The Fitch Downgrade of U.S. Debt: What You Need to Know

By Pam Martens and Russ Martens: August 3, 2023 ~

At 5:13 p.m. ET on Tuesday, after the stock market closed, Fitch downgraded the U.S. credit rating from AAA to AA+. Fitch is now the second of the three major credit rating agencies to have taken the historic step of removing the triple-A rating from the U.S. S&P made its first-ever downgrade to the U.S. credit rating on August 5, 2011, also from AAA to AA+, and has kept it there ever since. Moody’s is now the only member of the Big Three credit rating agencies that has maintained a triple-A rating on the U.S.

As the chart above indicates, the stock market responded negatively to this development yesterday, particularly over the fact that it came at a time when the U.S. Treasury is boosting the amount of debt it is issuing.

Yesterday, the U.S. Treasury announced its plans to increase its debt issuance, writing as follows:

The Digital “Atlas Club” Reveals Itself

In the stories of ancient mythology, Atlas – the Titan of endurance – was fated to bear the heavens upon his stooped shoulders.

He was a solitary symbol of resilience, standing strong amidst a world spiraling into chaos.

Fast forward to the modern-day, a stark parallel emerges in the stock market…

A group of seven ‘Tech Titans’ – Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta, and Tesla – now bear an Atlas-like burden.

Unlike the celestial sphere of the tale, their load is the weighty S&P 500 index, held aloft by their collective might.

Yet, there is a sense of balance, a teetering dance with fate that echoes the Greek Titan’s difficulty.

This week we peel back the layers of this Digital Atlas tale…

It probes the outsized influence of these tech Titans and uncovers the potential repercussions if their shared balance were to falter.

Wall Street Firms Are Becoming Crypto’s Biggest Allies

By Teeka Tiwari

“Isn’t he the idiot who said bitcoin would hit $40,000 weeks before it hit $4,000?”

In case you’re wondering, yes, that “idiot” is me.

That’s a variation of what many of the 5 million people who tuned in to watch a special broadcast I had with media personality Glenn Beck in July 2018 tweeted, wrote, or uttered.

At the time I pointed to how institutions were telling everyone how corrupt and worthless bitcoin was… While at the same time, they were laying the groundwork for their traders and money managers to buy, sell, and store bitcoin.

I called it the Great Crypto Conspiracy of 2018.

In July 2018 bitcoin was trading at $8,000. And my research told me as adoption increased, the price would ramp up rapidly.

I would end up being both right and wrong at the same time.

Adoption did indeed ramp up dramatically.

US Dollar’s Status as Global Reserve Currency on Slow Long-Term Decline, but Not Going Down in a Straight Line

An important thing to keep our eyes on these days.

By Wolf Richter for WOLF STREET.

The US dollar as dominant global reserve currency has been on a slow long-term downward trend, interrupted by upticks. And now we had an uptick, when the dollar gained share.

The share of the USD as global reserve currency rose to 59.0% in the first quarter of 2023, after having dropped to 58.6% in Q4, which had been the dollar’s lowest share since 1994, according to the IMF’s recent COFER data.

The US dollar as global reserve currency means that foreign central banks and foreign official institutions hold USD-denominated assets, such as Treasury securities, agency securities, corporate bonds, mortgage-backed securities, etc. They also hold competing foreign exchange reserves in other currencies, such as in euros (#2), and in yen (#3). But holdings in their own local currency are not foreign exchange reserves and are not included; so the Fed’s holdings of US Treasuries and MBS are not included; the ECB’s euro-denominated assets are not included, etc.

'Mom and Pop' Are Excited About Stocks Again

By Brett Eversole

We're leaving the bear market in the dust...

The bottom happened nine months ago. Stocks have surged higher since then... And we're darn close to new all-time highs.

Few would have thought it was possible at the start of the year. Investors wanted nothing to do with stocks. Now, with prices moving higher, folks are getting excited again...

Mom-and-pop investors are now the most optimistic they've been since before the bear market. And one bullish reading just hit a new 52-week high as a result.