Economists relieved about deal reached in Congress
12:47 PM, Oct 16, 2013
6:41 PM, Oct 16, 2013
OVERLAND PARK, Kan. - In Overland Park's Corporate Woods and in offices all around the country, economists and stock brokers are relieved that Congress has averted a default on the country's debt ceiling. It comes after a long morning of keeping a close eye on the stock market.
Overland Park economist Chris Butler with Butler, Lanz and Wagler says now that we've averted a default, we could see some fluctuations in the market.
He calls it the "buy the rumor, sell the news."
The market went up on the rumor that we are close to a deal. But now that we've reached one, suddenly thousands of shares may be sold.
"When the rumor is floated, everybody buys because we are going to have this thing resolved but when it's laid out and people hear the specifics, they dump," Butler explained.
Despite angst about the government shutdown, the stock market has been led by offensive stocks, not defensive ones, which is an encouraging sign.
Butler explains at some point lawmakers will have to stop kicking the can down the road.
"The world is watching the United States and saying we probably need to be looking at a different currency of choice for global commerce. It was the U.S. dollar, but people are losing confidence in that currency because they see we can't get our fiscal act together and that's going to be a problem," Butler emphasized. "The world knows the piper doesn't have to get paid today, but the world also knows the piper is going to have to get paid."
Butler also says not to be too worried about your 401k, now that an agreement has been reached.