Sometimes, no movement is good movement.
In the case of the government shutdown, money manager Larry Glazer believes it’s favorable for Wall Street — at least in the short term. His reasoning: It prevents lawmakers from passing policies that could be detrimental to corporate America.
“Investors like less Washington, and they realize Washington isn’t always the answer to our problems,” the Mayflower Advisors portfolio manager said Thursday on CNBC’s “Futures Now.”
The Dow Jones Industrial Average and S&P 500 Index are up more than 10 percent since the shutdown began on Dec. 22.
“The shutdown rally has been driven in part because investors realize gridlock isn’t necessarily a bad thing for the stock market,” said Glazer. “It’s terrible for federal employees, but it can be bullish.”
Despite Glazer’s optimistic view on the gridlock, he doesn’t believe it’ll flow through to the corner office. He believes CEOs will use the government shutdown as a negative trend in their earnings announcements.
“I really worry, however, that during earnings season companies begin to use the shutdown and China trade as an excuse to sandbag earnings and to lower the bar and lower future forecasts,” he said.
According to Glazer, opportunity would follow the negativity.
“That’s an opportunity for investors to cue in off of that,” he said. “Use some of that pessimism to rebuild position and take advantage of it because maybe we get better winds in the second half of the year to rally from there.”
But, his bullish case comes with a caveat.
“In no way is the shutdown good for the overall economy if it never ends,” he added.
Since it’s not his base case, Glazer, who manages more than $3.5 billion, is sticking with the view that both sides of the aisle will resolve the shutdown.
“Gridlock can be okay as a general backdrop. Washington isn’t the center of the universe, believe it or not for the financial market,” Glazer said.
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