The market’s got the attention span of a goldfish right now.

It’s obsessed with AI hype, chasing charts, and trying to guess when the Fed will cut rates again.

Meanwhile, we’ve got something way bigger brewing — and almost no one’s pricing it in yet.

Washington’s broken (what else is new?), and as of this writing, the federal government’s been shut down for nine days.

You’d think that would send a ripple through markets. 

But instead? 

Crickets.

Just more blind bidding on anything with “semiconductor” in the name.

But this isn’t just about unpaid TSA workers or missed BLS prints. This kind of shutdown has so many more economic consequences, especially if it continues dragging out. 

It affects federal contracts, consumer spending, subsidies, loan approvals, food aid, infrastructure projects … it’s impossible to list them all. 

You know what happens when the liquidity spigot slows down and sentiment is stretched?

• Weak names start falling apart. 
• Momentum stalls. 
• Smart money starts rotating.

So if you want to get ahead of this situation, you need to keep a few things in mind.   

What You’re Missing

For a lot of traders, a government shutdown barely registers. They just chalk it up to politics as usual.

But that kind of thinking gets expensive fast.

The real damage isn’t in the noise, it’s in the ripple effects that build behind the scenes.

First, the data stops flowing. Key economic reports — inflation, jobs, retail sales — all get delayed. 

So now you’ve got traders guessing at macro without fresh numbers.

Then come the contract delays. 

Defense projects, infrastructure builds, and tech services tied to federal budgets all stall. That means revenue gets pushed, or worse, pulled entirely.

It doesn’t stop there. 

Around 800,000 federal workers go unpaid. 

That’s rent money, grocery bills, and car payments. Every dollar not earned is a dollar not spent. 

You start seeing it in consumer names real quick.

And don’t forget the regulatory side. 

ETF approvals freeze. Loan applications slow to a crawl and deal flow chokes up. 

Anything that needs a stamp from Washington sits on ice.

Same story with subsidies and aid programs. SNAP, farm payments, disaster relief — all delayed. 

That adds pressure from the bottom up.

If this thing drags out past the two- or three-week mark, it will start bleeding into the real economy. 

But markets aren’t pricing that in yet.

How to Trade It

Once you’re really aware of the bigger picture, you can take action with your options strategy. 

Stocks that are likely to get hit first are aerospace and defense contractors. 

Next up are infrastructure stocks, and after that would be government services and tech stocks, followed by retail or consumer names. 

You don’t want to be chasing upside in these names right now. 

If a stock’s tied to federal contracts or consumer spending, and it’s been riding the broader market rally, I’d be watching closely for signs of relative weakness.

Don’t just look for a red day — I’m talking about when a name stops keeping up with its peers, or fails to hold a key breakout level it just cleared. 

When you see that kind of stall, that’s your shot to start positioning the other way, even if headlines still seem bullish.

Put spreads work well here, especially in names with rich premiums and clear downside catalysts. 

That way, you cap your risk while still getting paid if the weakness accelerates.

Look on the Bright Side

Historically, markets shrug off short shutdowns, but the longer they last, the more rotation you see.

Money gets more selective. 

The hot names lose steam, and capital starts flowing into places that don’t rely on government dollars or a steady economic pulse to perform.

The usual suspects pop up first: mega-cap tech names with strong balance sheets and zero exposure to DC gridlock. 

These companies don’t need subsidies, contracts, or approvals to keep generating cash.

Then you get a bid in healthcare and big pharma. These don’t swing wildly with fiscal policy. 

People still need meds and coverage whether the lights are on in Congress or not.

If the shutdown really stretches out, watch the safety plays: utilities and consumer staples. 

It’s not glamorous, but the money moves there when fund managers get nervous. 

Same with gold and Treasuries — the old-school political risk hedges still work when headlines get heavy.

But here’s what matters most: This isn’t about chasing what’s going up. 

It’s about steering clear of what’s about to get hit.

Where the Edge Is

Look, most of Wall Street’s still laser-focused on tech breakouts and rate cuts.

That’s fine.

Let them chase headlines.

You trade where the edge is.

And right now, the edge is in spotting the cracks before they become avalanches.

Watch the shutdown, watch the spending freeze, watch the tape start to shift — then act. 

Not when the media tells you to, but when the money does.

Let’s keep our risk sharp and our positioning smarter than the herd.

Stay street smart,
Jeff Zananiri