How Markets Are Reacting to Possible Gov't Shutdown

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Sept. 27 (Bloomberg) -- Trading Advantage Senior Market Analyst Alan Knuckman discusses the lack of market reaction to a possible U.S. Government shutdown. He speaks with Betty Liu on Bloomberg Television's "In The Loop." (Source: Bloomberg)

Ticking closer to a government shutdown and am surprised the market have not reacted as violently as you would've thought.

What is going on here?

As a traitor, your bachelor to follow price action, not your opinion or what other people think.

The markets know better.

If you look in the markets, 17.05 is what we closed on the s&p last friday.

Keep an eye on the support levels.

We have come back to the weekly support and this is where the market was before the breakout rally last week.

You alluded to the key point -- we are not getting any flight to quality in bonds or the dollar.

If you remember back in 1995, 1996, i was a traitor on the floor.

-- i was a trader on the floor.

We had a big rally going into that and we had a lot of buying of treasuries because people were so worried and concerned.

That isn't happening now and that is a positive sign.

What is driving trading right now?

If people are not concerned about a potential government shutdown, what are the catalysts that people are watching right now?

I am focusing on the dollar.

We see crude oil off of its recent highs.

We have been above 100 since near the fourth of july.

That is the new normal in crude because of the global comeback that we have seen.

I view that as a positive.

The fact that rates have come down a great deal over their highs from a couple of weeks ago is optimism there.

I think that people right now are focused on the upcoming earnings season to see what that brings us.

That is not taken until the beginning of october.

That is when we get the fundamental information of how well corporations are doing, and obviously they are doing very, very well.

Thank you for joining us.

From the trade to the call, i want to bring in a portfolio manager for stephen nicholas, which oversees approximately 100 billion dollars in assets prayed his called -- $140 billion in assets.

He is calling for a 10-15% decline in stocks.

Why do you say this?

I think the fed has painted themselves and a quarter -- in a corner here.

They have ginned up the equity markets and the credit markets are functioning well, but u.s. earnings and fundamentals in the economy that are here and the markets are here.

Forward-looking multiples at 15.5 to 16 times estimates.

Our estimation is for the s&p to earn $113 a share.

Gdp will be around 2%, 2.5%. as they move out of tapering, you will start to see the risk-

This text has been automatically generated. It may not be 100% accurate.


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