US Stocks To Buy After US Credit Rating Falls To AA+
I am certain everyone would have learnt about rating agency Fitch’s downgrade of US credit rating from a respectable “AAA” to “AA+” (meh!) by now.
How “timely”.
It rattled the US market to a certain extent (I like to believe).
By the time market closed on 01 Aug 2023:
DJIA: +0.20% (+71.15 to 35,630.68). Only index in the “green” zone.
S&P 500: -0.27% (-12.23 to 4,576.73).
Nasdaq: -0.43% (-62.11 to 14,283.91).
It wasn’t too long ago on 09 Mar 2022 that S&P Global has affirmed US credit rating as between AA+/A-1+ (see above).
This is a “worse” rating than AA+ (to me).
To be fair, on 25 May 2023 (barely 3 months ago), Fitch has already warned about cutting US credit rating (see above).
To have both Media and Treasury Secretary, Janet Yellen feigning puzzlement & injustice, is a “real” surprise (to me).
Is this what “selective amnesia” is about? LOL!
Reasons cited by Fitch for the downgrade:
"Steady deterioration" in governance over last 20 years.
Fiscal brinkmanship by lawmakers over government borrowing.
A high and growing general government debt burden.
Erosion of governance" relative to peers.
Expected fiscal deterioration over the next 3 years.
Heading into August’s 2nd trading day:
It is likely that US market will continue to consolidate.
As the “aftermath” of the downgrade continues to exert its downwards pressure.
US pre-market indicators (see above) seems to agree with my viewpoint.
The way I see it, in the immediate term - downgrade would have a spillover effect on other sectors of the economy: (for instance)
Foreign exchange markets (see above).
Corporate bonds.
Mortgages.
Consumer loans.
How To Trade In Coming Days & Months?
Avoid or Sell down on stocks “most” affected would be those sensitive to interest rates:
Financials - $Morgan Stanley(MS)$.
Utilities - $NextEra(NEE)$.
Real estate - $Prologis(PLD)$.
Consumer staples.
Monitor or Buy stocks that benefit “most” would be those less dependent on domestic demand:
Technology - $Microsoft(MSFT)$.
Health care - $UnitedHealth(UNH)$.
Consumer discretionary.
Do you think US market will continue to correct itself today & this week?
Do you think the stocks to avoid and monitor are “accurate”?
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UNH is definitely a $1 trillion company in the next 3 years. Enjoy the ride and don't worry about the day to day share price.
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Prediction: The market will shake off this downgrade by Fitch within the next couple of days. Meaning,stocks will go higher,including MSFT. The current dip is a good time to buy more,and I dont mean 2/10s of a share.
Would you consider "Follow me" and get first hand read of my Daily new posts? Thanks!
The market thinks that stocks have been overbought and is looking for any excuse to sell off. We're in an environment where "good" isn't good enough.
Most experts think this downgrade by Fitch ratings is nonsense.