This morning, the Bureau of Labor Statistics (BLS) did NOT release “The Employment Situation – September 2025” as it was supposed to do. So, the markets will have to wait a little while longer to ascertain the number of jobs the economy created, or terminated, last month.
Laughingly, given the veracity of these reports over the last, say, 24 months, perhaps investors aren’t really missing much. That isn’t very funny, is it?
Nor is it funny that the powers that be in Washington have “shut down” the Federal government again.
While the current political theater in the nation’s capital doesn’t amuse me, it surprises me even less. As I told a reporter on Tuesday morning, it feels like we have been here previously. Doesn’t it? As such, although I am supposed to caution “past performance is not indicative of future results,” I think most of us have an inkling how this will eventually go down.
Of course, this time could be different.
Without going into the nitty-gritty details, core to the standoff is the federal government’s role in paying for healthcare — and for whom. It seems one side would like to maintain, or even extend, Washington’s responsibilities and the other would like to curtail them. Who is right and who is wrong largely depends on your worldview.
However, what isn’t, or shouldn’t, be open for serious debate is the federal government’s true ability to pay for everything that everyone wants. Let’s just put it this way: when your accumulated debt is greater than your Gross Domestic Product (GDP), and your deficits have been growing at a faster rate than your economic output, the writing is on the wall.
Sure, the wall may be huge, and the writing may be small. However, it is still on there.
The little story I am about to share illustrates the problem(s) Washington has in reducing its seemingly profligate ways. While most people will undoubtedly agree that “we” have to get our books in order, the problem is how. What to cut and who to tax?
Years ago, when I was in my mid-20s, everyone was worried about Social Security’s long-term solvency. To be sure, thanks to the Baby Boomers hitting their stride during the 1990s, the system was in decent shape, even good. However, it didn’t take too high of an IQ to determine that we were going to have a real problem when all of these people started to retire in 20-30 years. Indeed.
Back then, being young and dumb, it didn’t faze me in the slightest. Social Security? So what? I wasn’t anywhere close to retirement. Besides, I was going to make so much money and accumulate so much wealth that I wouldn’t have to worry about Social Security. I was so ambivalent on the whole matter I remember telling someone something along the lines of: “I am not counting on Social Security anyway, and I fully expect them to do away with it for folks like me. If it is there, sure, I will take it… but big deal.”
These days, at a more seasoned 57 years of age, do you think I am still as cavalier as I once was about Social Security? Not a chance. I have been in the workforce, in some form or fashion, for over 40 years. The government has taxed both my employers and me a far from insignificant amount of money for my supposed “social security.” Is it my problem Washington has not be a very good steward of it?
You see, I don’t know of a single sensible person who thinks the U.S. federal government is an efficient, lean and mean machine. Everyone I know, regardless of political affiliation, would agree that Washington spends frivolously. What’s more, a lot of them would be of the opinion it often creates a mess when it gets involved, as it arguably has with healthcare.
But eliminate their checks? Cancel their contracts? Cut their Social Security? Slash their Medicare benefits? Turn off the money spigot?
Nobody likes that very much, nobody. In fact, they hate it. It doesn’t matter if they are wearing a red hat or waving a red flag. Government austerity is for the other guys. We all paid for our cake, and we intend on eating it, too. Those other guys? Yeah, I am pretty sure they didn’t pony up. Go trim the fat from them.
With that said, my wife and I were discussing the government shutdown, and I told her I sort of understood both sides of the issue. I further said I imagined the two parties will eventually come to a conclusion that will alienate more than a handful of the die-hards. Do you want to know what a good compromise is? It is when everyone feels as though they have gotten the short end of the stick.
This will be one of those times, because there must be a compromise. We can’t keep expanding the federal government’s reach and largesse without a realistic and financially sound way of paying for it. On the flip side, we can’t just yank the rug out from under folks cold turkey. Sure, we could, but I don’t think it is good form.
In the meantime, while we wait for the inevitable eventuality, we have to deal with the cards we are dealt. This includes the lack of official economic data at a time when the true health of the U.S. economy is in doubt. How will investors cope? How will they be able to make decisions?
Well, the S&P 500 index closed on Tuesday, September 30, 2025, at 6,688.46. The government shut down the next day. As I type here at 10:54 am CDT on Friday, October 3, 2025, the S&P 500 index is at 6,746.94. That represents an increase of 0.8743%. Hmm.
Obviously, that is a tidy little rally over the last several trading sessions. For its part, the yield to maturity on the 10-Year U.S. Treasury note has fallen from 4.152% to 4.110%. This suggests investors might not be too concerned about the federal government’s ability to pay its bills and eventually get back to business.*
In essence, at this time, roughly 11:00 am CDT on Friday, October 3, 2025, investors are effectively shrugging their shoulders at all of the political theater coming out of Washington. It seems they have seen this play previously and have a pretty good idea of how it ends.
Thank you for your continued support. As always, I hope this newsletter finds you and your family well. May your blessings outweigh your sorrows on this and every day. Also, please be sure to tune into our podcast, Trading Perspectives, which is available on every platform.
John Norris
Chief Investment Officer
Please note, nothing in this newsletter should be considered or otherwise construed as an offer to buy or sell investment services or securities of any type. Any individual action you might take from reading this newsletter is at your own risk. My opinion, as well as those of our Investment Committee, is subject to change without notice. Finally, the opinions expressed herein are not necessarily those of the rest of the associates and/or shareholders of Oakworth Capital Bank or the official position of the company itself.
*Past performance is not indicative of future results.