What we’re reading (5/20)
“Stock Market Rally Driven By ‘Unwarranted Optimism’ As Tariff Risk Looms Over $9 Trillion Rebound” (Yahoo! Finance). “After a massive drawdown in the initial reaction to President Trump's April 2 tariff announcement, major stock indexes have roared back, with the S&P 500 adding $9 trillion in market value in just over a month. But after six straight days of gains that have brought the S&P 500 within 3% of a new all-time high, some on Wall Street are cautioning the market rally may have extended too far, even if the probability of recession has declined in recent days.”
“The Trade War Isn’t Over” (Paul Krugman). “[Y]ou might well think that the Trump trade war is basically over, that we’re back to more or less normal policy. The reality is that we’ve gone from a completely insane tariff rate on imports from China to a rate that’s merely crazy. And China accounts for only a fraction of our imports. Tariffs on everyone else are still at 10 percent, a level we haven’t seen in generations. And there are still other shoes to drop: Trump has, for example, been promising tariffs on pharmaceuticals. The trade war is still very much on. Anyone who reports otherwise (a) hasn’t done their homework (b) is misleading the public. And while the stock market has to some extent bought into unwarranted optimism, markets with fewer naive investors like oil and bonds don’t seem fooled.”
“Mortgage Rates Jump Above 7% After Moody’s Downgrade Of U.S. Credit” (MarketWatch). “Mortgage rates surged after the credit-rating agency Moody’s downgraded U.S. debt. Moody’s cut the U.S.’s sovereign credit rating from AAA to Aa1. It was the last of the major credit-rating firms to strip the country of its triple-A rating. S&P Global Ratings downgraded U.S. debt in the summer of 2011.”
“US Debt Rates Itself (Matt Levine). “The credit rating of US government debt, for most purposes for which people would use a credit rating, is ‘US government debt.’ The credit ratings assigned by S&P or Fitch or Moody’s are not, as far as I can tell, binding on any investors; the thing that is binding is the particular legal status of Treasuries as US sovereign debt.”
“AI Is Coming For The Big Four Too” (Business Insider). “AI could be poised to disrupt their business models, organizational structure, and employees' day-to-day roles, while driving opportunities for the midmarket.”
