Shutdown ended, Burry exited, and Disney wobbled
After 43 days and 14 failed votes, the U.S. federal government is finally reopening. Democrats broke ranks at the last minute, joining Republicans to pass a funding package that will keep the lights on through January 30. Federal workers are being reinstated, back pay is guaranteed, and layoffs are paused. Markets jumped as the vote cleared, but it didn't last long and quickly became a "sell the news" event (where investors locked in profits after good news boosted the market).
The bigger story now is that economic data will finally return after a six-week complete blackout. The September jobs report should be first out of the gate, since it was nearly finished before the shutdown. October data will be more questionable and may distort year-over-year comparisons deep into 2026. Politically, the Democrats’ strategy collapsed. Using a shutdown to force Trump into direct negotiations did not work. Moderates pushed for reopening to stop delays in SNAP food benefits, travel disruptions and federal backlogs. The next fight is already on the calendar. This funding deal lasts 79 days, which means there’ll be another showdown early next year. For markets, the reopening means liquidity will improve, as the Treasury General Account (the U.S. government’s main cash flow account) winds down, and data releases restart. A clearer macro picture is finally coming.
Michael Burry, the “Big Short” investor famous for successfully betting against the U.S. housing market in 2008, deregistered his hedge fund, Scion Asset Management last week. This effectively shut down the fund and freed him from having to report to the Securities and Exchange Commission. With about $155 million under management, Scion wasn’t large, but Burry’s trades always punched above their weight. Recently, he’s been highly critical of the AI boom. He argues that hyperscalers (large cloud computing companies) are stretching depreciation schedules to smooth out the cost of massive infrastructure spending, thereby inflating reported profits across big tech. This move fits the recent narrative for short sellers, whose pessimism has been punished by the market for some years.
Disney shares dropped more than 8% after the company missed revenue expectations and warned that next quarter will take a hit from big film-release expenses. Fourth-quarter revenue slipped to $22.46 billion. Earnings per share results beat expectations at $1.11, but the company’s entertainment segment fell by nearly 6%, and operating income dropped by 35%. Parks were stable but not strong, and domestic attendance slipped. What's interesting here is not the results themselves, but the strong market reaction to anything that’s even remotely negative. Most companies are beating expectations, but they need to.
Looking ahead, one thing matters now: Nvidia’s earnings report next week. This will arguably be the most important result of the quarter.
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