Good morning from Europe!

We are back at the office this fine Monday morning where the market seems to be bouncing a bit on the news that the US shutdown is at the very least postponed.

We are a tad surprised but not by the immediate repercussions: We pointed out that a can-kicking would essentially jeopardize McCarthy’s position as speaker of the house and the extreme wing led by Gaetz seemed to be determined to put McCarthy’s destiny in the hands of a vote. And we don’t see him backing down just now- the Rubicon is probably crossed by Gaetz with these words “The one thing Democrats, Republicans, the White House, that we all have in common is that Kevin McCarthy, at one point or another, has lied to all of us,” unless he is paid a kings ransom for changing stance.

Markets were NOT predicting this outcome nor were we, which just goes to show how difficult it is to bet on political events. If your last name isn’t Pelosi you are unlikely to make any alpha in these waters.

The absence of Ukraine funding could prove to be detrimental for Zelensky who is already under pressure from waning support in Europe and a key election in Poland which could prove detrimental. Time for some sort of ceasefire negotiations? Won’t rule it out but a lasting deal is hardly in the cards as of now

Today we have the ISM Manufacturing out. If this morning’s horror print from the Netherlands is the least indicative, the Order/Inventory below will not be very helpful:

Chart 1: ISM Manufacturing