Through all the dysfunction of Congress in recent years, the stock market has thrived. Through the U.S. losing its AAA credit rating in 2011. Through the fiscal cliff, budget sequestration, and federal government shutdown in 2013. That resolve will be tested in the weeks ahead.
Admittedly, there have been some heart-stopping falls, like in the summer of 2011 when the S&P 500 stock index shed 16 percent in two weeks as the country's credit rating was cut. But the market has shown a stubborn determination to look through political showdowns and fiscal shutdowns.
In the week ahead, investors should be looking for clues from Congress about how it will address economically important spending plans as it returns from summer recess.
Front of mind is flood insurance. The program was $24 billion in debt before Hurricane Harvey and its historic rains. Beyond the bailout the program needs, Congress has to decide if it wants to remain in the flood insurance business. The program is due to expire at the end of this month, just as the equity American homeowners have in their homes has finally rebounded fully from the collapse caused by the Great Recession. The need to protect that equity from floodwaters has never been so obvious, or so expensive. Homeowners and banks have a lot riding on it.
Health care spending is almost a fifth of the nation's economy. Health insurance companies are waiting for clarity from the Trump administration over the federal government subsidies used by most Affordable Care Act enrollees to pay their monthly premiums. Insurers have until Sept. 27 to say whether or not they will be involved in the marketplace for 2018.
While Obamacare has consumed the debate over government's role in health care, the Children's Health Insurance Program faces its own Sept. 30 deadline. The federal-state program covers health insurance for 9 million kids whose families make too much money to quality for Medicaid.
Add reaching the debt ceiling (Sept. 29) and the need for a new federal government budget (Sept. 30) to Congress' to-do list.
Investors, and markets, would rather concentrate on profits instead of politics.
