Dan Niles: Govt. shutdown may last long but it really doesn't matter for stocks

Market Sentiment and Economic Outlook - The current government shutdown is not expected to significantly impact the market, as seen in the past where the S&P rose 10% during a similar shutdown in 2018 [2] - Investors are likely to focus on upcoming Q2 and Q3 earnings reports and developments in the AI sector, rather than the shutdown itself [3] - Anticipated rate cuts on October 29th and December 10th are expected to sustain market optimism, despite concerns about underlying economic realities [4][10] AI Sector Analysis - The AI market is perceived as having many potential winners, but historically, only a few companies dominate in their respective sectors, such as Google in search and Amazon in e-commerce [5][6] - Current market enthusiasm for AI investments may mirror the late 1990s tech bubble, where irrational exuberance led to significant market gains despite a lack of sustainable fundamentals [6][7] Federal Reserve and Monetary Policy - The necessity of rate cuts is debated, with some arguing they are not essential given the current GDP growth of 3% and persistent inflation above target levels [10][11] - The Federal Reserve's stance on inflation being transitory raises questions about the justification for rate cuts, especially in light of past misjudgments regarding inflation trends [11][12]