MAILBAG: Government Shutdown at SOTU + Is There a Snow Crash on the Way?

I’ve been off of the blogging flywheel lately and on to the New Year’s resolution treadmill, but you animals won’t let me be. You have been lighting me up about this government shutdown and wanting to know where the alpha is. So let’s open the mailbag and see what we’ve got.

As a reminder, here’s the market in question:

Jan 18 shutdown

Basically, how much longer will the current partial government shutdown last? The most popular position is January 18 or longer, which is trading in the low 60s.

Now let’s open the mailbag on this subject. Oh, and full disclosure: I HAVE NO MONEY IN THIS MARKET. NONE AT ALL.

From: JNaussett in Washington, D.C.

“You should debate: will shutdown last until state of the union so that Trump can go to Congress and shame them. Base will love it. His biggest weakness w shutdown is his ability to file and get tax returns and food stamps. He’s taken lots of flexibility to reduce pain already. Why not extend it to the state of the union to grandstand?”

I like this question a lot and honestly, I am sure that Trump’s advisors have been batting around the idea of using the State of the Union address to flex on the shutdown. However, I’m not convinced that it’s a good political move for the President to brow-beat Congress during a “crisis” that a lot of people think he manufactured. That runs the risk of Trump looking like he’s standing in the Bully Pulpit with his pants around his ankles. And let’s be honest, the last president who did that got impeached.

Clinton-Boner.jpg

There are some other things to consider. The first one is whether or not Donald Trump even takes political advice. As far as I can tell, his top advisor is whatever Fox News anchor is currently on air, which is one of the reasons why his staff and cabinet secretaries have the same lifespan as a black guy in an ’80s slasher movie– extremely short.

Remember, Trump governs like an entertainer. Political advice sells low in that environment.

The second thing to consider is whether or not normal political advice is even relevant these days. Trump basically ran for office saying, “I’m going to prove the haters wrong,” and accidentally got elected President in the process. Since then, he’s made his hay by calling bluff-after-bluff, like this whole thing about either having a wall or an open government.

dirty harry

We’ll see if he gets blown-out with all his chips on the table.

The third thing to consider is that access to the House Chamber, where the President gives the State of the Union address, is controlled by the Speaker of the House. That’s Nancy Pelosi. This week, Trump gave her Senate counterpart, Sen. Chuck Schumer (D-NY), the amazing pet name of “Cryin’ Chuck,” which I think might be even better than “Low Energy Jeb” or “Little Marco.” The point is that Trump is one cold Big Mac away from degrading Speaker Pelosi the same way, and I do not expect her to take that lying down. She could definitely retaliate by denying the President’s request to use the House Chamber for the State of the Union. And that’s not as bonkers as it sounds, considering the fact that liberal Democrats collectively lost their marbles over the fact that network TV stations even gave the President air time this past week. Ergo, there is definitely a vocal constituency within the Democrat Party that thinks that whatever Donald Trump says is, by definition, hateful lies, even if he is just reading the phone book or the back of a Campbell’s Soup can.

Because of this, if there is still a shutdown during the State of the Union, I would not be surprised if Speaker Pelosi denied Trump the use of the House Chamber under some bleeding heart pretext about federal workers being without a paycheck and the President being a pathological liar, etc., etc.

So maybe this year’s Joint Address will be from the lobby of the Trump Hotel. Wouldn’t that be something?

From: Zoltar-the-All-Knowing in Florida

“Alert, K-Dawg! Don’t buy shutdown shares. There is a possible snowday coming on Jan 14, which would fuck up the OPM update!”

Interesting. In case you haven’t figured it out, every time that an email from Zoltar hits my inbox, I stop and listen. That man went 10-for-10 the last time he came on my podcast and he has a killer instinct for how to profit off of PredictIt’s sloppy rules drafting. So naturally, when I saw his email, I went down the government shutdown snow day “rules cuck” rabbit hole with him.

But before we go there, let’s re-read the rules of the current shutdown market:

Jan 18 shutdown

“Subsequent to the launch of this market, the first date upon which the Office of Personnel Management’s Snow & Dismissal Procedures website (located upon launch of this market at https://www.opm.gov/policy-data-oversight/snow-dismissal-procedures/current-status) shall at 12:00 p.m. (ET) not indicate that due to a lapse in appropriations, federal government operations vary by agency shall be the date or date range identified in the contract.”

Ruh-roh! I think Zoltar is on to something. Everyone on the news is squawking about how there is no end in sight to this shutdown, which is why the most popular bet is that YES, it will continue on or after January 18 (62 cents). I have no money in this market, but I agree with that position. However, what the rules of this bet are asking is when the OPM message will stop saying that the government is closed due to a “lapse in appropriations” and start saying literally anything else– like “closed” or “delayed” for “snow.”

Now, here’s something you don’t know: Every now and then, Zoltar goes full Limitless and inhales a month’s worth of that modafinil “smart drug” that real alphas buy on the dark web or on Wall Street trading floors so that they can see into a fourth dimension. Then, a few hours later – usually around dawn – he’ll start sending me emails about cash traps to avoid and free money waterfalls to bathe in on PredictIt. This happens because modafinil has made him tear through boring papers written by government lawyers faster than I tear through a 12-pack watching Top Gun.

But before we get to Zoltar’s midnight findings, we need to take another detour to establish some more facts about the “snow cuck” that PredictIt traders are bickering about:

(1) This bet is using OPM’s website as a benchmark for whether the government is open or closed. Those of you who played the December 2018 shutdown market know that Marge over at OPM is a real sicko, and that these markets can get out of control quickly, regardless of what the facts on the ground are.

(2) OPM uses this same webpage to alert federal workers to snow days, late openings, and really any deviation from a normal schedule that you can think of.

(3) As Zoltar identified, there is a snow storm headed to the Beltway on or around January 14th.

weather report

(5) So what happens if there’s a snow day and a shutdown at the same time? What does OPM’s webpage say about that?

Well first of all, someone else posed this same question on a PredictIt board and got lit up by some of the biggest traders. “Nothing to see here,” they said.

Screenshot 2019-01-10 16.05.44

Hmm… interesting take…

Back to my story.

So it’s 2:00 AM on Wednesday and I am snug as a bug-in-a-rug. Little do I know that Zoltar is somewhere in Miami, appears to be in the middle of another modafinil bender, and has been pleasuring himself with boring OPM reports for the last six hours– until my phone starts buzzing, blinking and flashing so fast with new messages that for a moment, in the dark of night, I think that I am on molly at a Deadmau5 concert in 2010. Too bad for me, though. Just Zoltar.

opm status rule cucked

But… he has two crucial pieces of evidence about the possible “snow cuck.” The first one is a history of OPM’s website hanky-panky.

OPM closures

As you can see, there are a lot of reasons why OPM could change their status for weather-related work disruptions and totally bone January 18 holders. Or maybe they’d come up with a hybrid alert. I really don’t know, but I have no money in this marketplace and this new uncertainty doesn’t make me want to get in.

But Zoltar didn’t stop there. That’s because he is an absolute maniac. Instead of quitting and saying, “Nah, I’m out of this market,” like a normal person would, this guy goes and finds the Holy Grail of OPM trivia– an interview with the guy who makes the final call. Check out what he has to say:

snow day interview

So there’s your answer to the Snow Cuck of 2019. Let’s review:

(1) The possibility of a snow cuck is real.

(2) So if you don’t have any money in this market, wait until 4:01 AM on the day of the storm. If there’s nothing listed by OPM at that time, you’re golden. Yes, your entry point is going to get more expensive if you wait until then to buy, but I’ll take that trade-off to insure against another shutdown rules cuck like December’s.

(2) If you’re holding January 18, the opposite is true. No need to panic sell. The potential for a snowstorm at some point in the future is a terrible reason to gut your portfolio in the present. Don’t be stupid.

But you already knew that.

BONUS CONTENT:

Here is a music video from the Hollywood classic, Snow Day, to inspire you.

 

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