CrowdWisers™General Look Ahead -2
18:58 13-Jul-25
On 5/19/25 07:59, Esekla wrote:
Right on cue, Moody's downgraded American debt on Friday evening, and American equity futures declined steadily all weekend. However, the decline in the dollar versus other currencies has been fairly muted, which tells me that the market doesn't think much more of the ratings agency than I do.
The move to €/$1.128 has been largest and most pronounced, which should benefit BGC. The company announced that FMX has begun trading treasury futures this morning, but only for 2 and 5 year notes. The 10-years see the most trading volume, and at a minimum, the long end of the curve should also eventually be included by trading 30-year bonds. Baby steps, I guess.
We also saw FCC approval for Verizon to buy Frontier. If that's not a cue for AT&T to move ahead with purchase of Lumen's consumer fiber, now that the reverse split is approved, I don't know what is. Charter and Cox are even having another go at merging, after abandoning the idea 12 years ago. LUMN shares are set to open just above the $4 level that I cited back then, and I also need to document that weekly options have either been reinstated going forward or there was a glitch somewhere along the line.
I find it perverse that amidst all the other meddling going on, the FCC appears untouched. Under its supervision, I calculate that less than 8% of American housing has access to more than one choice for fiber internet. I'll also personally attest that Biden's proposal to limit internet contract termination fees got bogged down at the agency and never came to pass.
On 5/16/25 10:25, Esekla wrote:
I still don't think it's a great time to be messing around with GRoDTs. Next week will be light on economic data, but I think that just shifts attention back to the federal budget and out of control national debt as shown to the right from the Treasury Department. Washington should get a new budget passed by the end of September, when the current continuing resolution and fiscal year for the federal government expire. America's adversaries have the opportunity to push up treasury rates and thus tank the federal budget, but if they choose to take collateral damage by weaponizing their reserves, it won't be before D.C. commits to this latest misstep. Implementing policy that would tax or otherwise disadvantage private treasury holdings could be even more damaging.
Only Moody's still has American debt at its highest rating, and it downgraded its outlook to negative at the end of March. Scope, which is the only agency outside the U.S., warned about another possible step down less than a week ago. As a reminder, America was already spending more on interest than defense, or Medicare. I'll pair this with April market leverage as soon as that is available, though that may not be until late next week.
In summary, this is not a warning about any immediate market relapse. It's detail on why I've consistently claimed that Trump will claim success even as he folds on most of his tariff demands. The lasting danger to markets, and especially indexes, has less to do with tariffs than it does with dodgy deal making that focuses on sound bytes, the increased business risk that the White House is unfairly enabling, and inconsistent policy over the long term.