From AAA to WTF
Uncle Sam gets slapped on the wrist
Good morning, my nervous unsecured creditors. This is your Stock Market Rundown for August 8th, 2023. Thank you so much, once again, for reading. Let’s get started:
TODAY’S TOP STORY: DOWNGRADE DUMPS 📈
Back in my school days, I was never an A+ student, and usually had to be satisfied with a gentleman’s C. But when you’re the global hegemon, you never get detention: the US government’s debt is perennially rated triple-A.
That is, until now: a top rating agency just downgraded Uncle Sam’s credit rating one notch, to AA+. Since markets loathe surprises, stocks traded lower on the news.
When you’re the dominant economic superpower of the free world, you don’t really expect to be slapped with a You Tried star. But “the numbers speak for themselves,” as a rep for the ratings agency sniffed. US debt is now 113% of annual economic output, which is like if you spent more on bottle service and Loro Piana cardigans than you made in salary… every month.
That’s the USA’s problem: champagne tastes on a beer budget. Entitlements like social security and Medicare face spiralling costs, with no political consensus to rein them in.
Another thing that makes ratings agencies cringe, is brinksmanship over the debt ceiling. These bean-counters have no sense of drama! What could be more emotionally satisfying than waiting until the last humanly possible second to raise the debt ceiling, with a government default hanging in the balance? It’s the fiscal governance version of walking away from an explosion in slow motion without looking back… badass.
Let’s give the last word to our girl Treasury Secretary Janet Yellen. She scoffed at the downgrade, calling it “entirely unwarranted”, “arbitrary” and “based on outdated data”. You tell ‘em, Janet. Nobody puts the global reserve currency printer in a corner.
SO WHAT ELSE IS GOING ON?
Taco Bell is being sued for false advertising because Crunchwraps don’t have as much meat as the ads claim. You could argue this isn’t the best use of the courts’ resources, but maybe Taco Bell should’ve thought of that before they started telling spiced-meat lies.
Not a bang, but a whimper: a top strategist is predicting a mild recession to come later this year, with job losses not spiking as much as previous downturns. And heck, if it’s worse than he expects, DoorDash is hiring—bulk up your quads delivering burritos by bicycle.
Most Americans think you need $1.8 million to retire. That might fly if you’re OK spending your golden years in a trailer in the Florida Panhandle, but don’t expect room in your budget for cognac or Cohibas.
AirBNB reported strong quarterly earnings with revenue and bookings both up double digits. Guess their customer base of penny-pinching vacationers are still cool with laundering their own bedsheets and dodging spy cams in the headboards.
That’s it for today, see you bright and early tomorrow. Yours in capitalism, The Axe