Friday, May 20th, 2016

S&P downgrade massacres markets

S&P downgrades US Treasury debt for the first time in history sending financial markets into turmoil. The market plunged 300 points at the open and now is extremely oversold here. This downgrade was no surprise and the wrangling in Congress over debt ceilings last two weeks have contributed to the negative outlook. S&P further downgraded Fannie Mae and Freddie Mac bonds and 32 banks associated with it, delivering and axe to the fragile real estate markets.

No doubt this will hurt the flagging economy. It will be lot more expensive to borrow money and that cost will be reflected in mortgages and credit cards and other financial instruments. Its a complete credit massacre that we are witnessing today. Here is a quick video:

It remains to be seen if these market go down further. The selling may stop if we rally back above 1200 levels. Taking long positions is risky at best and any rallies that develop may get shorted again sending the markets down.

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