Week Ahead - Government Shutdown Looms

The opening bell rings at 9:30 AM Eastern Standard Time, but smart money, we get there early. Welcome to Beat the Bell, the podcast that demystifies what's happening in the market before it impacts your wallet. I'm Dominique Broadway, self-made first-generation multimillionaire, and after helping over 600,000 people build wealth, especially those who are the first in their family to do it, I'm here to translate the financial noise into clarity you can actually use. Whether you're just starting your wealth journey or you're ready to level up, this is where we beat the bell together.

Hey, beautiful humans, and welcome to Beat the Bell. I'm Dominique Broadway, and if you thought last week was intense, well, buckle up, my friend, because this week is about to test everything that we just learned about preparing for uncertainty. So we've got Nike earnings tomorrow that could show us how badly tariffs, which are those extra taxes on imported goods, are hitting the brands you love. Carnival Cruise Lines reports this morning, and it'll tell us whether people are still choosing to spend money on vacations and experiences, or if they're just starting to pull back. A potential government shutdown is starting Wednesday that could affect millions of paychecks and delay the financial reports that we all depend on to make smart money moves. And the job report on Friday if it even comes out. So the next 15 minutes, I am giving you exactly what to watch, how to protect your money, and more importantly, how to position yourself to make money while everyone else is panicking. So let's beat the bell together. All right, let's start with the elephant in the room, the potential government shutdown that kicks in at midnight on Tuesday. Now I need y'all to understand something. This isn't your typical political drama where they work it out at the 11th hour. Congress literally left town Friday without deal. They're not coming back until today, and the deadline is tomorrow night, which is wild. So here's what makes this shutdown different from the ones we've seen before. The White House told federal agencies to prepare for permanent layoffs, not just temporary time off like we've seen in past shutdowns. That means that people could actually lose their jobs, not just miss a few paychecks. So what this means for your money right now, if you work for the federal government or you've got family who do, like I have tons, you need to be having real conversations about emergency money. Nearly 1.4 million federal workers are considered essential. That means they're required to show up to work but won't get paid starting on Wednesday. Think about it, working without a paycheck. I'm not here for it. So another 900,000 workers would be sent home without pay, and here's what's really messed up. So in past shutdowns, everyone eventually got their back pay, but this time there's no guarantee. So here's what you need to do today. If you work for the federal government, make sure you've got at least 1 month of expenses sitting in your checking account where you can grab it immediately. If you're a federal contractor, meaning you work for a company that has contracts with the government, you're not guaranteed any back pay at all. You need an even bigger cushion. So here's what most people aren't thinking about. The businesses that depend on federal workers, the lunch spots near federal buildings, the daycares, the dry cleaners, they're about to see their revenue drop off a cliff. So during the 2019 shutdown, communities near national parks lost $20 million per day because tourists couldn't visit. Beyond the immediate money problems, this shutdown could delay critical economic data. You know that monthly jobs report that I talk about all the time, the one that tells us how many jobs were created and what the unemployment rate is, that's supposed to drop on Friday. So if the government shut down, we don't get that report. And trying to make smart investment decisions without that data is like trying to drive at night. Night with their headlights off. So financial markets hate not knowing what's happening even more than they hate bad news. So even if your paycheck isn't directly at risk, your investment accounts might still take a hit from all this uncertainty. Now let's talk about what's happening with the companies you might be interested in because earnings season is here and it's about to get real interesting. So Carnival Cruise Line reports, reports this morning, and I'm watching this one like a hawk because it tells us something really important about how people are spending. After the pandemic, pandemic, we saw this huge shift, right? So people stopped buying as much stuff and started spending on experiences— trips, concerts, cruises, anything that made them feel alive again. And Carnival has been crushing it. 8 straight quarters of record-breaking sales. Last quarter, their profits more than tripled. But now we've got inflation still running hot, we got credit card debt at all-time highs, and everyone's feeling uncertain about what's coming next. So the question is, are people still dropping $1,500 or more on a or are they starting to say, you know what, maybe I should hold on to this money a little bit longer. So Wall Street analysts are expecting Carnival to report earnings of about $1.32 per share. That's how much profit they made for each share of stock. So if they beat that number and tell us bookings for future cruises are strong, that means that consumers are still spending despite everything. So if they miss that number or say future bookings are slowing down, That's your early warning signal that people are finally tapping out. So for your money, if you own any travel stocks, this can be airlines, hotels, cruise lines, pay close attention to what they say about future bookings. That forward-looking information matters way more than what happened last quarter. Now, Nike also reports tomorrow after the market closes, and this is where we're going to see the real impact of tariffs on everyday brands. So, Nike is expecting to report about 26 to 28 cents per share. That's down 20— that's down 60% from last year. 60%, y'all. That's huge. Revenue, that's total sales, is expected to drop about 5% to around $11 billion. Now, you may be asking, why such a big drop? Well, Nike's been getting hammered by tariffs on goods that they import from China. So, those tariffs are basically extra taxes on products coming into the country and someone has to pay them. So the company warned that their gross margins, that's the difference between what it costs to make something and what they sell it for, is going to take a massive hit. So between 350 and 425 basis points or so. Now, a basis point is just 100th of a percent. So we're talking about 3.5 to 4.5, 2.5 percentage points. About 1 full percentage point of that hit is directly from tariffs, but there's going— but there's, there's more going on outside of this. So Nike's also dealing with too much old inventory sitting in warehouse— warehouses. We got weak sales in China, and they've launched this whole turnaround plan they're calling Win Now. This earnings report is going to show us whether they're actually able to absorb these tariff costs or if they're passing them on to you and me. And whether we're willing to pay higher prices. So here's why you should care even if you don't own any Nike stock. So Nike is what we call a bellwether. That means it's an indicator for the whole consumer discretionary sector. And consumer discretionary is just a fancy way of saying stuff people want but don't absolutely need. So if Nike shows that people are pushing back on higher prices, that's a warning sign for every company selling non-essential products, and Nike has a history of disappointing investors after earning announcements. The stock has actually dropped 63% of the time after reporting earnings over the past few years. When it drops, the average decline is 6.5%. The worst drop was actually 20%. So your move: if you own Nike or similar consumer brands, decide now whether you want to hold through the earnings announcement or take your profits before Tuesday's close. The big theme to watch across all earnings is pricing power. That means which companies can raise prices without losing customers and which ones are watching sales drop because people won't pay more. So this split between winners and losers that we talked about last Friday, it's about to become crystal clear this week. Now let's talk about economic data coming out, assuming that the government stays open. So Tuesday we get something called the ISM, ISM Manufacturing PMI. And let me break that down. So the ISM is the Institute for Supply Management. They survey the people who actually buy materials and supplies for factories, which are the purchasing managers. PMI stands for Purchasing Managers Index. It's basically asking these managers, are you ordering more stuff or not? Are you hiring or laying off? Are prices going up or down? So a reading above 50 means manufacturing is expanding. Below 50 means it's contracting, shrinking. So in August, it came in at 48.7. That means manufacturing has been shrinking for 6 months straight. But there's one bright spot. New orders jumped to 51.4. That's the orders coming in for future production, and it suggests that maybe, just maybe, we're starting to stabilize. So here's why you care. Manufacturing is only about 15% of our economy, but it's a leading indicator for everything else. So when manufacturing starts to struggle, the rest of the economy usually follows a few months later. So pay special attention to something called the prices paid index within this report that tells us whether the cost for raw materials and supplies are going up or coming down. That directly affects inflation, which affects whether the Fed cuts interest rates more or holds them steady. So Thursday we get the Services PMI. Services is everything that's not manufacturing. So restaurants, salons, accounting firms, healthcare, entertainment. It's 85% of our economy. Services has been holding up better than manufacturing, but we're starting to see some weakness there too. And then Friday, if the government is actually open, we get the September jobs report. So expectations are really low. Only 39,000 jobs added for the entire month. That would be the second straight month of basically no job growth after just 22,000 in August. And remember what we talked about Friday, the government admitted that they overcounted jobs by nearly a million, a million, over the past year. So we're not starting from a strong position here. So if Friday's numbers come in below 40,000 and the unemployment unemployment rate ticks up from 4.3%, expect everyone to start talking about recession. Now, here's something that might seem backward. Weak job numbers could actually make stocks go up in the short term. Why? Because it makes it more likely for the Fed to cut interest rates aggressively to help the economy. Lower rates usually boost stock prices. I know it's twisted, but that's how the markets work. All right. Now, let me give you the 5 strategies you need to navigate this chaos Because I don't want you to just surviving this week. I want you positioned to start building wealth. Strategy 1, build your cash buffer right now. If you haven't already stacked 3 to 6 months of expenses, an emergency fund, this week is screaming at you to do it. Cash gives you options. It covers your bills. If income gets disrupted, it lets you buy investments when they go on sale. And it lets you sleep at night when headlines are while high yield savings accounts are still paying over 4%. But as we talked about Friday, those rates are coming down. So lock in what you can now. Strategy 2, review your income sources. If you're depending on just one paycheck, especially a federal one, this is your moment to think about diversification. What skills do you have that could bring in some side income? Could you consult, freelance, create a digital product, teach people what you know? I'm not saying quit your job. I'm saying build a plan B because the job market just got a lot more competitive. Next, I want you to watch for money-making opportunities. Here's something I need you to really understand: market volatility doesn't destroy wealth, it actually transfers wealth from people who panic to people who are prepared. So when Nike potentially drops 6 to 20% tomorrow after earnings, that might be your chance to buy a quality company at a discount if you believe in the long-term story. And when the government shutdown creates panic selling in defense contractors or government service companies, That might be your opportunity to scoop up great businesses at bargain prices, but you can only do this if you've got that cash ready and you're not stressing about your own bills. Strategy 4 is to audit your portfolio for government exposure. So if you own stocks of companies that depend heavily on government contracts, get ready for some volatility. Defense contractors such as IT companies that service federal agencies, aerospace companies working with NASA or the Department Defense. All of these could see selling pressure. Now, I'm not saying sell everything. I'm saying know what you own and have a game plan. For example, having put options on some of these companies. So, strategy 5, protecting your health insurance. If you're one of the millions getting help paying for health insurance through the Affordable Care Act, those enhanced subsidies expire December 30th. That's separate from the shutdown, but it's part of the same political fight. So, if you benefit from those subsidies, start planning now for potentially way higher health insurance costs next year. Look at HSA-eligible plans— that's Health Savings Accounts— plans that let you save pre-tax money for medical expenses. Compare your options and budget for higher premiums, and do not wait until January when it's too late to plan. So here's the bottom line for this week: we're walking into a period where nobody knows exactly what's going to happen. Uncertainty is super high, earnings reports are all over the place, economic data is showing cracks. But here's what I know for sure: uncertainty creates opportunity for people who are prepared. The difference between people who build wealth during crazy times and people who lose money comes down to 3 things. One, having cash. You're not forced to sell investments at the worst possible time. Two, having a plan so you're not making emotional decisions based on scary headlines. And number 3, having the discipline to stick to your plan when everyone around you is losing their minds. So this week is going to test all three. Reminder, Tuesday Carnival is going to tell us if— well, Monday or Tuesday Carnival is going to tell us if consumers are still spending on experiences. Nike's going to show us who's really paying for these tariffs, and then Wednesday we might have that government shutdown, and watch how the markets react. All right, Thursday we get that services data, which is going to show us if the biggest part of our economy is holding up. Friday's is supposed to be the job report, if we even get it, but that will show us if the labor market is stabilizing or getting worse. And through it all, remember, you're the CEO of your money. CEOs don't panic when things get volatile. They don't make rash decisions based on headlines. They stick to their strategy, they protect what they've built, and they position theirselves for the next opportunity. That's exactly what we're going to do this week. If this helped you, share it with someone who needs to hear it. We've got a big week ahead and I wanna make sure our whole community is prepared. I'm Dominique Broadway, and remember, in volatile markets, being prepared isn't just smart, it's how you build wealth. We'll see you Friday with a full recap of how it all played out. Beat the bell. Have a good day.