This is an interesting datapoint, and relevant for all the double-dippers out there:

“U.S. credit-rating upgrades are poised to exceed downgrades this quarter for the first time since before markets froze as the economic recovery boosts company profits.

Standard & Poor’s lifted the ratings of 244 U.S. issuers, while cutting 211, according to data compiled by Bloomberg. Moody’s Investors Service upgraded 205 borrowers and lowered ratings on 131. Upgrades haven’t surpassed downgrades since the second quarter of 2007.

Corporate profits in the U.S. rose at the fastest pace since 1984 in the first three months of this year. Cash levels at investment-grade borrowers have surged 15 percent from a year earlier while debt has fallen 2 percent, according to JPMorgan Chase & Co., suggesting corporations are healthy enough to weather a slowing economy.”

~~~

Source:
Bond Upgrades Top Cuts for First Time Since ‘07
John Glover and Sapna Maheshwari
Bloomberg, June 29 2010
http://noir.bloomberg.com/apps/news?pid=20601087&sid=agUWz14HwXTg&

Category: Credit, Economy

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

18 Responses to “Bond Upgrades Top Downgrades”

  1. Mike in Nola says:

    Does anyone with any sense care what ratings agencies say these days?

  2. V says:

    On the one hand credit upgrades and bullish, on the other it’s S&P, are we back to listening to them again?
    As noted, this is expected given the moves companies have made to cut debt and improve cash positions. Although admittedly it doesn’t really capture what’s going on with small and medium enterprises which is where the debate seems to be fiercest.
    I’ll remain on the fence.

  3. nucemgd says:

    wait…these are the same ratings that triple A rated all the mortgage crap???

    This is valid why??

  4. Marcus Aurelius says:

    Some business are okay. Right. What about us?

  5. dead hobo says:

    BR noted:

    Standard & Poor’s lifted the ratings of 244 U.S. issuers, while cutting 211, according to data compiled by Bloomberg. Moody’s Investors Service upgraded 205 borrowers and lowered ratings on 131. Upgrades haven’t surpassed downgrades since the second quarter of 2007.

    reply:
    ————-
    This is the crap that I find confusing.

    1) Ratings agencies have been proclaimed as dung merchants but data such as the above quotation is cherry picked and presented in a way that implies credibility. You can’t have it both ways. Is it that they know what they are talking about on M, W, F, but T and Th are reserved for criminally incompetent analysis? Or is the left hand honest but you can’t trust the right hand? Please parse this out because I can’t comprehend the concept of semi-credible numbers replacing accurate numbers as a matter of accepted daily practice, yet that is the current state or so it appears.

    2) If profits are so great then why is employment so bad, why is retail so dismal, why do experts claim the proper S&P level based on trailing earnings should be about 850? Would a more detailed analysis state that earnings are bursting with goodness or would they be more along the lines of $2 is a 100% increase over $1 while ignoring that profits were$5 before 2007?

    3) If the future looked so bright then why are cash holdings growing? Competently managed companies in a healthy economy would be putting some of that cash into Investment. Mediocre management would be making stock buybacks. Goofball management would be borrowing money and making LBOs that return invested non-borrowed funds as fees upon closing the deal.

    Perhaps, BR, you can point out the mistakes in my concerns and wash away the caution in my thinking?

  6. ancientone says:

    Why should this make the economy grow? Consumers are 70% of the economy—-how are they doing? Is unemployment suddenly shrinking? Is income suddenly booming? And, as others here have already said, who gives a flip what these fraudsters say about anything?

  7. d4winds says:

    S&P caught up to the bull market assumption that depression scenarios were off the table with a bit of a lag–just before markets began to reconsider them.

  8. flipspiceland says:

    Why did God create economists?

    A: In order to make weather forecasters look good.

  9. tawm says:

    “….suggesting corporations are healthy enough to weather a slowing economy.”

    This depends how one defines “healthy enough.” Perhaps in the context of shedding most of the US workforce. But not sure if that healthy status is applicable beyond the limited, myopic perspective.

  10. Gatsby says:

    Well that’s all I needed to hear to feel comfortable. I’m all in 100% long. Don’t bother wishing me luck, I have the ratings agencies behind me.

  11. tagyoureit says:

    Recovery for management, double-dip for labor. I’ll have Mint Chocolate Chip.

  12. beaufou says:

    How many people have been made redundant by those corporations?
    There’s an article in the Times today mentioning a gain in productivity, surely it wouldn’t be due to the fact that those still employed are making a little extra effort to stay employed.
    Corporations are not only making record profits, they are profiting from the situation.

    We don’t have a corporate profit issue, we have an employment and wage deflation problem, and many others.

    Rating agencies?
    http://www.zerohedge.com/article/no-not-onion-headline-sp-puts-moodys-downgrade-review

  13. insaneclownposse says:

    every time I read one of these bullish posts on TBP, I get nervous about being heavily short. Then I look at the charts of the equity indices and it leads me to conclude that the stock market doesn’t give a shit about whether we double dip or not. Equities want to head down and where they stop is anyone’s guess.

    By the time we figure out if there is going to be another downturn in the economy, the capital markets are going to have already discounted the possibility.

  14. Low Budget Dave says:

    The corporations around here are making good profits by firing half their workers, and forcing the other half to work longer hours for less pay. The goods are all imported from China and the services are uniformly terrible.

    This is the Wallmartization of America. We have defeated the recession by changing the definintion of poverty.

  15. dead hobo says:

    insaneclownposse Says:
    June 30th, 2010 at 11:06 am

    By the time we figure out if there is going to be another downturn in the economy, the capital markets are going to have already discounted the possibility.

    reply:
    ————-
    Yes, but have they, yet, discounted the fact that the possibility has already been discounted? If so, has the market discounted the discounting of the discount? HFT computers, of course, perform these tasks in nanoseconds, where they simultaneously discount the concurrent discounting by other HFT computers. ME, I just discount everything and make the rest up.

  16. insaneclownposse says:

    @dead hobo:

    It looks like your approach is just as valid as any other philosophy. The events of the past couple of years have proven that.

  17. southernboy says:

    apart from the credibility of ratings agencies, why would this turn be considered a leading rather than a lagging indicator? the piece itself says we haven’t seen this since 2Q07–THAT was a great time to be bullish.

  18. nemo says:

    Moody’s is upgrading borrowers? And some people take that seriously?

    Reminds me of Samuel Johnson’s description of second marriages: “The triumph of hope over experience.”