Stocks and s&p rating - Market reaction

by truthbetold Sun Aug 07, 2011 7:43 pm

S&P downgrade is having an initial impact. CNN says futures are showing significantly lower opening on Monday. China's reaction is negative and a lecture to US. Indian Finance minister characterized it as huge impact.

Some entities including several in US may be obligated to own only AAA for some portion of their assets. Those funds may exit treasuries because of legal obligations. This may have some impact.

Asian markets opening in the next few hours will show the first reaction followed by Europe.

Media all over the world carried the downgrade as major news and sought to make it a serious deal.

I am hoping that US markets will be more subdued after an hour's turmoil. A down market is most likely but it may not be catastrophic.

What is certain is it is the beginning of a new economic era in the world economy. It is the end of Bretton woods.

by MaxEntropy_Man Sun Aug 07, 2011 7:51 pm

barney frank congressman from MA has accused S&P of doing this to salvage their reputation after their terrible judgment calls the last couple of years. i'm no fan of frank, but can't help feeling there's some truth
to what he's saying.

by Ram Sharan Sun Aug 07, 2011 8:01 pm

MaxEntropy_Man wrote:barney frank congressman from MA has accused S&P of doing this to salvage their reputation after their terrible judgment calls the last couple of years. i'm no fan of frank, but can't help feeling there's some truth
to what he's saying.

Oh, yeah. There's no doubt they did this because they got caught with their pants down on the subprime CDO mess. IMO, the credit rating agency business model is rotten. It's gotta be replaced with something else.

by charvaka Sun Aug 07, 2011 8:26 pm

Ram Sharan wrote:
MaxEntropy_Man wrote:barney frank congressman from MA has accused S&P of doing this to salvage their reputation after their terrible judgment calls the last couple of years. i'm no fan of frank, but can't help feeling there's some truth
to what he's saying.
Oh, yeah. There's no doubt they did this because they got caught with their pants down on the subprime CDO mess. IMO, the credit rating agency business model is rotten. It's gotta be replaced with something else.

by sambarvada Sun Aug 07, 2011 8:41 pm

===> I am putting more money into Vanguard total market index fund.

This is the best time to put money in stock market.

by charvaka Sun Aug 07, 2011 8:59 pm

truthbetold wrote:S&P downgrade is having an initial impact. CNN says futures are showing significantly lower opening on Monday. China's reaction is negative and a lecture to US. Indian Finance minister characterized it as huge impact.

Some entities including several in US may be obligated to own only AAA for some portion of their assets. Those funds may exit treasuries because of legal obligations. This may have some impact.

Asian markets opening in the next few hours will show the first reaction followed by Europe.

Media all over the world carried the downgrade as major news and sought to make it a serious deal.

I am hoping that US markets will be more subdued after an hour's turmoil. A down market is most likely but it may not be catastrophic.

What is certain is it is the beginning of a new economic era in the world economy. It is the end of Bretton woods.

I don't know if tomorrow is going to be catastrophic. I think it's hard to repeat Thursday after just one business day in between. This downgrade may actually be good in the long run, if it gets Congress to clean up its act and put the Tea Party in its place. If OTOH one of the other two agencies piles on, this could be another -5% day.

by charvaka Sun Aug 07, 2011 9:22 pm

MaxEntropy_Man wrote:barney frank congressman from MA has accused S&P of doing this to salvage their reputation after their terrible judgment calls the last couple of years. i'm no fan of frank, but can't help feeling there's some truth
to what he's saying.

Frank is right. S&P doesn't want to be in the same position of giving too high a rating to anyone that doesn't deserve it. I wonder if the three agencies coordinated this so only one of them would downgrade, and put some pressure on the politicians that way.

Why don't you like Frank? I think he is often right.

by Hellsangel Sun Aug 07, 2011 9:25 pm

charvaka wrote:

Why don't you like Frank? I think he is often right.

Isn't he the gay, pro-Pak, anti-Indian Hon. rep from Massachusetts?

by charvaka Sun Aug 07, 2011 9:27 pm

Hellsangel wrote:
charvaka wrote:

Why don't you like Frank? I think he is often right.
Isn't he the gay, pro-Pak, anti-Indian Hon. rep from Massachusetts?

I know him as the gay rep from Mass who chairs the House banking committee. Didn't know about his stances on India-Pakistan issues. Any references to his anti-India positions?

by MaxEntropy_Man Sun Aug 07, 2011 9:30 pm

charvaka wrote:
Why don't you like Frank? I think he is often right.

because he is partly responsible for the housing mess and at least
partially responsible for the freewheeling mortgages that were
the norm until two years ago.

by charvaka Sun Aug 07, 2011 9:35 pm

MaxEntropy_Man wrote:
charvaka wrote:
Why don't you like Frank? I think he is often right.

because he is partly responsible for the housing mess and at least
partially responsible for the freewheeling mortgages that were
the norm until two years ago.

OK, that's a fair criticism of his policies. He's gotta take some of the blame for the Freddie-Fannie excesses.

by Hellsangel Sun Aug 07, 2011 9:41 pm

charvaka wrote:Any references to his anti-India positions?

I can look up his foreign policy votes but perhaps Il Professore can tell us how the Hon rep. from his state voted on the nuclear deal

by MaxEntropy_Man Sun Aug 07, 2011 9:42 pm

have you seen this: https://www.youtube.com/watch?v=a5NrqqK60OI?

by charvaka Sun Aug 07, 2011 9:47 pm

Oh this is fucking hilarious. I can't stop laughing.

by truthbetold Sun Aug 07, 2011 9:55 pm

S&P has done the downgrade to rescue its image is a widely accepted theory. However, for larger public that is a non issue. Fall out of such down grade is beyond the motives of S&P.

Some investors like Jim Rogers saying what took it so long. The criteria listed by s&P were out there and US could have downgraded in the past 1 and 1/2 years any time (if not earlier).

The rep from Mass who is against India's nuclear deal is Edward Mackey.

So far Asian markets opened lower with most of them by around 1.5% or less. Europe's problems could markets more significantly.

by Another Brick Mon Aug 08, 2011 12:50 am

oh by god lag gayee
market gir gaya

senseks down by over 500 points. my portfolio resembles spanish roads after Tomatino. bhaag dk bose...

by Marathadi-Saamiyaar Mon Aug 08, 2011 2:25 am

Brace for this week.

The S & P downgrade was already factored into by the market, and that was not a surprise in itself. Also, everyone knows that US bonds are still the best of everything out there and ppl have no where else to put their money in.

BUT...this only indicates how bad the other countries are. Imagine the ratings of greece, Italy, etc... Now how low they will go down is the mystery, and the expected tanking this week of Euro/Asian markets. Funny that the Chinks are going to be in deeper shyt bcz their money/investments could be at stake. It is almost like Indians deposited their money in chit fund companies.

I am toying with the idea of pulling some funds out of mutual funds and go directly to some specific targeted companies (long term). due to my non-economic, non business back ground, my basic instincts will play a major role in shortening the list. i will list after I buy them....bcz anything I say will be laughed at by the economists and the investment strategists here.

by Another Brick Mon Aug 08, 2011 3:03 am

bought some more TCS, satyam, L&T and Coal India. let's see.

by Marathadi-Saamiyaar Mon Aug 08, 2011 3:28 am

Another Brick wrote:bought some more TCS, satyam, L&T and Coal India. let's see.

All four are ok - from future demand, technology, economic points of view (don't know much about their P/E ratios, turnover or other business aspects).

by Another Brick Mon Aug 08, 2011 3:37 am

yeah, i am quite confident about TCS, Larsen and Coal India. Satyam is always a gamble for me.

by truthbetold Mon Aug 08, 2011 6:23 am

Early morning reports show - Asia lost between 1.8% (BSE) to 3.8% (Taiwan). Europe's early numbers show similar numbers.

If dow loses 1.8% - we lose - 200 plus (futures at 240 points)

If dow loses 3.8% - we lose - 440 plus points .

Combination of Italian and spanish debt and downgrade is going to weigh on the market. Where are the investors going to go? Swiss, Australia and canada cannot support such large demand. Asia does not offer alternatives. So people may stay in US treasuries for a while longer.

by Another Brick Tue Aug 09, 2011 7:23 am

Another Brick wrote:yeah, i am quite confident about TCS, Larsen and Coal India. Satyam is always a gamble for me.

finally, i mean F I N A L L Y, satyam is showing positive EPS. congrats satyam!

by MaxEntropy_Man Tue Aug 09, 2011 8:01 am

there's something weird and schizophrenic about all this. so the stock market tanks because of the s&p downgrade of US debt and what do people do with their cash after selling their stocks? stick it in money market mutual funds; mostly. and guess what the money market mutuals hold?

i don't have any extra money lying around, but if i did, i'd go shopping for stocks right now. there are all kinds of deals to be had.

by MaxEntropy_Man Tue Aug 09, 2011 8:43 am

i bet warren buffett is busy shopping but we won't know what he is buying just yet.

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