… I wish it were Sunday…
Well, looky here: the S&P downgraded its USA credit outlook. (Source: Yahoo Finance).
Standard & Poor’s on Monday downgraded its credit outlook for the United States, citing a risk that policymakers may not reach agreement on a plan to slash the huge federal budget deficit. While the credit rating agency maintained the country’s top AAA credit rating, it said authorities have not made clear how they will tackle long-term fiscal pressures. S&P said the move signals at least a one-in-three chance that it could cut its long-term rating on the United States within two years.
So the S&P changes the outlook from “stable” to “negative” but keeps the AAA rating. That’s what I like to call “covering all bases.” Good job, S&P.
A top administration official reiterated U.S. commitment to act on Monday and said S&P underestimated that resolve. “We believe S&P’s negative outlook underestimates the ability of America’s leaders to come together to address the difficult fiscal challenges facing the nation,” said Mary Miller, assistant Treasury secretary for financial markets.
Excuse me, Mary, I have to put down my coffee before I spit it all over my monitor. Thanks for the laughs.
In other news, Citigroup’s first-quarter profit fell 32%. (Source: WSJ)
Consumer banking struggled in Citi’s U.S. home market and elsewhere, while investment-banking results dropped from the stellar results a year ago. While losses from delinquent borrowers continued to improve, allowing Citi to take money out of its loan-loss reserve, expenses rose as the bank’s legal costs increased and it continued to invest in new bankers.
Citigroup’s current problems stem from the earthquake/tsunami in Japan, which will cost about $100 million in private-equity losses, as well as $50 million in one-time charges related to regulation changes.
If you look at the stock, though, it would appear that Citi is stable, as of 11am anyway. Fortune suggests that this is because Citi still posted a profit, and that despite the Japan crisis, emerging markets still looks favorable for growth (apparently, 62% of Citigroup’s revenue comes from abroad).
As for the rest of the market, well take a look. Currently the DOW is down 227, Nasdaq down 53, S&P500 down 22.
Is the bear market here yet? Only time will tell.