Will A Potential Government Shutdown Derail The Markets?

Sep 27, 2021 | Economy, Investing

The clock is ticking. Will there be a deal on the debt ceiling by October 1st? Karl Eggerss was on the Trey Ware Show discussing what this could mean for the markets.

Trey Ware:

Trey Ware here on KTSA. It is Monday. It’s the 27th of September. Wrapping up September headed right into October soon. And let’s see what’s going on with your money. Our friend, Karl Eggerss from creatingricherlives.com joins us Monday at this time. What’s going on Karl?

Karl Eggerss:

Well, we’ve got the government shutdown looming, which we’ve seen this for several times over the last 20 years. They’re talking about raising the debt ceiling and nothing gets done October 1st. There’ll be a shutdown payment default by the government, et cetera, but most think that’s not going to be an issue. And I think you can see that in the stock market. When we talked a week ago, Trey, the Dow Jones was down 900 points at one point last Monday, and it just completely reversed all of that by the end of the week. And that’s what I’ve been explaining on here is that we still have a tremendous amount of liquidity in this market. So every time the stock market drops, regardless of the news, there seems to be plenty of money coming in to buy the dip, and push stocks back up to all-time highs, which they’re very close to right now.

Trey Ware:

Well, these stories that are now really growing quite a bit about supply chain issues. Costco announced on Friday they’re putting limits on certain items. I’ve got a major story here talking about how there are ships that are lined up in the ocean right now, and it’s going to be at least 60 to 90 days before they can get to port and unload. You’ve got stuff sitting in those big shipping containers in Los Angeles and Long Beach because there’s nobody to load them up and drive the trucks. There’s nobody to put them on the store shelves. We are seeing holes on store shelves. Does this affect the future economy, or how does it affect a future economy?

Karl Eggerss:

I think it actually pushes inflation even higher because there’s a scarcity element to this. If you know you want something and you hear that there’s a wait for that, it makes you want to order it quicker so that you can get it quicker and potentially not have these delays. I mean, I think we have something like 65 to 80 ships, containers, sitting there right now, waiting in line, essentially to get in. So these supply disruptions are not going away anytime soon, and prices going up as we’ve been talking about for months on here, Trey. We’re going to see higher inflation for longer than most people think and most people are comfortable with. And so again, inflation does kind of feast on itself. And when people know that something’s going up in price, they rush to buy more it and that pushes up prices again. So that’s kind of the issue right now with supply chain issues. They’re not going away.

Trey Ware:

And so what will that mean for people living their lives? Obviously higher prices when they buy a pound of bacon. But what else?

Karl Eggerss:

Again, it affects the companies they invest in as well because there’s companies right now that they can sell this stuff, they just can’t get the stuff to sell. And so it again causes this supply-demand imbalance. And so companies may struggle as well. They may not be as profitable as they could have been had they been able to sell all the stuff they wanted to. And so again, you got to watch the stock market from that perspective to see which companies are being affected by that. Where are companies getting their supplies? Where are they getting their products from? If they’re getting it locally, may not be a big issue. If they’re getting it overseas, they could still see some big disruptions in there. So that could affect the markets going forward as well.

Trey Ware:

What has to happen to fix the labor shortage in America?

Karl Eggerss:

Look, I think we need more skilled labor in this country. I think that we need more internships. And I grew up in this era that everybody has to go to college. I think it’s a fallacy. I think we’re missing a lot of skills in this country that frankly we need. And so I think we need to assess each child, figure out what their skillset is, train them properly, and then let them go start earning a living instead of piling on years and years of debt, just so they can go to college.

Trey Ware:

Well, that’s something that’s going to take a very long time. We’re going to need a faster fix to fix what’s happening right now, because the labor shortage is the thing that’s going to be the big effect on the economy for right now. And-

Karl Eggerss:

How about don’t pay people to stay at home. That would be the quick fix.

Trey Ware:

That’s what I was looking for. That’s the one right there. Thank you, Karl. Have a great week. That’s Karl Eggerss, creatingricherlives.com. Check him out there as well.

 

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