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Fitch puts U.S. rating on negative watch, Dow futures plunge

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Comments (26)
  • Tack
    , contributor
    Comments (14395) | Send Message
     
    Guess Fitch must not be getting enough notice in the media lately.

     

    That the market would react to this silliness just demonstrates how emotional, reactionary and dislocated from economic reality many investors are, driven by the hysteria of the moment.
    15 Oct 2013, 05:04 PM Reply Like
  • Rope a Dope
    , contributor
    Comments (650) | Send Message
     
    Fitch could just be trolling for an Attorney General.
    15 Oct 2013, 05:07 PM Reply Like
  • ThetaDecay
    , contributor
    Comments (107) | Send Message
     
    People have incessantly criticized the credit rating agencies for their complacency leading up to the housing crisis. Now that they are being more vigilant, you want to marginalize their attempt to do so and claim it's merely a publicity stunt?

     

    Would you have said the same in '06 if they warned about a housing bubble?
    15 Oct 2013, 05:11 PM Reply Like
  • Tack
    , contributor
    Comments (14395) | Send Message
     
    TD:

     

    Laughably funny, in as much as the ratings agencies were not "complacent" in in the housing bubble; they were "complicit," complete with phony AAA ratings on junk paper.

     

    The ratings agencies are a business, nothing more, and anybody who thinks they represent some holy grail on the state of global finances, here or anywhere else, is rather naive in their views.
    15 Oct 2013, 05:19 PM Reply Like
  • sbeardsley702
    , contributor
    Comments (65) | Send Message
     
    So because they were complicit with the last scam, we should believe their intentions this time around are as pure as the driven snow?
    15 Oct 2013, 05:20 PM Reply Like
  • ThetaDecay
    , contributor
    Comments (107) | Send Message
     
    Tack and sbeardsley:

     

    No one is claiming they are a holy grail. And yes, they are businesses.

     

    But both of you are drawing false equivalencies. The critique last time around was that they were too soft on the banks because they didn't want to irk their employers. That would be akin to them NOT downgrading the US, for fear of the ramifications.

     

    That's not at all what we're seeing here. Fitch gains nothing from being critical of the US. In fact, it would be in the company's best interest to not speak out against the US government - I'm sure Fitch remembers the DOJ's response to S&P's downgrade of 2011.
    15 Oct 2013, 05:32 PM Reply Like
  • Tack
    , contributor
    Comments (14395) | Send Message
     
    TD:

     

    My criticism of Fitch (et al) goes further than their motivations or competency. They're simply no more material than one equity analyst, saying "buy" or "sell." They've been imbued with some special significance by some that is wholly unmerited.

     

    They can threaten, or even do, anything they wish, and, yes, there will be some kneejerk reaction, but the underlying ability of the Government to service its debts and the actual demand for U.S. debt will remain unaltered.

     

    Simply put, they're noise.
    15 Oct 2013, 05:38 PM Reply Like
  • ThetaDecay
    , contributor
    Comments (107) | Send Message
     
    Tack:

     

    You are correct. What they say changes nothing in terms of underlying fundamentals. The likelihood of US default is no higher now that it was five hours ago.

     

    Still, those ratings dictate whether or not extraordinary sums of money are allocated to various credit instruments. I think it would be unwise to ignore the ramifications of a downgrade. Even if you think the ratings agencies are worthless (and I tend to agree with you on this), many institutions do not.
    15 Oct 2013, 05:49 PM Reply Like
  • Tack
    , contributor
    Comments (14395) | Send Message
     
    TD:

     

    Apparently, the market disagrees with you because after S&P and Moody's downgraded the U.S., and the predictable momentary hysteria ensued, Treasury prices increased, not declined.

     

    They're simply useless noise, except for savvy short-term traders, fleecing the over-emotional.
    15 Oct 2013, 05:54 PM Reply Like
  • ThetaDecay
    , contributor
    Comments (107) | Send Message
     
    Tack:

     

    Just to clarify, your argument is that because the Treasury market eventually recovered in 2011, the impact of all future ratings downgrades can be dismissed as immaterial?

     

    The stock market has recovered since bottoming in early '09... does that mean the Lehman collapse was "simply useless noise"?
    15 Oct 2013, 06:15 PM Reply Like
  • Tack
    , contributor
    Comments (14395) | Send Message
     
    TD:

     

    A good differentiation you offer that dovetails with my usual advice to investors, that is, pay attention to real events and data, not punditry or opinions. Lehman was a real event; Fitch is an opinion.

     

    I scrupulously avoid analysts and pundits, I examine actual data incessantly and I make my own decisions. It's served me well for many years.
    15 Oct 2013, 06:22 PM Reply Like
  • ThetaDecay
    , contributor
    Comments (107) | Send Message
     
    Tack:

     

    Ahh, thanks for explaining the distinction. You've given me some things to think about.
    15 Oct 2013, 07:45 PM Reply Like
  • fla6987
    , contributor
    Comments (25) | Send Message
     
    Actually futures a positive right now...
    15 Oct 2013, 05:28 PM Reply Like
  • joemarolla23
    , contributor
    Comments (48) | Send Message
     
    its like dejavu all over again people. its unfolding just like i though it would
    15 Oct 2013, 05:48 PM Reply Like
  • bbro
    , contributor
    Comments (10411) | Send Message
     
    Who believes there will be no deal by the morning of October 18?

     

    There is a 12 billlion Social Security payment due on the 23rd....
    15 Oct 2013, 05:57 PM Reply Like
  • David S. Batchelder
    , contributor
    Comments (11) | Send Message
     
    If there is no deal, who cares. SS payments, I thought they had all the money needed till the yr 2039. So they say. Believe, believe in the hope and dope change.
    I hope the rep don't cave or care as much as obvomit. Bring it all down. It would tell everyone, this type of system, federal reserve system. Anyone who sub scribes to that is not on America's side. They want their graft. Wayne Roots book. Details it all. It is all a sham. SS should not be in the general fund, but yet it is. Why, so they can steal it. Scum one and all.
    15 Oct 2013, 06:32 PM Reply Like
  • Bouchart
    , contributor
    Comments (803) | Send Message
     
    Tomorrow morning, someone at Fitch is going to wake up to find a horse's head in his bed.
    15 Oct 2013, 06:37 PM Reply Like
  • Qniform
    , contributor
    Comments (3202) | Send Message
     
    "Dow futures -122 points on the news."

     

    Oh, is that why the market did what it did? I love glib explanations unfettered by any need for causal connection.
    15 Oct 2013, 06:38 PM Reply Like
  • Tack
    , contributor
    Comments (14395) | Send Message
     
    Even worse, that was an error. The real-time S&P futures are up 5.50, not down. Dow must be up similarly.
    15 Oct 2013, 06:44 PM Reply Like
  • TruffelPig
    , contributor
    Comments (4108) | Send Message
     
    Boy oh boy - my UVXY went down AH.
    15 Oct 2013, 07:15 PM Reply Like
  • Hendershott
    , contributor
    Comments (1619) | Send Message
     
    Maybe everyone is underestimating just how crazy or dumb the TP bunch really is.
    15 Oct 2013, 07:03 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6574) | Send Message
     
    Any market sell off will be due to "fear" not fundamentals..
    If so a "classic" signal to buy may be presented.

     

    Savvy investors will use that "fear" to their advantage as the lemmings will go over the cliff :)

     

    This too shall pass...
    15 Oct 2013, 07:12 PM Reply Like
  • june1234
    , contributor
    Comments (3205) | Send Message
     
    Rating agencies serve same function credit bureaus do they assign ratings like the bureaus do with FICO scores
    15 Oct 2013, 07:14 PM Reply Like
  • SoldHigh
    , contributor
    Comments (1013) | Send Message
     
    Careful Fitch, Obama will sic his crooked lapdogs from the DOJ on you. He isn't afraid to use govt agencies (DOJ IRS EPA) to go after anyone who disagrees with his ineffective, job-killing policies.
    15 Oct 2013, 11:20 PM Reply Like
  • ammo one
    , contributor
    Comments (3) | Send Message
     
    for all of us sitting on the sidelines watching tiger look over his lie,it's easy to lean to your buddy and say he should use a 9 iron,don't for a sec think that is the only thing going thru his head, it's ludicrous to assume we know the grand scope of fitches research or how bad the deficit is,i dont believe there will be a deal,who cares what i think,i know very little, very little info is released for a reason,they are hiding something, lately everything,when tigers caddie hands him a nine iron ,you can say you were right, that guiness comercial comes to mind, briliant
    16 Oct 2013, 04:16 AM Reply Like
  • al roman
    , contributor
    Comments (10110) | Send Message
     
    You Gentlemen on the Hill don't let Mr. Fitch take that switch out on you now !
    16 Oct 2013, 06:39 AM Reply Like
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