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Height Securities: Odds Of Government Shutdown Are Nearly 50-50, But Congress Still Likely To 'Kick The Can'

Height Securities: Odds Of Government Shutdown Are Nearly 50-50, But Congress Still Likely To 'Kick The Can'

There’s a major deadline approaching in Washington, D.C. later this week, and Height Securities said Congress is likely prepared to do what many would argue it does best — nothing. 

In a new note to clients on Wednesday, Height Securities said there’s a 45-percent chance the government will shut down as a result of Congress failing to pass a spending bill by the deadline midnight Friday. The more likely scenario, the firm said, is that Congress will once again simply choose to kick the can down the road by extending its spending bill deadline by another month. Either way, Congress is not likely to pass a much-needed spending bill by the end of the week, Height said. 

“The latest government funding bill offered by Congressional Republicans does not provide a straightforward path toward resolution by midnight this Friday, but we still think it is more likely than not enough Democrats will join Republicans to simply kick the can for four weeks (until Feb. 16) on the government funding and immigration debates,” according to Height. 

Democrats and Republicans remain deeply divided on the DACA immigration debate, and Democrats are insisting the next government funding bill include money for DACA in order to snag any Democratic votes. Several fiscally conservative Republicans plan to vote against the current Republican spending bill, likely leaving its fate in the hands of Democrats.

“Republicans have a 51-49 vote margin [in the Senate] and will need numerous Democrats to break ranks to pass a spending bill,” Height said.

After so many government shutdown threats in the past, investors seem to be mostly ignoring the noise out of Washington. Despite the looming deadline, the SPDR S&P 500 ETF Trust (NYSE: SPY) is up 1.3 percent over the past five trading sessions.

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