Tuesday, April 19, 2011

S&P Warns US


That’s us, as well as US meaning the United States. Get your act together!
Yesterday, S&P put out a warning for a possible downgrade of US debt if politicians can’t get together and solves our debt problems. This highlights the growing frustration with those in Washington who would rather have more people “like them” on Facebook than actually deal with what ails us.

Adding fuel to yesterday’s already occurring risk-aversion, the S&P change of outlook may put pressure on politicians to do their job. It must be noted, however, that this was not a downgrade, but rather a change of outlook. While an actual debt downgrade would be catastrophic for the markets, it was interesting to see the early trading action as initially the Dollar was sold off on the announcement as this is clearly bad for the Dollar, only to reverse and cause the Dollar to strengthen further as the market realized that the flight to safety was the only way to go as that situation would be bad for everyone!