On our way to Annapolis for Academy’s Annual Geopolitical Summit – biggest one ever, which is exciting.

In the meantime, let’s follow up with a few things discussed in Meandering Through the Narratives and one thing not discussed.

Prepare for An Extended Shutdown

Markets are taking a government shutdown in stride, which makes sense, but I would not be surprised if this one last weeks, or even months, rather than days.

• Neither side seems to be negotiating in earnest (if at all).
• The Democrats seem to believe that the shutdown will cause problems and those problems will be blamed on the President (I suspect some portion will blame the admin no matter what, some will defend the admin no matter what, and the rest of us will be in the grey zone, frustrated, potentially, with both sides).
• The Republicans, I believe, have an agenda to “take advantage” of the shutdown:
  • At its most basic, let “non-essential” services flounder and see if they are really necessary or not, potentially paving the way for the admin to cut costs permanently where DOGE wasn’t successful.
  • Not sure what else to expect, but would look for some “surprises” during the shutdown to reduce costs, departments, etc.

If I’m correct, and the admin “has a plan” around the shutdown, they may not offer anything to the Dems (for some time) and at this stage, it would seem highly unlikely that the Dems give up their demands.

Therefore, I’m expecting a longer shutdown, which over time, will likely weigh on the economy (and I’m already dreading the vitriol on social media).

ProSec™ and Electrons

Add Lithium Americas (ticker LAC) to the list of companies that the U.S. government is taking stakes in.

Look for this to continue. At some point, I expect some steps to be taken to fund a proper Sovereign Wealth Fund (maybe by revaluing gold holdings and selling some?).

This stake also seems to confirm that, despite not helping “sustainable” energy efforts in the Big Beautiful Bill, the government realizes that to ramp up electricity rapidly (to keep up with demand from AI/Data Centers and keep costs under control), sustainable will play a key role. I bet on solar and batteries above wind (the President seems to really hate wind, but that could change, too).

Department of War Rebranding

I have not listened to or watched the full program from Quantico yesterday. Having said that, my discussion with the admin involved in that event (and what is to come, going forward), agreed that the term “rebranding” is appropriate.

I need to watch the full event and get a sense from the veterans at Academy, what their take is on all of this (the summit being a perfect opportunity for that). I suspect, as with so much, there will be mixed takes on it. One concern is that it could be pushed to “go too far.”

Bottom Line

The shutdown, if it is extended and is used as a tool to make cuts, could be good for bonds and weigh on stocks and credit spreads.

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