctight government,\u201d as Evercore ISI strategist Julian Emanuel calls it, can be far trickier\u2014and more volatile. Emanuel notes that there have been just eight periods where the Senate majority was determined by two seats or less and the House by 10 or fewer and the election year was particularly dramatic\u2014each other eight saw double-digit moves, with three being positive and five being negative. \u201cThe message is clear: prepare for more volatility,\u201d Emanuel wrote on Sept. 24, before the current shenanigans began. \u201cNear term, confusion carries stocks\u2019 Seasonal decline into Oct, to SPX 4,200.\u201d<\/p>\n<p>Emanuel, too, argues that the stock market is reacting to the Washington dysfunction. \u201cThe profound political uncertainty defined by \u2018Tight Government\u2019\u2026[is] causing a lot of market volatility, much more than usual,\u201d he writes. \u201cIn this regard, today\u2019s news coupled with the yield surge has absolutely affected markets. Markets dislike uncertainty. There is more uncertainty today than there was yesterday.\u201d<\/p>\n<p>The House has fewer than 45 days before it will have to fund the government again, and there is no sign that Republicans will be able to coalesce around a single candidate for Speaker. Without one, the government will be shut down again, with zero chance of a stopgap bill being passed. It\u2019s a worst-case scenario, but one that\u2019s worth contemplating. <\/p>\n<p>No, Washington won\u2019t be the ultimate determinant of whether markets can recover from their recent swoon, but with the S&amp;P 500 already sliding, the dysfunction comes at a painful time for investors.   <\/p>\n<p>Write to Ben Levisohn at ben.levisohn@barrons.com<\/p>\n<p>\u00a0<\/p>\n<\/p><\/div>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.marketwatch.com\/articles\/kevin-mccarthy-government-shutdown-markets-dd7cffad?mod=markets\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Kevin McCarthy is out as House Speaker\u2014and the financial markets have a problem. Usually, we like to think that what happens in Washington stays in Washington, at least when it comes to the stock market. Over time, the S&amp;P 500 goes up, no matter who is in office. But what just happened in the House [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":68367,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-68366","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Kevin McCarthy Is Out After Averting Government Shutdown. The U.S. Got Something Worse. | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Kevin McCarthy is out as House Speaker\u2014and the financial markets have a problem. 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