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Post by yogibearbull on Aug 1, 2023 22:11:20 GMT
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Post by yogibearbull on Aug 1, 2023 22:25:07 GMT
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Post by anitya on Aug 1, 2023 23:28:47 GMT
I forgot how prompt S&P was when they downgraded but Fitch downgrading 2 months after the last event, which everybody new ahead of time and everybody saw the sausage making, is irresponsible. They need to explain why they could not announce this downgrade the first week of June if they were to be credible.
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Post by uncleharley on Aug 2, 2023 1:48:32 GMT
I'll let the world sort this out. Good Night everybody.
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Post by anitya on Aug 2, 2023 7:11:56 GMT
Just an FYI - only two US companies are rated AAA. Even if no company in a country can potentially have a higher rating than the country rating, I am not expecting massive corporate downgrades as a result of Fitch’s desire to make news.
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Post by Norbert on Aug 2, 2023 8:25:56 GMT
I forgot how prompt S&P was when they downgraded but Fitch downgrading 2 months after the last event, which everybody new ahead of time and everybody saw the sausage making, is irresponsible. They need to explain why they could not announce this downgrade the first week of June if they were to be credible. Quoting from the CNBC piece linked by Yogi ... "In Fitch’s view, there has been a steady deterioration in standards of governance over the last 20 years, including on fiscal and debt matters, notwithstanding the June bipartisan agreement to suspend the debt limit until January 2025,” the ratings agency said. "Fitch also highlighted the rising general government deficit, which it anticipates will rise to 6.3% of gross domestic product in 2023, from 3.7% in 2022. “Cuts to non-defense discretionary spending (15% of total federal spending) as agreed in the Fiscal Responsibility Act offer only a modest improvement to the medium-term fiscal outlook,” Fitch said." Obviously, this is not just about the debt ceiling squabbling. The soaring deficit combined with statist ideology is making the US resemble France. Opinion seems divided and partisan. From the UK "Telegraph" ... Larry Summers said that "Fitch’s decision was 'bizarre and inept' given the US economy 'looks stronger than expected'." "Steven Ricchiuto, US chief economist at Mizuho Securities, said the downgrade 'basically tells you the US government’s spending is a problem'. He added: 'It’s an unsustainable budget situation because the economy can’t even grow its way out of this problem going forward.'" "Janet Yellen, the US Treasury Secretary, said she strongly disagreed with Fitch, calling the rating change 'arbitrary and based on outdated data'." |
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Post by Chahta on Aug 2, 2023 12:13:09 GMT
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Post by yogibearbull on Aug 2, 2023 12:22:06 GMT
Timing for debt downgrade is never ideal. While odd, Fitch had the US on negative outlook and may have deliberately avoided the period around the debt-ceiling fiasco, a mistake that the S&P/McGraw Hill made on 2011. Only 2 US nonfinancial companies, JNJ & MSFT, are rated AAA. These aren't related to the US debt rating. But in 2011, all US financials were downgraded to AA+ or lower on the theory that no US financial could have debt rating higher than the US. This when only the S&P did the downgrade. IMO, some US financial could easily be AAA, if not for this artificial ceiling. There was a temporary hit to stocks in 2011 after the S&P downgrade, but McGraw-Hill suffered more. Basically, it disappeared as a public company, and today, there are public S&P Global/SPGI (in the meantime, it also gobbled up all of the Dow Jones indices) and only private McGraw-Hill Education. For years, people said that 2 out of 3 major ratings counted, so the US remained AAA/Aaa even after the S&P downgrade. But now, with Fitch (owned by Hearst; also publishes Cosmopolitan, Seventeen, etc) joining S&P, 2 out of 3 becomes AA+. Moody's/MCO (with 13.45% owned by Warren Buffett/BRK) remains at Aaa. The SEC recognizes 10 NRSROs - Nationally Recognized Statistical Rating Organizations, but so far, the big 3 count. Note that DBRS is now owned by M*; Kroll is the old Duff & Phelps. www.sec.gov/about/divisions-offices/office-credit-ratings/current-nrsrosEdit/Add. There was a Fido alert last night of an event in my brokerage account. It was on the downgrade of my Treasury holdings. Schwab & Vanguard haven't sent similar alerts yet. |
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Post by steadyeddy on Aug 2, 2023 13:57:40 GMT
I think it is fair that there is a downgrade on US credit rating. We are at the (tail) end of a growth cycle - and the slowing/recession cycle could last a long time.
De-dollarization, while in infancy stage, is going to reduce the reliance over time on USD based assets such as Treasuries. India - Russia, and China - Russia, and I believe Saudi - Russia have already started trading in respective local currencies. This is not an imminent danger to king Dollar but the sentiment is quite negative.
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Post by uncleharley on Aug 2, 2023 14:05:35 GMT
I think it is fair that there is a downgrade on US credit rating. We are at the (tail) end of a growth cycle - and the slowing/recession cycle could last a long time. De-dollarization, while in infancy stage, is going to reduce the reliance over time on USD based assets such as Treasuries. India - Russia, and China - Russia, and I believe Saudi - Russia have already started trading in respective local currencies. This is not an imminent danger to king Dollar but the sentiment is quite negative. You may be right. However, the chart for the USD indicates that the trend for the value of the USD appears to be up after a longer-term consolidation. |
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Deleted
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Post by Deleted on Aug 2, 2023 15:19:17 GMT
Seems like the downgrade would be the perfect example of why one wouldn't want to put all their eggs in one basket, but my international equity is fairing much worse than domestic on the news. Drats...
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Post by Norbert on Aug 2, 2023 15:26:08 GMT
Seems like the downgrade would be the perfect example of why one wouldn't want to put all their eggs in one basket, but my international equity is fairing much worse than domestic on the news. Drats... Plus the USD is soaring. Go figure. |
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Post by uncleharley on Aug 2, 2023 15:45:45 GMT
Reuters has published a piece that claims the Jan 6 activities were a subject for discussion in negotiations between treasury and Fitch regarding the downgrade.
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Post by anitya on Aug 2, 2023 15:52:59 GMT
I am yet to learn anything new from Fitch. To me, they are as credible as the politicians and their enabling partisan citizens. I do not invest based on what they say. Edit: This may be the start of the most consensus anticipated August dip in equity markets. Interestingly, all the recently hot stuff seems to be getting hit hard today. May be a good time to start doing research if you were underweight anything. uncleharley, if the most anticipated swoon arrives, when is it prudent to buy the dip? Wait until uptrend resumes? |
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Deleted
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Post by Deleted on Aug 2, 2023 19:17:33 GMT
Admin Rules:
Bullet #6... This is not a place for off-topic* political discussion. There are numerous other venues for that. Experience has shown that such discussions lead to unproductive, heated arguments that degrade the forum. Kindly take it somewhere else.
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Post by chang on Aug 2, 2023 20:23:08 GMT
Some partisan political posts were removed. Please avoid inflammatory, political postings.
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Post by anitya on Aug 2, 2023 20:51:30 GMT
Some partisan political posts were removed. Please avoid inflammatory, political postings. Sorry about that. I did not read all the posts to know what was removed but posters, please give chang a break from baby sitting the forum. He has a real job to do. Pl remember to self moderate; we do not want @chang to turn this into a private / semi-private forum as other forums have done. I also noticed we have yogibearbull and others have returned to the forum as regular posters and we do not want to lose them again. |
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Post by anitya on Aug 2, 2023 22:16:11 GMT
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mikes425
Commander
generally happy in semi-retirement and dividend income-land
Posts: 126
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Post by mikes425 on Aug 2, 2023 23:12:23 GMT
anitya, uncleharley, Chahta, chang, yogibearbull, anitya, uncleharley, Norbert, Chahta, steadyeddy,@django,@axe, chang, mikes425,Interesting. I just find it an interesting dichotomy, the deletion of a post that quoted Fitch's own statement about their downgrade when it specifically refers to politics as a key factor in their decision. How does one "avoid" discussing the 'elephant in the room' per se, when it is directly and objectively, relative to an open discussion of an investment topic. Just curious.
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Post by yogibearbull on Aug 2, 2023 23:38:02 GMT
anitya, "...I also noticed we have yogibearbull and others have returned to the forum as regular posters..." Good news is that I will be more regular at a few sites including here. Bad news is that I have cut down on my general postings; I have also cut out several sites/groups. I still get tired easily. Just maintaining my serials is time consuming (only the weekend Barron's are seen here).
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Post by Chahta on Aug 2, 2023 23:53:18 GMT
anitya , uncleharley , Chahta , chang , yogibearbull , anitya , uncleharley , Norbert , Chahta , steadyeddy ,@django ,@axe , chang , mikes425 ,Interesting. I just find it an interesting dichotomy, the deletion of a post that quoted Fitch's own statement about their downgrade when it specifically refers to politics as a key factor in their decision. How does one "avoid" discussing the 'elephant in the room' per se, when it is directly and objectively, relative to an open discussion of an investment topic. Just curious. Admin/Chang has some patience where politics get injected into a thread. But when words like "obstructionist Republicans" are used it becomes partisan politics. It works well here because this forum is much more civil than the others, MFO being one of the worst. Armchair nearly shut down because of bickering. It might be your opinion that obstructionists caused something but it is only your opinion, not mine. I don't remember if those were your words but they did not belong here, whomever said them. |
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Post by Chahta on Aug 3, 2023 0:03:44 GMT
anitya , "...I also noticed we have yogibearbull and others have returned to the forum as regular posters..." Good news is that I will be more regular at a few sites including here. Bad news is that I have cut down on my general postings; I have also cut out several sites/groups. I still get tired easily. Just maintaining my serials is time consuming (only the weekend Barron's are seen here). Welcome back. |
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mikes425
Commander
generally happy in semi-retirement and dividend income-land
Posts: 126
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Post by mikes425 on Aug 3, 2023 0:28:51 GMT
Chahta , I may have made reference to political obstructionism, relative to the downgrade, which would in fact be what Fitch referenced - but I didn't elaborate on the obvious and specify a party 'label' responsible for the act. If anyone took it that way, it would have been empirical presumption on their part. I fully recognize this is not a forum for frank political observation.
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Post by anitya on Aug 3, 2023 1:03:47 GMT
anitya , uncleharley , Chahta , chang , yogibearbull , anitya , uncleharley , Norbert , Chahta , steadyeddy ,@django ,@axe , chang , mikes425 ,Interesting. I just find it an interesting dichotomy, the deletion of a post that quoted Fitch's own statement about their downgrade when it specifically refers to politics as a key factor in their decision. How does one "avoid" discussing the 'elephant in the room' per se, when it is directly and objectively, relative to an open discussion of an investment topic. Just curious. , As I said I did not read all the posts to know what was deleted but did not want to ignore your above post. chang made a judgement call as he has to. It is always going to be subjective and we have to defer to his judgement, unless we think he is picking sides or being partial. Sometimes he may delete an entire post when only a part of it violates, which I think is fine for him to do. I would suggest not taking it personally. If you shared an outside link that you thought would be useful to most others and is not partisan political, just repost link without your commentary. If you think it is potentially political, I would use the Messages feature to share with the few you think would enjoy reading. When in doubt about posting, I would err on the side of being conservative so as to keep the forum useful to most members. chang once deleted or moved one of my posts which I thought he was in error at that time but I am fine with his actions. While I did not write to him at that time, it is not a bad idea to send him a private message if you disagree with his action(s) and ask for clarification so you know his thought process to help you tailor your future posts. He has a thankless job and we ought to make it easy for him for allowing us to exchange information here. I hope that helps. |
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mikes425
Commander
generally happy in semi-retirement and dividend income-land
Posts: 126
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Post by mikes425 on Aug 3, 2023 1:15:10 GMT
anitya, FYI, I simply quoted the Fitch reply to Reuters about their rationale for their downgrade. Period. If that in and of itself is viewed as a political act, when the subject matter deals with "a political act" - I cannot and will not be held responsible. There was no embellishment on my part. That is all : ).
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Post by yogibearbull on Aug 3, 2023 1:31:31 GMT
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Post by anitya on Aug 3, 2023 1:56:27 GMT
anitya , FYI, I simply quoted the Fitch reply to Reuters about their rationale for their downgrade. Period. If that in and of itself is viewed as a political act, when the subject matter deals with "a political act" - I cannot and will not be held responsible. There was no embellishment on my part. That is all : ). Got it. Let me send you a private message later tonight. Thanks. |
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Post by steadyeddy on Aug 3, 2023 2:39:15 GMT
Fannie & Freddie were downgraded along with the US debt..
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Post by chang on Aug 3, 2023 6:04:03 GMT
anitya , FYI, I simply quoted the Fitch reply to Reuters about their rationale for their downgrade. Period. If that in and of itself is viewed as a political act, when the subject matter deals with "a political act" - I cannot and will not be held responsible. There was no embellishment on my part. That is all : ). Inflammatory political comments were deleted. These were flagged by other posters. Dispassionate politics related to investing is fine. Partisan stuff intended to stir the pot and start a food fight is not. Everyone knows that. When a deletion is made from PB it cannot be recovered. So I cannot paste what was deleted, nor would I want to. Move along, please. |
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Post by yogibearbull on Aug 3, 2023 11:36:13 GMT
This Fitch insights page provides more details. www.fitchratings.com/topics/us-debt-ceiling#insightsUS Rating DOWNGRADED to AA+ US GSEs DOWNGRADED to AA+ US Farm Credit System DOWNGRADED to AA+ US Corporations Unaffected (so, JNJ & MSFT are AAA) US Financials Unaffected (so, NY Life, Northwestern Mutual, TIAA are AAA) US M-Mkt Funds Unaffected This is more nuanced that what the S&P did in 2011 - it downgraded all US financials along with the US. |
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