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S&P Downgrade Effects

Friday we saw approximately twice the usual volume in interest rate futures on a non-farm payroll day. This was before CME markets closed and S&P made their announcement.
Did anyone else notice anything else interesting like this last week? I mean lot's of stuff happened last week. But what other observations did people see ?
S&P downgrade was leaked before the close
http://ftalphaville.ft.com/blog/2011/08/05/645016/the-safest-of-havens/
 
I hope someone can help me with the following;

as far as I understand there are conditions on what kind of paper mutual/money market funds are allowed to have and what is acceptable as collateral in repos, reverses etc., implying that there should be a sell-off on Monday. Yet this came out from Fed, the FDIC, NCUA, OCC;

Full release:
Board of Governors of the Federal Reserve System
Federal Deposit Insurance Corporation
National Credit Union Administration
Office of the Comptroller of the Currency
Agencies Issue Guidance on Federal Debt

Earlier today, Standard & Poor’s rating agency lowered the long-term rating of the U.S. government and federal agencies from AAA to AA+. With regard to this action, the federal banking agencies are providing the following guidance to banks, savings associations, credit unions, and bank and savings and loan holding companies (collectively, banking organizations)

For risk-based capital purposes, the risk weights for Treasury securities and other securities issued or guaranteed by the U.S. government, government agencies, and government-sponsored entities will not change. The treatment of Treasury securities and other securities issued or guaranteed by the U.S. government, government agencies, and government-sponsored entities under other federal banking agency regulations, including, for example, the Federal Reserve Board’s Regulation W, will also be unaffected.

Does this mean S&P got a collective "shove the downgrade up your ass" and it should be business as usual in the money markets on Monday?

Did anyone else notice anything else interesting like this last week? I mean lot's of stuff happened last week. But what other observations did people see ?

I am quite sure a selected few were "flashed" with the report, though as you mentioned so many things were going on it's hard to point to anything solid.

We have a first casualty: Saudi stock market first to plunge on S&P downgrade
 

Abdel

Economist
I hope someone can help me with the following;

as far as I understand there are conditions on what kind of paper mutual/money market funds are allowed to have and what is acceptable as collateral in repos, reverses etc., implying that there should be a sell-off on Monday. Yet this came out from Fed, the FDIC, NCUA, OCC;

Full release:
Board of Governors of the Federal Reserve System
Federal Deposit Insurance Corporation
National Credit Union Administration
Office of the Comptroller of the Currency
Agencies Issue Guidance on Federal Debt

Earlier today, Standard & Poor’s rating agency lowered the long-term rating of the U.S. government and federal agencies from AAA to AA+. With regard to this action, the federal banking agencies are providing the following guidance to banks, savings associations, credit unions, and bank and savings and loan holding companies (collectively, banking organizations)

For risk-based capital purposes, the risk weights for Treasury securities and other securities issued or guaranteed by the U.S. government, government agencies, and government-sponsored entities will not change. The treatment of Treasury securities and other securities issued or guaranteed by the U.S. government, government agencies, and government-sponsored entities under other federal banking agency regulations, including, for example, the Federal Reserve Board’s Regulation W, will also be unaffected.

o, this must be the famous independance of the FED from any political influence.

The day of reckoning is fast approaching. If ''spaceship'' Ben comes in with QE3 (wich he is probably doing already in stealth mode & with a different name) it will be the end game for the USD.

3 G's : Gold, Guns and a Get away plan, lol
 
Is this news making anyone else incredibly depressed....
Where were you during 07-08 crisis? Where were you during 9/11?
We have gone through it before, correct?

I was working on Wall Street during the 07-08 crisis and I experienced the fallout first hand. Just shrug and move on to the next thing. I look around these days and none of my finance friends is homeless so no need to panic. Many of them have since moved to other banks, getting better paid jobs. Life goes on.

This is a "new normal" (whatever it means these days) that you have to accept. That means you should think about your career in this new light. What would you do if you don't work in finance? What transferable skills you have?

As long as I have all limbs intact and healthy, as do my loved ones, that all it matters to me.
 
I don't believe anyone is saying the job outlook is bright in the near future.

Wat? I'm getting interviews out the wazoo here. Analytics, trading, startups, internet advertising (aka admarketplace...thanks for that post, Andy, it got me an interview XD), and my best opportunities in Chicago have yet to even be formalized while I currently am self-employed (for no pay >_<) as an open-source coder.

If you write an open-source piece of software or three, market yourself as a data kid and not a money-mover, there are plenty of places that'd be willing to talk to you.

(The hard part is finding them >.<)
 

bob

Faculty (Undercover)
I hope someone can help me with the following;

as far as I understand there are conditions on what kind of paper mutual/money market funds are allowed to have and what is acceptable as collateral in repos, reverses etc., implying that there should be a sell-off on Monday. Yet this came out from Fed, the FDIC, NCUA, OCC;

Full release:
Board of Governors of the Federal Reserve System
Federal Deposit Insurance Corporation
National Credit Union Administration
Office of the Comptroller of the Currency
Agencies Issue Guidance on Federal Debt

Earlier today, Standard & Poor’s rating agency lowered the long-term rating of the U.S. government and federal agencies from AAA to AA+. With regard to this action, the federal banking agencies are providing the following guidance to banks, savings associations, credit unions, and bank and savings and loan holding companies (collectively, banking organizations)

For risk-based capital purposes, the risk weights for Treasury securities and other securities issued or guaranteed by the U.S. government, government agencies, and government-sponsored entities will not change. The treatment of Treasury securities and other securities issued or guaranteed by the U.S. government, government agencies, and government-sponsored entities under other federal banking agency regulations, including, for example, the Federal Reserve Board’s Regulation W, will also be unaffected.

Does this mean S&P got a collective "shove the downgrade up your ass" and it should be business as usual in the money markets on Monday?

I have had occasion to speak with a number of MM fund providers over the last year or two concerning SEC-mandated stress testing, and it has been made clear all along that these funds are permitted to treat all US government debt as free from default risk. It would be very odd for an agency of the US government to behave differently, really.

However, that isn't to say that it will be business as usual in the money markets. It already isn't. General collateral rates have been spiking for a couple of weeks now, and although it doesn't look like CP is getting hurt much yet, it bears watching. In Europe, dollar liquidity has been difficult to come by for quite some time due to concerns about counterparty credit, and if our short-term markets catch that particular cold too, then the Fed will likely have to step in.
 
Effects of the S&P downgrade: well, my student loans were set in stone before the downgrade. So, I suppose the credit card interest I'll never ever pay because I always pay my balance on time (or even if I use my credit card--I use my debt card nowadays since I have to figure out how to link my credit card to my debit card account where I get my direct deposits), and maybe it might cost me more to get a mortgage in the future, but in order to buy a house, I first have to find a place to permanently find work in. I'm not exactly a fan of owning for that reason in that the job can evaporate at any time, and I'd need to switch cities.

Overall, financially, I'm not sure it'll have any effect on me--that is, it won't affect me (affect=verb, effect=noun, L2Grammar), but it might affect my job search. Which may be a bit of a pain in the ass, but so long as I keep writing open source software, I should be able to pay rent, loans, buy healthy eats, and generally have a good time.
 
@IlyaKEightSix

I was doing a lot of Open Source software consultancy/contracting back in '08. The worst issue I had was people not paying on time. So just make sure you cover yourself on that front.
As for the online ad metrics, there are some good companies out there. I used to work in the industry, so if you are looking for the names of some decent companies hiring IM me.

Good luck with your interview.
 
no need to overreact it; it's s just embarrassing and a little bit symbolic. the key economic indicators are much much more important that the ratings (s&p just is a company and already made tons of significant mistakes!). In additon, the major concern of the rating agency is the disfuctional political system of the U.S.A; cannot understand why the politicians cannot reach a compromise deal including some tax revenve.
 
Look at it like this. The deficit has never been a sexy political topic. Now it is front and center. This will bring Obama even more to the center and force him to become a fiscal vanguard. We had a nice budget fight with cuts from a president and senate that would of preferred to simply spend. I think you will see even more of a push to scale back the government and spending.
 

DominiConnor

Quant Headhunter
An interesting factor is China, they have been diversifying away from the USA for a while, and if they stop buying US debt then yields will go up big time.

I think Anthony is right about the fact that neither party cares more about the US economy than their personal chances in the next election. I don't share his optimisim about Obama, who is in the pocket of organised labour who make both political parties look as wise as Maynard Keynes.

I see no possibility of scaling back spending on entitlements, crazy levels of defence spending or pork.

To understand US politicians, you need to be a parent, which gives you the insight that what you tell kids is not what they hear.
If you say "you must be polite to adults" they may well intrepret that as "big people have the right to punish smaller ones if you don't follow arbitrary unexplained rules"

Let's imagine (unrealistically) that the sort of voters who voted in this bunch of bozos kick some out at the next election.

What message does that send ?
It sens the message that your position is unstable, and can easily be taken away.
How does one deal with that ?
Get goodies for your own subset of voters (AKA pork) and make sure that none are taken away.

That's not going to end well.
 
Politicians have zero incentive to cut spending. People are so selfish and myopic that as long as they get their entitlements they don't care about anything else. This is why I think the government always wants to increase taxes (either directly or through hidden ways). You cannot garner favor with voters if you allow free citizens to donate or support what they want to. The government could easily incentivize private donations and charity, but that is out of their control.

I 100% support eliminating tax credits for married people, children, mortgages, etc. The government has a revenue issue because it has too many credits. Why should someone who has children be favored over someone else. I would hope that those who have children can afford them without the tax deduction. Same thing with home ownership. Canada does just fine without a mortgage deduction. One could say that this also helped fuel the home ownership bubble. Same thing with marriage. Why should single, divorces and widowed people get punished for not being married.

Government has no business rewarding such sensitive and personal behavior. Instead of taxing "rich" people they should make people pay across the board. I have no children and am not married, why should I subsidize someone else's decision.
 
Why should single, divorces and widowed people get punished for not being married.

Or in some cases, reward single mothers on welfare -- in effect incentivizing the father to leave the picture.
The way I look at it, the US government is so fucked up at this point its going to be difficult to keep chugging along as the lone superpower. Most politicians are still going on TV and playing politics. I just don't get it.

But actually I think I do... most americans are just plain weapons-grade stupid. Any google search on surveys of questions like http://www.offspring.com/forums/showthread.php?t=4328 (sorry for weird website, couldn't find the article archived on cnn.com)

Can't find NY on a map? In 2002?!? Right after 9/11?!!? Wtf

I truly believe that a great deal of congress members share this lack of.... knowledge... http://www.youtube.com/watch?v=XK3rTUgoQD4

God damn it. These dumbasses aren't going to fix anything.

//suicide
 
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