Oh my! Let's go and hide in the bomb shelter! Moody's speaks and no one listens!
If you don't already know by now that Moody's is an absolute joke, you now know it today. A trillion in reserves, but Moody's gives them a downgrade.
Check the Reuter's headline:
TOKYO (Reuters) - Moody's Investors Service stripped the Japanese government of its last triple-A foreign currency credit rating on Monday in a move that could revive market speculation about the creditworthiness of other rich nations, especially the United States.
The two-notch downgrade to Aa2 from Aaa was a token censure for Japan which has almost no foreign currency debt exposure.
Look what Zero (H)edge had to say (btw this blog has some of the best information out there, but just don't trade on it! Use it to understand the bear's mindset!)
With US CDS having been hit by a massive short covering wave, and recently trading in the 30s, a downgrade would potentially have a catalytic event on this manifestation of risk, and as such the upside/downside of the US CDS, which had traded at 100 as recently as 2 months ago, may be a prudent analysis.
Maybe that's why we had the late selling on Friday. Everyone always knows ahead of time what Moody's is planning on doing.
But that's not this year's game!
But what were CDS on the US doing at 100 basis points in the first place?
Heck the VIX averaged 75 not more than a few months back. Anyone think it's going back to there?
So why would stocks go back down?
You've already answered the question.