The Week (and Weekend) Unpeeled
Wow! Where to begin? Talk about resorting to the old-school PR trick of releasing negative news late on a Friday to cushion a blow or “hide” the news. (This one was tough to hide, though.)
In what now seems like weeks ago and as all the world knows, S&P downgraded its rating on US credit to AA+ from triple-A after the markets closed on Friday (amid rumors of the move nonetheless) and added a “negative outlook” for possible additional downgrades. (The announcement was actually about 8 pm.)
Turns out it might have been pretty good strategic planning (was it, btw?) for the late announcement because the weekend seemed to serve as a market cushion as everyone debated what impact, short and long term, the move will have on the markets, interest rates and the rating of other debt instruments. (Moody’s and Fitch never followed S&P’s decision, and the late announcement was due in part because of S&P’s $2 trillion math error, caught by the administration. (“A judgment flawed by a $2 trillion error speaks for itself,” a Treasury official said, in defense.)
The rating agency said the decision was based on its view that “the effectiveness, stability and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenge.” A view that seems to have been shared by many with a record 82 percent of Americans saying they disapprove of how Congress is handling its job, according to a New York Times/CBS News Poll, released last week.
That news only capped a really bad week. The Dow – and other markets around the globe – suffered one of worst weeks since the financial crisis. (The Wall Street Journal on Saturday carried a five-page section called “Markets in Turmoil,” detailing the negative news around the globe, while CNBC and Bloomberg held special reports Sunday night on the markets and outlooks. For the week, the Dow ended down 698 points, or 5.8%, at 11,444.
Elsewhere (yes, other important news happened):
- The jobs picture improved by the headlines but was still extremely sluggish, with non-farm adding 117,00 jobs and the unemployment rate edging down to 9.1 percent;
- A US helicopter was shot down by Taliban in Afghanistan, killing 30 Americans, the deadliest day in the Afghan war for the US;
- Kraft decided to split itself into two companies;
- Bank of New York Mellon said it would charge wealthy clients for deposits;
- In general, corporate earnings did well, showing that the business economy is nothing like the Main Street economy;
- Gov. Rick Perry of Texas hosted a big prayer event (“The Response”);
- Scientist think water (some form of life?) may be on Mars; and
- Anderson Cooper taped his first daytime show for syndication, called “Anderson,” but nothing aired yet.