George Brooks: S&P Downgrade U.S. Debt Rating

George Brooks |

George Brooks Stock MarketBrooksie’s Daily Stock Market blog: An edge before the market opens.

Monday, April 18, 2011 BULLETIN 10:32 am EDT

DJIA: 12,146

Shortly after the open today, Standard & Poor’s cut the United States’ long-term debt rating to negative from stable, while affirming its AAA long-term and A-1+ short-term sovereign credit rating, according to Bloomberg.

S&P said that more than two years after the beginning of the recent crisis, U.S. policymakers have not agreed on a strategy to reverse recent fiscal deterioration or address longer term fiscal pressures.

The announcement crushed stock prices, lopping off more than 220 points from the DJIA in a half hour.

Clarification is needed here and pronto ! It appears that both Democrat and Republican parties are in the process of addressing the issue of deficit and debt. To preempt the decision process is irresponsible (in my opinion) and without clarification, could cause unnecessary and significant losses in equities globally.

Political ? But to the benefit of which party ?

In time, we will get some answers. What investors need to know now is should they use this crunch to buy, or do they bail out before a further decline ?

Based on what is known now, I don’t have an answer. I have been wary of the market for some time, but have been so based on concern for Q1 earnings and the fact the market has risen so much since early September 2010. This announcement by S&P obviously stunned the Street, upstaging earnings and everything else.

S&P – you damn well better clarify your release, its timing and especially why you preempted what appears to be a pending settlement within our government of its debt issue.

George Brooks
sensiblesleuth@gmail.com

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
TIK Tel-Instrument Electronics Corp. 3.64 0.12 3.26 3,163

Comments

Emerging Growth

Invictus MD Strategies Corp.

Invictus MD targets companies with proven brands, strong customer focus, and significant growth potential. We not only provide capital to meet these objectives but also years of management experience from…

Private Markets

WayBetter

The spark hit Jamie when he saw co-workers competing to lose weight. Instead of pizzas and subs, they were eating salads and jogging along the river. Some were sneakily leaving…

Cloudera

Cloudera offers enterprises a new data platform built on the Apache Hadoop open-source software package. Hadoop is a data-management platform that can consolidate data in a single repository for comprehensive…