At a time when the government shutdown is expected to a have much greater impact than previously projected, coupled with earnings season from major companies disappointing, it is hard to understand why we have a rally in the stock market.

Here is what we know – The administration had initially counted just the impact from the 800,000 federal workers not receiving their paychecks. But they now believe the impact doubles, due to greater losses from private contractors also out of work and other government spending and functions that won’t occur.

Results from Netflix, Morgan Stanley, Macy’s among others were all weaker than expected. Gymboree and Sears are joined at the hip in bankruptcy with PG&E eagerly waiting to join them at the bankruptcy party. Tesla is laying off workers as Musk finally realizes that Model 3 is not a profitable car. Nissan is laying off its employees as well although its CEO cannot join Musk to commiserate ‘coz he is in jail.

Future Wealth’s View

Next week of earnings is unlikely to lift optimism. Apple has already lowered Q1 guidance and its slew of suppliers are going to point fingers at Apple while posting weaker numbers. The other members of the FAANG (Facebook, Amazon, Apple, Netflix, Google) will report next week and their earnings and guidance will be eagerly watched for signs of continued weakness or optimism. The bright spot, if you could call that, thus far, was financials with exception of Morgan Stanley. But, forgiving the Morgan Stanley miss while applauding the financial sector is akin to Steph Curry missing all his three pointers while congratulating Warriors for the win.

And so, the question is – if corporate results didn’t take the market higher, what caused the rally? It appears that market seems to be expecting a trade truce with China. While we, at Future Wealth, are no experts on trade negotiations – having a person who is extremely volatile, petty and prevaricates on one side of the negotiating table is not a bet we are willing to take, with our clients money, as a sure sign of impending truce.

And so, while our Speaker struggles to find a commercial flight to Afghanistan, our President writes his State of the Union speech that may never happen, Elon Musk searches for pot and Eddie Lampert looks for ways to strip Sears even more, we, at Future Wealth, remain content to stay on the sidelines. This movie may not have a happy ending.