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Govt. shutdown standoff into the holidays could pressure equities: Morgan Stanley's Monica Guerra
11/4/2025, 8:02:52 PM
Economic Summary
- Morgan Stanley (MS) reports clients are increasingly asking about real-world impacts of the shutdown; SNAP expiration could lower personal income by roughly 0.4%, disproportionately affecting lower-income households and sectors like food and beverage.
- The current shutdown is tied for the longest on record; historically markets often rise into shutdowns, but extended disruption—especially during holidays or if airports are impacted—could meaningfully increase market and consumer nervousness.
- ACA subsidy negotiations (roughly framed between $340 billion and $1.5 trillion in proposals) are central to any deal; an extension—permanent or temporary—would likely produce sectoral winners in health care, notably private-exchange insurance companies.
- Local elections (New Jersey, Virginia, New York City mayoral) may show regional effects: New Jersey could act as a referendum on broader political sentiment, while Virginia's heavy government-employee base creates different dynamics that the shutdown could influence.
Bullish
- ACA subsidy extension would be a tailwind for private-exchange insurers.
- Markets have historically tended to rise into government shutdowns.
- A post-election bipartisan deal could reduce uncertainty and support risk assets.
Bearish
- SNAP benefit expiration could reduce personal income by about 0.4%, hitting food and beverage demand.
- Prolonged government shutdown through the holidays or airport disruptions could spook markets and consumer confidence.
- Uncertainty over ACA subsidy size could keep insurance stocks depressed until resolution.
Bullish tickers
INSURANCE COMPANIESMS
Bearish tickers
FOOD AND BEVERAGEMSINSURANCE COMPANIES
MS
Bullish
Increased demand for advisory and wealth-management services amid uncertainty could support engagement and business for Morgan Stanley (MS).
Bearish
Client assets and fee revenue could be pressured by prolonged shutdown-driven market uncertainty and reduced consumer income.
INSURANCE COMPANIES
Bullish
An ACA subsidy extension would provide a tailwind for private-exchange insurers, offering potential upside after recent share declines.
Bearish
ACA subsidy uncertainty and political negotiation risk could keep insurance stocks depressed until clarity arrives; Medicaid-heavy insurers face weaker prospects.
FOOD AND BEVERAGE
Bearish
SNAP expiration cutting personal income by ~0.4% would disproportionately reduce spending at food and beverage companies.
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