As the Government Turns…

Or, maybe All My Congressmen is a better fit. I guess since so many long running daytime soap operas have recently been cancelled (including CBS’ As the World Turns and ABC’s All My Children), our federal government has decided to fill the daytime TV void. At least that’s the way it seems with the over-the-top theatrics going on in Washington right now.

There’s plenty of media coverage and opinion out there regarding the current debt ceiling debate. We don’t have any particularly unique insight to add to the guessing game of what’s going to happen or when. If the 11th hour deal to avoid a government shutdown a few months ago was any indication, then it’s not terribly surprising that this is going down to the wire, too.

For us, it simply means to expect increasing volatility as each day passes and the stakes continue to increase. The equity markets have been gyrating pretty wildly lately, with a 7% selloff from late April through mid-June, followed by a 7% rebound into early July, and now a 3% decline over the last 4 trading days. Gold hit a record high yesterday. The Treasury market is remarkably subdued, with yields on the 10-year back down below 3%.

Call us naïve, but count us among those who believe our elected leaders realize the enormity of the situation and will eventually come to their senses and reach some sort of agreement to avoid a U.S. default. The way this saga is dragging out, if I didn’t know better, I might believe you if you told me that a now out of work soap screenwriter was responsible for it.