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Off-Topic Stock Market & Crypto Discussion

JD08 said:
Fitch Ratings late Tuesday made good on recent concerns about the U.S. credit profile and downgraded its rating on the nation’s debt one notch to AA+ from AAA, saying that it reflects “expected fiscal deterioration,” a “high and growing” government debt burden and an “erosion of governance” in face of repeated debt-limit standoffs and other ills.


www.marketwatch.com

U.S. AAA debt rating gets a downgrade by Fitch; White House says move 'defies reality'

Fitch Ratings cut its top credit ratings for the U.S. to AA+ from AAA on Tuesday, pointing to 'erosion' of governance and the nation’s expected fiscal...
www.marketwatch.com www.marketwatch.com
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What do you think they meant by “erosion of governance”?
 

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mr.h said:
What do you think they meant by “erosion of governance”?
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Let them explain it.

Erosion of Governance: 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 repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management. In addition, the government lacks a medium-term fiscal framework, unlike most peers, and has a complex budgeting process. These factors, along with several economic shocks as well as tax cuts and new spending initiatives, have contributed to successive debt increases over the last decade. Additionally, there has been only limited progress in tackling medium-term challenges related to rising social security and Medicare costs due to an aging population.

 
Fitch Ratings downgraded its US debt rating on Tuesday from the highest AAA rating to AA+, citing “a steady deterioration in standards of governance.” The downgrade comes after lawmakers negotiated up until the last minute on a debt ceiling deal earlier this year, risking the nation's first default.
 
08:30USDContinuing Jobless Claims(Jul 21)1.7M01.7M1.679M
08:30USDInitial Jobless Claims(Jul 28)227K0227K221K
08:30USDInitial Jobless Claims 4-week average(Jul 28)228.25K--233.75K
08:30USDNonfarm Productivity(Q2) PREL3.7% 2.632%-1.2%
08:30USDUnit Labor Costs(Q2) PREL1.6% -0.842.6%3.3%
Jobless claims up slightly
productivity up and unit labor costs down shows inflation is dropping…Goldilocks
 
mr.h said:
Fitch Ratings downgraded its US debt rating on Tuesday from the highest AAA rating to AA+, citing “a steady deterioration in standards of governance.” The downgrade comes after lawmakers negotiated up until the last minute on a debt ceiling deal earlier this year, risking the nation's first default.
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Share the whole picture.

Ratings Downgrade: The rating downgrade of the United States reflects the expected fiscal deterioration over the next three years, a high and growing general government debt burden, and the erosion of governance relative to 'AA' and 'AAA' rated peers over the last two decades that has manifested in repeated debt limit standoffs and last-minute resolutions.
 
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When was the last time the FED landed softly?

I could see a spiral of equities, crypto, and real estate as consumers try to find cash. When/if this happens, it could get ugly quickly as most households don’t have much savings. It will take 12-18 months for real estate to see massive foreclosures and I’d expect the FED to have pivoted by then. Thus, equities and crypto would get hit harder because they are more liquid.
 
JD08 said:
Share the whole picture.

Ratings Downgrade: The rating downgrade of the United States reflects the expected fiscal deterioration over the next three years, a high and growing general government debt burden, and the erosion of governance relative to 'AA' and 'AAA' rated peers over the last two decades that has manifested in repeated debt limit standoffs and last-minute resolutions.
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Every financial CEO is saying that this means nothing.
I‘ll list them to you if you want.
 
mr.h said:
Every financial CEO is saying that this means nothing.
I‘ll list them to you if you want.
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First, if it means nothing, why do you keep beating the debt ceiling drum?

Second, I was just pointing out the debt ceiling standoffs were only a part of their reason.
 
09:45USDS&P Global Composite PMI(Jul) 5205252
09:45USDS&P Global Services PMI(Jul) 52.3-0.0852.452.4
10:00USDFactory Orders (MoM)(Jun)
2.3% 0.412.2% 0.4%
10:00USDISM Services Employment Index(Jul) 50.7-0.1851.153.1
10:00USDISM Services New Orders Index(Jul) 55-0.1955.655.5
10:00USDISM Services PMI(Jul) 52.7-0.155353.9
10:00USDISM Services Prices Paid(Jul) 56.81.9052.154.1

factory orders up
ISM numbers at or near expectations
any result above 50 is bullish..
 
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mr.h said:
The first one is a 2019 article. The second article say the path is unsustainable, which I agree.
I believe we will see interest rates lower in mid 2004, especially if we have more rate hikes In 2023 and I believe the economy can handle it. I don’t believe the Fed will drive us into a recession and it’s an election year.
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That was the point to including it, Powell was already warning about the deficit when it was half what it is now.
 
SpikeUM said:
That was the point to including it, Powell was already warning about the deficit when it was half what it is now.
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I agree.
Funny that Powell did nothing about interest rates until 2022. Did lower interest rates allow the government to spend more because of the cost of borrowing?
 
mr.h said:
I agree.
Funny that Powell did nothing about interest rates until 2022. Did lower interest rates allow the government to spend more because of the cost of borrowing?
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As if Powell has a gun to the head of Congress telling them to over spend!

Powell's job is to make sure inflation runs at around 2% or less along with keeping unemployment as low as possible without letting inflation run hot. Are you expecting Powell to increase rates while unemployment is high in 2020?
 
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Bank failures: truly 5 have happened but the Banc of California and PacWest merger covers up the PacWest failure.
Oct 1, student loan payments hit and this group apparently accounts for 40% of consumer spending.
ERC ends April 2024 for 2020 and April 2025 for 2021- 30B/month or 400B/yr!

I feel like I'm on the shore looking out to sea. The weather looks really bad but the weatherman said it was going to be a great day for fishing. Do I trust my eyes or the weatherman?
 
90scane said:
Bank failures: truly 5 have happened but the Banc of California and PacWest merger covers up the PacWest failure.
Oct 1, student loan payments hit and this group apparently accounts for 40% of consumer spending.
ERC ends April 2024 for 2020 and April 2025 for 2021- 30B/month or 400B/yr!

I feel like I'm on the shore looking out to sea. The weather looks really bad but the weatherman said it was going to be a great day for fishing. Do I trust my eyes or the weatherman?
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This is not 2007.
 
TheEye said:
This is not 2007.
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Yeah, I'm not expecting residential real estate to cause bank failures. I do expect CRE to cause some additional bank failures. I do expect bank failures to cause liquidity problems for all sectors. Combine that with the end of student loan forgiveness, the end of ERC, higher rates, high energy costs...
 
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90scane said:
Yeah, I'm not expecting residential real estate to cause bank failures. I do expect CRE to cause some additional bank failures. I do expect bank failures to cause liquidity problems for all sectors. Combine that with the end of student loan forgiveness, the end of ERC, higher rates, high energy costs...
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Expect it to be spread out over a much longer time frame than events of the past.
 
90scane said:
When was the last time the FED landed softly?

I could see a spiral of equities, crypto, and real estate as consumers try to find cash. When/if this happens, it could get ugly quickly as most households don’t have much savings. It will take 12-18 months for real estate to see massive foreclosures and I’d expect the FED to have pivoted by then. Thus, equities and crypto would get hit harder because they are more liquid.
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Its possible, but there is still a lot of cash in the system, and PE has record amounts of cash available, so whatever happens might be sharp, but relatively short lived.
 
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