Why the rally?


Dad wondered why there would be a rally at just the announcement of a bipartisan deal with regard to the debt ceiling. The way I see it there are two possibilities. Either, one the news media ignored the actual source of the rally in favor of their preferred political party being involved in the deal. (This is pretty unlikely since I haven’t heard of anything else that might reasonably have an effect.)¬†Or, the added certainty of a deal existing, regardless of what the deal was.

Business ventures automatically have a certain level of uncertainty, adding in a potentially disasterous pending government decision into the mix can lead to many business leaders to vacillate, unsure of whether to risk investing or play it safe in the hopes of having enough to make it. Getting the government decision out of the way allows investors to make their decisions based off of more stable factors.

Hopefully, this helps to clear a few things up.

Advertisements