The US government partially shut down this week and clients are asking if we are making changes to our portfolios in reaction to it. LTAM is not changing our overall portfolio strategy because as you will see with the points below we do not believe there will be a great economic impact.
1. There have been 10 similar shutdowns in the last 30 years, none lasting for any significant amount of time, with minimal long-lasting economic or market impact.
2. According to Bloomberg, during the past 12 government shutdowns, the S&P 500 rose an average of 11% in the ensuing 12 month period.
3. Any government shutdown that lasts over a month could slow the GDP annualized growth rate by 1%.
4. The annual budget deficit has decreased by $500 billion for the year, due to increased tax revenue and reduced government spending. The decreasing budget deficit should lessen the shutdown and debt ceiling debate as the US budget has improved.
Although this market outlook has been prepared from public and private sources and data that LTAM believes to be reliable, LTAM makes no representation as to its accuracy or completeness. Any indices and other financial benchmarks shown are provided for illustrative purposes only, are unmanaged, reflect reinvestment of income and dividends and may not reflect the impact of fees. Investors cannot invest directly in an index and the Program’s performance may differ substantially from the performance of an index. Investors should bear in mind that past performance is no guarantee of future results and there can be no assurance that the Program will achieve comparable results. Investment products are subject to investment risk, including possible loss of the principle amount invested. The information and views expressed are given as at the date of the writing and are subject to change. This information is not to be used or considered as an offer or the solicitation of an offer to sell or buy any securities mentioned herein. Ladenburg Thalmann Asset Management Inc. is a registered investment advisor and subsidiary of Ladenburg Thalmann Financial Services Inc. which is traded on the NYSE_MKT: LTS.