News hit Friday that House Speaker John Boehner will retire from Congress in October. He's not just quitting his speaker position, but leaving Congress altogether.
According to data from PredictIt, Boehner's departure has dramatically reduced the chance of a government shutdown—all the way down to a meager 8 percent.
PredictIt is a real money betting experiment from New Zealand that allows people to predict financial and political events, by putting their money with their mouth is.
According to the site, the chance of a U.S. government shutdown come Oct. 1 had been as high as 40 percent overnight. The drop from 40 to 8 happened in a matter of moments when the Boehner news came out.
Goldman Sachs explained why this might be the case in a note to clients Friday, claiming Boehner's departure "significantly reduces the probability of a government shutdown next week."
That said, Friday's news might actually increase the odds of a potentially more dangerous showdown over the debt ceiling. Goldman wrote:
The next relevant question for financial markets will be how this affects the debt limit and other pending issues. There is a clear possibility that the vote next week, which was initially expected to deal just with the extension of spending authority, could instead also address other issues like an extension of the Export-Import Bank and, possibly, even an extension of the debt limit, which we believe will need to be raised before Congress adjourns for the Thanksgiving break in late November.
Separately, UBS' Art Cashin described how his exit has other effects: "Smart money says Boehner quitting may doom export/import bank, which could impact earnings. Note how GE shipped some operations and jobs offshore over this issue."
The trading numbers have been moving around a lot in the last few minutes, going from 6 to 14 to 8—bouncing quickly in between. For the time being, trading here has been more volatile than the actual stock market.
Since trading on PredictIt started in early September, there was only one day (Sept. 11) when it closed above 50 percent. Every day since then saw closing prices between 28 and 46 percent.
Those are much lower than the so-called "experts" who claimed the chance of a shutdown was at least 50 percent. On Thursday, just a day before Boehner's announcement, six experts interviewed by The Washington Post had predicted such high numbers. Now they have backed down and moved away from those statements. The prediction markets didn't have to make as big an adjustment, because the bettors were closer to being right than the "experts."
According to a PredictIt spokesperson, the market—which is made up of everyday people who follow the news and current events—has an 89 percent accuracy rate.
So maybe the wisdom of the crowds is better than an expert, or maybe that's just what happens when you put your money where your mouth is.
—CNBC's Nicholas Wells contributed reporting.
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