With another government shutdown and funding deadline looming, BTIG Director of Policy Research Isaac Boltansky tells Yahoo Finance Live that while "government shutdown risks are real", he advises investors to "push the noise from DC out of their investing thought process."

Despite a lack of "meaningful progress on the basic foundations of [a] deal" and the high likelihood of a first-quarter shutdown in 2024, Boltansky believes it ultimately "should not matter to investors."

"Any negative reaction from a government shutdown will be short-lived," Boltansky says.

His only real concern is a prolonged shutdown compromising Federal Reserve data flows. However, given the hopes for an eventual recovery, Boltansky sees limited market impact from temporary DC disputes.

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Video Transcript

- And it's the first workday of the year for most people in the US, but Congress is still on vacation until the 8th. Must be nice. Lawmakers facing yet another government shutdown coming up on the 19th under the two-tiered stopgap bill passed in November. Congress has 11 days until funding lapses for various parts of the government.

Now, election years are usually a boon for stocks. But could contention on the Hill throw a wrench in strategists expectations? So for more on this, we're going to bring in Isaac Boltansky, BTIG director of policy research. And Isaac, thanks so much for being here with us. We've got those two days coming up that are going to lead to those big questions about what's going on with funding down in Washington. Talk to me about just how big a risk those days hold in terms of the potential impact to markets. Is there a huge read through there in terms of the effect that we could expect to see?

ISAAC BOLTANSKY: Look, the top line answer here is I'm telling clients to try to push the noise from DC out of their investing thought process at least for the next few months. These government shutdown risks are real. And look, I still think that we are going to have a government shutdown in the first quarter because we have yet to see any meaningful progress on the basic foundations of a deal.

Keep this in mind, we still don't have agreement on the top-line funding numbers. That should be one of the first big steps to getting a deal. Then you fight over all the particulars in there. So we are still miles away from a deal. And I think we're going to get a shutdown. But it should not matter to investors because there will be a deal eventually that funds the government through the end of the fiscal year. Any of the missed economic activity during that period will be made up; everything from salaries to government approvals for projects.

And the only thing that when I think about a government shutdown that worries me is that if it is prolonged, it could have an impact on official data coming from government agencies. And obviously, that feeds into the fed's interest rate thinking. So that's the only caveat that I have. Otherwise, we should completely dismiss the headlines and the risks around a government shutdown from an investment perspective.

- So Isaac then should investors at least be looking at-- if we do see a government shutdown, we do see the markets react negatively to that. Should they be viewing it then as a buying opportunity?

ISAAC BOLTANSKY: Yeah. Look, I think that any negative reaction from a government shutdown will be short-lived. And so I think you're framing is fair. And my only caveat, again, is the only thing that really matters in DC right now is what the fed is going to do. And so I do worry about that official data.

And if we have a two or four-week shutdown, then I'm going to start to worry because maybe that alters some of the trajectory thoughts from the market in terms of rate cuts or the rate trajectory overall. But otherwise, you should completely dismiss this and instead start to worry and think about the 2024 election.