Jay Soloff

How is the US government shutdown and looming debt ceiling affecting investor sentiment? Surprisingly, investors have remained fairly resilient during this politician-created mess. In fact, the S&P 500 is flat over the last week and still up over 2% for the month. At the end of last week, bullish sentiment (AAII study) actually ticked up about a percent and a half from the prior week. Most investors appear to be in wait and see mode - cautious but not yet selling. The overarching belief is Washington won't let the US default. This scenario is playing out in the VIX as well, The investor fear gauge has ticked up to its highest level since June. Nevertheless, at roughly 18.50, it's still a point and a half below the lifetime average (20) and well below 2008's financial crisis high (80).


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