The Blind Leading the Bullish

The Blind Leading the Bullish

Week two of the government shutdown and the S&P just kissed another all-time high on Monday. Bitcoin's hovering above $123K. Gold's screaming. The dollar's getting dumped for foreign equities. And the Federal Reserve minutes—those precious breadcrumbs we usually parse for hints about where Powell's committee actually stands—dropped Wednesday afternoon to a market that's basically trading in a sensory deprivation tank.

You want to know what's broken? Not the rally. The rally's fine. The rally's spectacular. The thing that's broken is the idea that any of this requires information anymore.

We're flying blind. No jobs report Friday. No BLS data. No fresh economic releases to tell us whether the labor market's still softening or if it's already carved out a bottom. The Fed cut 25 basis points in September because unemployment had "edged higher" and job growth dipped below 200K monthly. That was the whole story: dovish pivot, labor market cooling, inflation battle won enough to justify easing. But now? Now we're supposed to extrapolate forward with September's data while the government sits dark and traders shrug their way into record territory.

Monday's session closed mixed, but the S&P and Nasdaq both hit records, buoyed not by data—because there isn't any—but by merger announcements. Two major acquisition deals were enough to convince the market that corporate America is so flush, so confident, that it's shopping for growth even as Capitol Hill remains shuttered. The shutdown entered its second week, and instead of panic, we got dealmaking. Instead of de-risking, we got melt-up mechanics.

Bitcoin climbed to $123.8K. Japan's Nikkei surged 4.75%. South Korea's KOSPI jumped 2.7%. Foreign markets are eating America's lunch while American investors rotate into hard assets and offshore equities because, hey, if Washington can't keep the lights on, maybe sovereignty itself is a little overpriced right now.

The FOMC minutes came out Wednesday at 2 PM ET, and here's what everyone was looking for: signals. Hints about the pace of cuts. Language around labor market resilience versus deterioration. Any clue about whether November brings another 25 bps or if the committee's getting cold feet. But the minutes are backward-looking. They're from September's meeting, when the Fed had data to work with. Now the market's supposed to divine forward guidance from a rearview mirror, all while the economic reporting apparatus is literally offline.

The CME FedWatch tracker puts the likelihood of another cut this month at 99%. That's not analysis. That's prayer. The market has decided cuts are certain because cuts feel good, because liquidity is king, because risk assets love easy money. And maybe they're right! But they're right the way a drunk driver is right when they make it home—technically accurate, procedurally insane.

Here's the uncomfortable part: The S&P 500 is up since the shutdown began, and apparently that's not unusual. Shutdowns don't crash markets. They annoy economists and delay data releases, but equities? Equities tend to shrug. The structural dysfunction of the federal government has become such baseline noise that traders have learned to tune it out. It's priced in. Not the shutdown itself—the irrelevance of the shutdown.

What's not priced in is the feedback loop this creates. No data means no reality check. No reality check means momentum runs hotter. Momentum running hotter means valuations stretch further from fundamentals until fundamentals don't matter because sentiment is the only fundamental left. We're not trading the economy. We're trading the idea of the economy, and the idea right now is: Fed cuts, dollar weakness, inflation controlled-ish, corporate profits resilient-ish, and if you squint hard enough, this looks like 2024 all over again except with less visibility and more YOLO.

Bitcoin jumped more than 2% to $116.4K earlier in the week as investors fled U.S. assets for gold and crypto. That's the tell. When government dysfunction makes people prefer decentralized ledgers to Treasury-backed certainty, you're not watching a normal market cycle. You're watching a crisis of institutional confidence dressed up as a bull run.

The minutes are out. They'll say what they always say: data-dependent, balanced risks, committed to dual mandate. And traders will nod along, parse the language for hawkish versus dovish tilts, adjust their bets by 10 bps, and pretend that any of it matters when the next jobs report is indefinitely delayed and the government can't agree on basic operational funding.

This isn't a market top. It's a market moon shot fueled by the absence of gravity. And gravity, for now, is stuck in a budget impasse.

Stay liquid. Stay skeptical. And maybe keep a little gold on hand.

Because when the market decides it doesn't need information to make decisions, the only information left is: this won't end well.