What does a government shutdown mean to you?

The federal government is headed for a partial government shutdown that will likely last until January 3rd when the new Congress is sworn in. This is not the first time we have had a government shutdown through the holiday season, as we had one in 1995 when Bill Clinton was president. The major difference between today and 1995 is that this will be a “partial” shutdown with nearly 75 percent of the government already funded and completely unaffected by the shutdown. That leaves just 25 percent of the government impacted by the shutdown. We anticipate a significant portion of personnel will be considered essential and receive exemptions. As such, it could be that less than 10 percent of the government will be impacted. Historically, shutdowns have not had a major impact on the US economy or financial markets. If the partial shutdown occurs, the impact will be even less. However, we are keeping an eye on the secondary effects:

1.  Shutdown headlines will run throughout the holiday season, at a time when media reports are also leading off with falling stock values.

2. The unpredictability of Trump. He agreed to no shutdown on Wednesday, but was spooked by conservative media over the border wall and reversed his position Wednesday night. This is going to make the more important policy issues for financial markets, the debt ceiling and sequestration, tough to solve in 2019.

3.  Because Trump is not getting the wall, he pulled out of Syria by Twitter. This triggered a set of effects including General Mattis resigning. Mattis leaving seems to be a far bigger event. With Mattis gone, does this make it easier to put EU auto tariffs in place which required DoD sign-off? How about Jay Powell being removed as Fed Chair?

4. Republicans are starting to turn on Trump. There are cracks developing in the structure. The economy was holding Trump up and that is fading.

The 1995 shutdown over the holidays was the longest on record. Our belief is that if we shut down tonight, the partial shutdown will be at least 12 days.

We wanted to point out a few facts the media is always inclined to leave out when it comes to government shutdowns.  (1) Most government employees are paid every two weeks, and as stated above, the expectation is that this shutdown will likely be less than two weeks. (2) Further, in past shutdowns the government has generally paid in arrears the wages that would have been earned had their been no shutdown.  (3) Essentially, as long as the shutdown does not last too long , it really should have virtually no affect on the economy.  It is true, the impacted government employees may very likely have to wait an extra week for their paycheck to arrive, but they can reasonably expect to receive their paycheck.  (4) It's also convenient that this shutdown did not start at the beginning of the holiday shopping season.  Perhaps a government shutdown in the third week of November that lasted through the first week of December would have dampened the confidence of some, and led to a reduction in their holiday spending, but that was not the case.

WHAT IS FUNDED AND WHAT IS NOT FUNDED

Departments and agencies already funded for fiscal year (FY) 2019 include

  • Army Corps of Engineers
  • Department of Defense
  • Education Department
  • Department of Energy
  • Health and Human Services
  • Bureau of Reclamation
  • Department of Labor
  • Federal Energy Regulatory Comm
  • Nuclear Regulatory Comm 
  • Social Security Administration

The following departments and agencies have not been funded and would be affected if the Federal government shuts down

  • Agriculture Department
  • Commerce
  • Homeland Security  
  • Housing and Urban Development
  • Interior  
  • Department of Justice
  • Department of State  
  • Department of Transportation
  • Treasury  
  • District of Columbia
  • Environmental Protection 
  • Executive Office of the President
  • Federal Communications  
  • Food and Drug Administration
  • General Services Admin  
  • NASA
  • SEC 
  • U.S. Postal Service

There is still time for a deal to be made but we wanted to give you our thoughts at this time.  We will know more by the end of the day. Please call or email us with any questions you may have.

Source:  Strategas

Fortem Financial

PRIVACY NOTICE REGARDING CLIENT PRIVACY

Fortem Financial Group, LLC, has adopted this policy with recognition that protecting the privacy and security of the non-public personal information we obtain about our customers is an important responsibility.

All financial companies choose how they share your non-public personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your non-public personal information. Even when you are no longer our customer, we will only share your non-public personal information as described in this notice. So, please read this notice carefully to understand what we do.

The types of non-public personal information we collect and share depend on the product or service you have with us. This information can include items such as your Social Security number and income, your account balances and transaction history, and your investment experience and account transactions.

We collect your non-public personal information in a variety of ways. For example, we obtain your non-public personal information when you open an account or give us your income information, tell us about your portfolio or deposit money, or enter into an investment advisory contract. We also collect your non-public personal information from other companies. For example, from the custodians who hold your account assets.

All financial companies need to share customer’s non-public personal information to run their everyday business. Below, we describe the reasons we can share your non-public personal information and whether you can limit this sharing.

We share your non-public personal information for our everyday business purposes such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, report to credit bureaus, to protect the confidentiality or security of your records, or as permitted by law. We may also share your non-public personal information for our own firm’s marketing purposes; so that we can offer our products and services to you.

Federal law gives you the right to limit only sharing non-public personal information about your credit worthiness for our affiliates’ everyday business purposes; sharing non-public personal information about you with our affiliates to market to you; and sharing non-public personal information with non-affiliates to market to you.

We don’t share non-public personal information about your creditworthiness with our affiliates for their everyday business purposes. We don’t share your non-public personal information with our affiliates to market to you. We don’t share your non-public personal information with non-affiliates to market to you. We also don’t share your non-public personal information for joint marketing with other financial companies. State laws and individual companies may give you additional rights to limit sharing.

We share non-public personal information with our parent company affiliate, Focus Financial Partners, Inc, for its internal and external auditing purposes. We also share your non-public personal information with a non-affiliate for the purpose of aggregating it and providing summary information based on this data to our parent company, Focus Financial Partners, Inc.

To protect your non-public personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings.

Our policy about obtaining and disclosing non-public personal information may change from time to time. We will provide you notice of any material change to this policy before we implement the change.

If you have questions please call us at 760-206-8500 or go to our website at www.fortemfin.com.

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Fortem Financial Group, LLC ("Fortem Financial" or the "Firm") is a federally registered investment adviser with offices in California. Fortem Financial and its representatives are in compliance with the current registration and notice filing requirements imposed upon federally registered investment advisers by those states in which Fortem Financial maintains clients. Fortem Financial may only transact business in those states in which it is notice filed, or qualifies for an exemption or exclusion from notice filing requirements.

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