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CRA Opinions, Budget Cuts, Corporate Earnings of Interest to Investors

8 August 2011 - News - Editor

The US government's apparent inability to reach consensus on the debt ceiling is being cited as one the primary reasons for S&P's credit rating pessimism as the US was downgraded from AAA to AA+. Although the news initially sent shockwaves through markets, with Asian markets reacting negatively, Europe absorbed the news with little effect. Analysts have been quick to remind investors and other interested parties that an AA+ rating is still considered to be good, also pointing out that, although the same information is available to all credit rating agencies, the S&P rating is the only CRA that changed it rating, highlighting the fact that credit ratings are based on opinions, informed opinions, but opinions nonetheless. Certainly, the S&P downgrade of the United States economy has once again put credit rating agencies, and their considerable influence, in the spotlight.

It is surmised that S&P's informed opinion has included a degree of skepticism that the proposed budget cuts will, in fact, take place. A new bipartisan committee, consisting of six Republicans and six Democrats, has until the 23rd of November to agree on workable budget cutting strategies. The twelve member committee will be chosen within the next few weeks, and will have their work cut out for them as lobbyists, special interest groups, and lawmakers running reelection campaigns will want their voices heard.

The week ahead starts off slowly, with no market-moving economic data due on Monday. Tuesday's highlights include the release of the Federal Reserve's policy decision in the afternoon, while on the corporate front The Walt Disney Company (NYSE:DIS) will publish second quarter earnings. Cisco Systems (NASDAQ:CSCO) and News Corp (NASDAQ:NWSA) will be reporting after Wednesday's closing bell, and during the day Wall Street investors will gain access to June wholesale inventories. The Labor Department's weekly jobless claims become available on Wednesday, where the number of unemployed filing for benefits is expected to climb to 409,000. US trade balance figures will also be released Thursday, while corporate companies reporting second quarter earnings include Kohl's (NYSE:KSS), Nvidia (NSADAQ:NVDA) and Nordstrom (NYSE:JWM). The week draws to a close with the August consumer sentiment reading from the University of Michigan and June's business inventory report, while JC Penney (NYSE:JCP) is set to report second quarter during the day.

 


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