Following the longest government shutdown in U.S. history towards the end of 2025, the government is barreling for an encore at the end of January. While the prospects of another shutdown are seemingly always in the mix, givenAnalyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it ...

Group 1: Government Shutdown Overview - The US government has shut down for the first time in 7 years due to a failure to reach a spending agreement between Republicans and Democrats [1][6] - Democrats are demanding healthcare provisions, including the extension of Affordable Care Act subsidies and a reversal of Medicaid cuts [2] - The shutdown could lead to an economic data blackout, affecting key reports like weekly jobless claims and the September payrolls report [4][33] Group 2: Market Impact - Stock futures and the dollar are declining as traders assess the risks associated with the shutdown, while gold prices are surging, nearing $3,900 an ounce [3][26] - The ADP report indicated an unexpected decline of 32,000 jobs last month, raising expectations for a Federal Reserve rate cut [4][29] - Historically, government shutdowns have not resulted in major sell-offs in the stock market, but this shutdown may be different due to potential job furloughs turning into cuts [5][32] Group 3: Economic Effects - The Congressional Budget Office estimates that about 750,000 federal employees will be furloughed, costing $400 million per day in lost compensation [34] - Essential services will continue during the shutdown, including military and law enforcement, but some services may experience slowdowns [35][36] - The impact on federal benefits like Medicare and Social Security will be minimal, but SNAP benefits could be affected if the shutdown lasts more than 30 days [36][37] Group 4: Company-Specific Updates - Nike reported first-quarter earnings that exceeded estimates, but warned that progress may not be linear due to tariffs expected to cost $1.5 billion [38][39] - Berkshire Hathaway is in talks to acquire Occidental Petroleum's chemical business for around $10 billion, marking its largest deal since 2022 [39] - The US government plans to take a 5% equity stake in Lithium Americas to bolster domestic supply chains for critical minerals [41]

Group 1 - A government shutdown occurs when Congress fails to pass a budget or a short-term funding solution, leading to a temporary lapse in funding while essential services continue to operate [1][2] - The impact of a shutdown includes delays in federal permits, loan approvals, and data releases such as the monthly jobs report, but it does not equate to a government default on debt [2][3] - Historical data shows that during the 11 US shutdowns since 1980, stock market reactions tend to be muted in the short term, with median returns remaining small until about a month after the shutdown [4][5] Group 2 - The US 10-year Treasury note yield does not show significant changes immediately before or after a shutdown, but typically experiences a median drop of 19 basis points one month after the shutdown begins [7][9] - Short-term interest rates exhibit mixed movements around the time of a shutdown, but tend to decrease about two-thirds of the time one year later, with a median drop of 39 basis points [9][10] - The length of a shutdown can negatively impact growth expectations and lead to lower long-term rates, while delays in data releases can cause markets to rely more on alternative data sources [11][12]