Hey friends - starting to really feel like fall here in NYC. Love it and hate it.

🌎 The Big Picture

The government shutdown continues, disrupting services, leaving thousands without pay, and creating a blackout on economic data. The Bureau of Labor Statistics already missed its monthly jobs report, the main gauge of the job market used by policymakers, investors, and business owners, due to the shutdown. Investors are starting to expect a delay in the official inflation report as well, meaning the lack of jobs and inflation data has the potential to keep the Federal Reserve from continuing its interest rate cuts.

But the shutdown only really stinks for the people not getting paid. Too many commentators say there’s no major economic impact from the shutdown, because workers all get back pay for the time missed. Those commentators clearly don’t know what it’s like to miss a paycheck. Also, the administration has threatened not to pay people back and to make some of the temporary job furloughs permanent, so these workers don’t actually have any guarantee that they’re going to earn this money back.

But beyond those tens of thousands of furloughed workers, most of the disruption is just an inconvenience. Investors aren’t bothered by it yet, and markets keep climbing to new record highs.

The market climbed to another all-time high on Wednesday as investors continued riding the momentum. With both the federal government and Federal Reserve focused on stimulating the economy, and billions continuing to pour into artificial intelligence, investors feel very optimistic about the potential for this stock market rally to continue. There's plenty of talk about AI overspending and the incestuous business structures of the tech industry looking like the dot-com bubble, but investors are partying like it's not yet 1999, thinking there might still be 1-2 years of stock market gains left before a crash.

The primary fuel for the stock market optimism has been the explosive spending in AI, the stimulus from the federal government (deregulation, tax cuts, etc.), and the Federal Reserve continuing to lower borrowing costs. Investors can ignore the risks of higher inflation and a weakening job market, amidst the hopes that the stimulus will turn it all around and continue to boost corporate profits. Investors are flying blind until corporate quarterly financial reports start rolling in or the shutdown ends and restores government economic data. Without the data, there's plenty of reason to be uneasy.

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