UPDATED WEEKEND READING LIST: SPAIN DOWNGRADE AND INFLATION -WSJ

Really? 12:37p was ‘the perfect time’ to hit SEND on this gem?? Really??

Fitch Downgrades Spain to ‘AA+’ 

Fitch Ratings downgraded Spain’s long-term foreign and local currency Issuer Default Ratings (IDRs) to ‘AA+’ from ‘AAA’. The process of adjustment to a lower level of private sector and external indebtedness will materially reduce the rate of growth of the Spanish economy over the medium-term, factors that largely precipitated the rating downgrade. Those and other issues are discussed in more detail in a special report, the link of which is attached below.

HERE IS LINK TO 13pg REPORT FROM FITCH. PLEASE ADD IT TO WEEKEND READING LIST SO AS WE CAN DISCUSS WHEN WE HAVE A FULL ‘CLASSROOM’ – SAY ON TUESDAY. SOUND GOOD?

Seriously, though, we’ve got issues with pulling this sort of thing off when just about NOBODY is paying much attention. Then again, folks say earnings announcements come ‘after the bell’. To that, we might only respond that IF you’ve got a vested interest in a company, you probably KNOW when earnings are announced and therefore might, donno, call us crazy, HANG AROUND TO SEE THE RELEASE? NOW, arguably this is NOT news – perhaps they are playing catch-up to OTHER ratings agencies announcements on Spain. MAYBE. ALSO, who really still CARES about ratings agencies? Aren’t they ALWAYS late and wrong? MAYBE. BUT STILL. One doesn’t have to dig too deep INTO the report and see one aspect that is so troubling. Paragraph No2:

The Spanish government has announced an ambitious fiscal consolidation plan to ensure a return to sustainable public finances after the global financial crisis. Fitch believes the Spanish government could find it hard to implement some of the expenditure cuts. In particular, the agency has some doubts over the feasibility of the cuts that need to be made by Spain’s autonomous communities, who may also see a reduction in the transfers they will receive from the state budget.

WE READ THAT AS … AUSTERITY = PAIN = TOUGH CHOICES AND FAILURE TO BE ABLE TO DO SO = DOWNGRADE

RIGHT. Speaking of austerity, didn’t we just see the USs savings rate tic UP? Nevermind. Suffice it to say we’re anxiously awaiting Tokyo’s OPEN on MONDAY NIGHT. Here is a ChartGrid – 30min bars over last few days. We’ve noted timeframe of the wires picking up the Fitch story:

Right. How’s that nice flattening idea we liked?? Thanks a bunch. Where are you supposed to go on this news, though?? Can the USA be far behind?? WE CAN ONLY HOPE SO AND … well, can only hope and think Tsies will benefit from this continued ‘uncertainty’ over there.

ON A COMPLETELY UNRELATED TOPIC – INFLATION – there is none. The Fed made sure to tell us of another test of a mechanism to ensure that if/when they feel the NEED, they will be able to DRAIN liquidity:

Federal Reserve announces schedule for small-value auctions of term deposits through the Term Deposit Facility 

SO, just in case, they are ready. AND if you don’t believe it, here is one more thing for the weekend reading list – WSJ:

Central Bankers Still Seeing Tame Inflation Data

SO there you have it. Go ahead and have at whatever your version of the Hamptons Hedge might be and we’ll REMAIN comfortable in flattening trades (call us crazy) and we’ll catch one and all on the flipside of the long weekend!

Have a nice day ??!!!

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