#uscredit #usdebt #fed #usdebt #yahoofinance
Ratings agency Fitch surprised a lot of people when it downgraded its rating on U.S. debt from AAA to AA+. Allianz Chief Economic Advisor Mohamed El-Erian tells Yahoo Finance Live that he was surprised by the move too, and that “what Fitch put in their statement has been true for a while, so why now?” “When you look at the reason you scratch your head as to the timing of this,” El-Erian said. On the political issues the downgrade could raise, El-Erian says “domestically, this is likely to fuel more of the polarized conversations that are going on. Internationally, for the adversaries of the U.S., they will point to that as yet another development in terms of the U.S. no longer being as powerful and as influential,” adding that he thinks those arguments are “weak, but they will be used.” Overall, El-Erian says there is “no reason for the U.S. to fall into recession,” saying the economy is “vibrant enough, it is flexible enough, and it’s handling this global soft patch well.” His biggest worry is that the Fed will overtighten and “continue pursuing an inflation target, 2%, that makes less sense for today’s structural and supply-side elements.” El-Erian says he wouldn’t have hiked rates in July and “certainly wouldn’t hike in September.” “There’s a more fundamental issue, which is, as I regard, excessive data dependency by the Fed,” El-Erian said, highlighting how data is backward looking while the Fed’s tool, interest rates, can take time to have an impact.
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3% is easy to say , but another kick in the teeth of the average person
So would a recession
@Wexp Media recessions are part of the normal business cycle , 3 % inflation will just see the wealth gap widen
What El-Erian failed to mention here as regards U.S. real pick up in growth is the fact that if I as the U.S. government was in the process of spending trillions to prop up the economy with wasteful subsides for corporations such as Intel under the Chips Act or the Inflation Reduction Act well I could temporally give you a better economy also. None of this is due to a free and open market, but just the arrogant extension of more debt. Central planning coming on a grand scale with little pursuit of long term productive, sustainable growth for Americans.
Exactly. Cities are flooded with cash from the Inflation Reduction Act to build out Infrastructure, but much of it is going toward pet projects or being wasted. My city just spent $50,000 replacing boards on a footbridge that was in good shape. I talked to the contractor who happened to be onsite when I wanted to cross the bridge. He told me that he has 5 similar small projects that could be done for a quarter of the cost, but the city needs to spend the money or lose it.
@weirdshibainu; In the small town I am in they are putting in new side walks and actually tearing up older ones that are in perfectly good shape. All these cities and towns will take this federal money with no thought for the future of the nation and it’s people as a whole.
Mean while the towns roads in the town and along Highway 101 are badly in need of resurfacing including being a winding coastal road here in the Pacific Northwest (Wet Climate) this same major highway sees collapsing areas where the road just caves in or falls in the ocean. It seems sidewalks are a priority because we have all of 4 people in town who are in wheelchairs who have navigated the old side walks safely for years now.
@Alfred Epding Yep. I traveled 101. It’s no joke. Our city has spent millions on sidewalks, yet joggers run in the street or the bike lanes, which irritates the bikers. Go figure.
This is a debt based economy, it needs to crash from time to time to wipe out the debt and savings.
@DrScopeify “Well that spending paid off with the current GDP growth and avoiding a recession” — that’s so funny, you are suggesting to borrow your way to prosperity. That works only as long as the lenders are willing to lend. It’s unsustainable and will inevitably crash and burn with economy ending in the toilet and the inflation growling faster than the Kardashian’s butt.
Why now?! Exactly. It feels political af.
10000%
Yes, surprising that it comes so late, and surprisingly just one notch down. AA- is more appropriate.
No its just a political game look at the timing with what is going on with Trump. But he will just get more support which is why it makes me laugh at their actions. Keep in mind the USA real national debt the Non-Governmental debt is 25 trillion so it is not even 100% of GDP I think in the 80% range it is too high but not as bad as it seems.
The ratings agencies are a joke! They are just pawns for the Fed. The fact that Fitch went out on its own is what’s surprising.
Maybe it’s very late timing… Insanity in ClownWorld USA, >32 Trillion debt, 1 Trillion in interest payments, OMG Should be CCC rating
Well 7 trillion of the 32 is its own cash so it is paying itself the real non-governmental debt is 25 trillion which is not as bad as it seems but that is still too high but for example China has a much higher debt burden
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“CREATOR OF THE UNIVERSE, LORD GOD,
Please help me against evil and all who favor it. Thank you for everything CREATOR OF THE UNIVERSE, LORD GOD. Amen.”
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The timing of it makes me question the credibility of this private firm/Fitch. Why did it rate during earnings season? it unfairly influenced the stock markets. Might be bribed/manipulated by the wall street hedge funds.
The fact that they’ve managed to spin this into another Jan 6 issue…. Can you say imbeciles😂
They are playing a political game 1000000%
Gonna crush as a hammer when I hear their BS
Self-delusion.
lol He’s in a country where the mini budget fiasco happened just last year. How did he say that with a straight face.
either recession drives down inflation or refinancing drives up taxes. you can’t have it both ways, unless you have another boomer wave entering prime age(no there wasn’t a baby boom 20years ago)
This rating doesn’t mean anything. A.i will take of everything 😅😂. Biden and Powell ready to turn the money printer back on as soon as VIX hit 20+. Why is yahoo always looking for rate cuts???????? If they stop fighting inflation commodities will go up again
Republicians plan on shutting the government down this fall so perhaps they can get the US downgraded again.
But one trillion in defense spending year after year. Never a discussion on cutting this insane spending item, only goes up as defense contractors have bribed all the politicians. Thanks corrupt SCOTUS for allowing unlimited bribes (donations) to politicians. But programs fir the actual Americans must be cut?
Sounds like this downgrade has hit El_Erian and his rich friends in the hip pocket!
So recession is canceled? How come Mohamed changed narrative?
The real question should be what took so long? Its long over due.
Why now? Tax receipts crashed.
As always – I say elect this man to the head job that he will accept and support him in that role – he’s correct in what he says and (seemiingly n hopefully) unowned by the powers that be!
no. keep him in the private industry and education. You bring him into government , they will annoy him with bureaucracy.
@Aa E The problem is we need more people like him in government in order to fix it. The people in there now are idiots. More consumed with power then actually looking to pragmatically solve the country’s issues.
@Aa E I know I know…we just need a proper “good human” in our govornment now more than ever!
And how would YOU know whether he is correct or not?
This is such a ridiculous statement in the face of lots of very smart economists arguing about the issues often coming to the opposite conclusions. Anybody who thinks yahoofinance is the source of truthful and reliable information knows nothing — it’s just here for your entertainment, nothing more.
why now .. 1 Biden is senile and corrupt 2 the Ukriane war is lost and expensive 3 US cities are in ruins with 15/20% comercial realestate vacancys 4 … do we need a 4
0:31: 📉 Fitch has downgraded the U.S. government’s credit rating for the second time, citing an erosion of governance and repeated debt limit standoffs.
3:40: 📈 The Fitch downgrade of the US dollar is unlikely to have a significant impact on its status as the global reserve currency, as the dollar remains strong. Political arguments against the US may arise, but the private sector’s vibrancy and governance stability give the US economy an advantage. The long-term fiscal challenges can be addressed through promoting high sustainable inclusive growth and revamping economic growth models.
8:28: 😕 The speaker believes that the US economy is strong enough to avoid a recession, but is concerned that the Federal Reserve’s focus on a 2% inflation target is a policy mistake.
11:27: 📉 The Fitch rating downgrade of U.S. Treasury bonds does not change their status as the most liquid financial system, and there is no replacement for them in terms of reserve currency.
Recap by Tammy AI
Thanks
Thanks
Not a Yank, Singaporean & foeman of the FRBNY. Spouting well establish proven material falsehoods. T bonds do not hold value but are destructive of value & have exceptional poor liquidity. T Bonds are 30 year US Treasuries. Such 30 Year T Bonds in the last 18 or so mths have shown a pronounced & severe lost of value & liquidity. There are tranches of such US Treasury T bonds with long tailed maturity dates that have loss value very significantly & are trading at less then 55% or in certain case at even 50% below the nominal & or par value of said T Bonds.
Thank you!
USD is going to dive shortly … M EL is coping hard
Franz Pick rolling over in his ⚰️
Fantastic effort!
Thumbs up, masterful!
INTEREST RATES WHEN BORROWING TO PAY JUST THE INTERST ALONE IS THE PROBLEM WE ARE THEIVE’S WE WILL AND WON’T EVER PAY BACK OUR DEBT…NEVER, WE COULD BUT DON’T WANT TOO.
How do you downgrade the world reserve currency? What do they think is anything better, nothing is, and everything else is toilet paper, it just a timing issue so some rich arses on inside can make more money for nothing
Mr. Mohamed you are right. You can’t have all that and still deny growth. Some was wrong and they just stick to their point. It’s like with oil, when their peak target is reached the biggies start changing tone to get a short win. They win both ways. They are long but are not making money therefore they want a recession to go short and long in these 2 years. But most of them probably was chasing bitcoin and lost a lot of money when markets fell and find it hard to accept those loses. Therefor they have to push Bitcoin higher irrespective of the damage crypto exchanges had done.
wtf aa+, it should be B+, with 31 trillion in debt how are they going to payback ???? no way !!! Usa is bankrupt
AA+ is much too high
Not a Yank, Singaporean & foeman of the FRBNY. My tuppence worth of contribution to the debate. US Treasuries 10 year T notes junk bond status C or D. 2 year T notes BBB or CCC. 91 day T bills A or AA. 30-year T bonds new buy with maturity in 2053. Unless mandated by law or regulation, do not buy under any circumstances. If buying on some other party behalf, advise very strongly against & be aware it’s a breach of you fiducary duties to procure new issue 30 year T bonds unless compelled by law & or regulations.
Is FR owned by Russia or by MAGA?
Fitch has probably realized that the official numbers representing GDP, recession, and unemployment are highly inaccurate.
Mohamed is the smartest economist we see on a regular basis on tv in America. Never a full time bull or bear, he tells it like it is!
Yeah I wonder where he invests.
What!😮😱 With all that pile of debts they’re drowing in and Fitch still giving them that high rating. I personally think the real rating is BB-.😷🤒🤕🤢🤮
This guys is always spreading FUD/Doom&Gloom, while the US market just keep going higher. smh
Because the US treasury is going to issue a ton of debt and some influencing people might want to squeeze higher yields in the primary market. Who are Fitch top shareholders? And who are the top investors of those institutions? Are they going to buy US treasuries soon?
Fitch has always been corrupt.
The banks are flipping on Biden and his administration
I like higher rates.
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Thank you very much…
the powers to be made Fitch do it to crash the stock market because the market was getting to bullish
Owner of Fitch Ratings is…………HEARST (100%)👏🏼👏🏼👏🏼👏🏼
US currency does not have a substitute unfortunately. It’s like playing the game of monopoly.. we can’t stop playing until everyone gives up. By then usually a fight’s broken out.. “we can’t replace something with nothing..”
Why the Hell not?
Many Civilizations never adopted Capital as a value system.
Some of those societies lasted for thousands of years before Roman Capitalism arrived.
The Majority of the Humans on the Planet do not have enough money to pay bills.
Why not just agree to stop bothering with a social system like capitalism?
Nicely said 😎
The real question is when will Moody’s follow suit and downgrade?
Agree 100%
That’s why I rarely watch Yahoo finance! I’d argue that for most people with a common sense this downgrade isn’t surprising. “We don’t have a debt problem”? Has this “expert” looked at the data? Government debt to GDP at 129% and keeps growing …yeah right, there’s no problems here. The media continues to protect the incompetent president and his advisors by interviewing people with a certain outlook. The politicians just want to get by until the next elections and democrats especially are great at promising things the country can’t afford…AKA buying votes.
WOW NO the debt wasn’t downgraded because of “ARGUING about spending money” They downgraded about SPENDING TOO MUCH MONEY!!! So if everyone just agreed to spend trillions of dollars and never paying it back, Fitch would keep it at AAA??? The US is essentially a banana republic monetarily.
Why now? Because they are more than 6 months late…and we have more grow only because we have much more debt. Suddenly 5% interest rates are high… but 5% inflation is considered good,,coming down…bad logic. People are paying over 20%+ on CC. 5 % interest rates I earned on passbook savings as a kid in 1960
Football humor.. stupid 😮
The Fed needs to abandon the Phillips curve as their main metric. Lest we have mass unemployment as a counter to inflation, but that will lead to anything but a soft landing. With AI and automation, those jobs won’t come back, while the rest get off-shored. They’ll need a world war to jump start the economy again.
The guy knows football and said the whole truth in one paragraph. He said what the high and lows could be in the end. He gave a complete equation. 2 thumbs up. Does his want a coaching job ?
Stupid ending – who gives a crap about Football takes- show is suppose to be about finance.
I want to know if these guys think the debt will decrease ever.
No chance. Not when they can kick it down the road.
Fitch’s down grade sounds more political than financial.
Mohamed is a very brilliant economic mind. He has not totally sold his soul and is very careful with his words. He knows the system is rigged but if he exposes the truth his plane will suffer some sort of mechanical failure. You have to read between the lines. The U.S the cleanest shirt in the dirty laundry. He is right about Treasuries where you going to go? The only alternative is Gold for central banks that’s why they have been on a buying spree. The only way out is war The U.S is essentially a loan sharking business. What happens when the loan shark does not return your capital?. Eventually you are going to piss off the wrong people. I think he and the elite know what’s about to come without saying. He did say absence of of Global Political event the US would hobble along. It’s what he doesn’t say that matters.
I am not surprised 😂
Downgrade is long overdue, should have been done decades earlier as it became standard practice for US to run obscene deficits. US made a bad turn in 2001, now we are doomed.
so you didn’t listen to the video…
@3:13 – Uh… they are not called “Tweets” anymore… they are called Xs 😂
“Ideal CPI target” — an arbitrary number he pulled out of his
Fitch warned many weeks ago that they will take such a step. The warning was ignored. It was not a total surprise. Mr El Erian is defending an old horse that only few people profit from. The present economic system is unfair, heartless, and evil.
How about 0% inflation? Why must currency devalue in purchasing power? Tech makes everything cheaper. Devaluing fiat currency ensures that we don’t benefit from that trend.
~ 2% gives an incentive to buy goods and don’t wait for it to become cheaper.
I agree. It’s a way to manipulate consumer and worker behavior.
@BenJ. Don’t need to give incentive to buy goods. If people have money and need something they will buy. This whole keynesian idea is the cause of all the trouble in the economy
Let the debt slavery central banks fail. I will take all your gold and silver SKOOL!
Why now? US debt has been garbage for decades, and the US rating agency have always pandered to the US Govt in giving the US dollar pig the Miss USA beauty award (AAA). But as Biden moves more rapidly to WWIII and it is clear that US dollar is heading for collapse with no restraint on spending and US dollar printing, Fitch is trying to send a message that US dollar based investors should wake up.
Another downgrade and then a debt default will be nice.
Why now asks the Biden sycophant.
I wonder where he puts his money.
Erm it’s surprising it took this long to downgrade
THE FALL OF AMERICA IS HERE!!! THEY DOWNGRADE U.S. CREDIT!!! THE RAISE OF SO MUCH PAIN IS COMING!!! HYPERINFLATION!!! MORE BUSINESS NEED TO RAISE THEIR PRICES AND THAT MEANS WE ALL PAY FOR THIS PAINFUL CYCLICAL!!! MORE PRICES GO UP!!! BUSINESS PRICES GO UP AND NOW!!! THIS WILL JUST KEEP GROWING AND THEN BOOM!!! HYPERINFLATION!!!!
Where did this dude get his Economies Degree? Inflation should be aimed at less than 1%.
Blaming this on the Trump boogeyman again? This is insufferable.
My question would be , Has anyone positioned themselves into a position of power and control who could totally dominate the world after a collapse of the US economy ?
What colour would they be ?
What would they call their digital currency ?
Why now? Because de-dollarization and the multipolar world has started and the agencies are acknowledging it. Just doing their job.
Downgrade is all noise will not affect the S&P from reaching all time new highs in the next several months
Erosion of government is right!
I just lost all respect for this man. This sounds like some propoganda narative. Maybe he has a shot at the FED as chair.
Thank God, Congress & President recently passed the ‘Fiscal Responsibility Act’ which allows US to out print anyone we owe money to.
😁 The market is getting ready for inflation.
The credit ratings agencies are finally calling out the US for its structural inadequacies (politically) and its effects on the broader economy. Maybe this is why some NATO members are openly asking US officials if America can maintain its support of NATO, given all its internal problems (and competition from BRICS).
totally glossed over the excessive, rapidly growing amount of debt and the inability to control the everything for FREEEE PSYCHOLOGY and the ever increasing portion of the budget that is consumed by interest
El-Arian is smart. “one of the best at analyzing data. The questions he was being asked were political sniping against GOP. We are not stupid. Trump, Jan 6 Are you serious! “yahoo” just showed everyone to never trust them for advice about the MRKTS these people are a joke
Commenter makes same mistake as Fitch as not properly identifying the underlying cause of the deliberate attack on the proper functioning of American governance over entire last 20 yrs; it is wrong to just call it increased “polarization” / that wrongly ‘both sides’ what is really a one-sided issue: ALL the attacks on government function Fitch identify/ unnecessary debt-ceiling brinkmanship, massive expansion of debt with no investment, insurrection against the government, Trump indictments and more…. are ALL primarily due to one single, bad party that has gone full-tilt power-only/a TT-American, & the Force’s that control 1it
“The US will never default on it’s debt because we will simply print all the money we need.” Alan Greenspan
the US has defaulted – when Nixon suspended the the convertability to Gold – that is a default – the printing of money is the result of defaulting
We will never grow our way to paying off the huge national debt.
Mohamed should wake up and come to the real America
Why now??? More like what took so long????
The United States government and U.S. citizens are BROKE and deserve the lowest sovereign debt rating
The question is who at Fitch made this decision and who paid them off
Debt based system at its end – Print or Die – US is now in the Triffiin Dilemma
El-Erian has become a cheerleader for a system that is essentially dead – adapt or die – Gold is coming back into the monetary system to restart it as the confidence continues to erode – CBs hate it, because it imposes discipline and exposes the Ponzi scheme they have been running – a world in chaos – New world order coming as the US grip on the world slips away with the true power, that is the US Dollar – Multipolar world coming –
US treasury will not be replaced but Gold is reducing the holdings of the bonds – BRICS is leading the charge
Every one knows Mohamed is on Biden’s payroll so his comments are not surprising.Anyone with an ounce of sense knows the U.S. has some serious financial problems.
“Why now? Why now when such a downgrade will not affect markets at all?” You just answered your own question.
Powell is walking a line between recession and inflation.
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Fake b$ propaganda
Should have happened in 1971 and continued to decline
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Raising bond yields (“interest rates”) reduces the price of government bonds.
Thus, the government, to get its required cash, must issue more bonds to be monetized (at a lower price) by the Fed, thus dramatically increasing government debt.
The current government debt of over $33T is unsustainable and will increase exponentially just to issue more bonds to pay the spiraling interest.
A default of government debt is coming and there is no way to prevent it.
The United States admits to $33 Trillion dollars in debt (it’s actually many trillions more than that) and adding more than two trillion dollars per year in deficit spending.
If you set the federal debt interest rate to ZERO (won’t happen), did not borrow any more (won’t happen), and then paid off the principal at $100 BILLION dollars per year (won’t happen), then the debt would paid in 330 YEARS. IT WON’T HAPPEN!
Our problem, this administration is running the economy in the ground. Green energy is unrealistic, petroleum is the answer. Our economy would get an instant boost if we started producing our own energy again. Move factories back home. Our government needs to quit spending, & printing money.
The fact that anyone listens to this guy is puzzling.