Our chart of the day comes to us today via Bloomberg, looking at YTD performance of McGraw-Hill (parent co of S&P), Moody’s, and the S&P500 Index.

David Wilson observes:

“McGraw-Hill and Moody’s face two threats because S&P cut the U.S. government to AA+, Appert wrote yesterday in a report. The first is greater regulatory scrutiny of the rating industry, which has been criticized for flawed assessments of mortgage-backed securities during the past decade’s housing bubble.

“The perception in Washington that the rating agencies have too much power and must be ‘reined in’ will undoubtedly by reinforced by S&P’s decision,” he wrote.

The second risk is that bond sales may become more volatile as the lower rating helps slow economic growth, the report said. Assuming that occurs, revenue and earnings at McGraw-Hill and Moody’s would become less predictable as well.

As the chart above shows, the index has outperformed the two public rating agencies . . .


McGraw-Hill, Moody’s Risks Rise After S&P Cut: Chart of the Day
David Wilson
Bloomberg, August 09, 2011

Category: Analysts, Credit, Markets

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9 Responses to “McGraw-Hill, Moody’s Risks Rise After S&P”

  1. machinehead says:

    Clearly, rating agencies ought to hedge themselves with CDS, as they downgrade the planet.

    The more we cut, the more we make!

  2. Woof says:

    Sorry, but doesn’t the chart show that the ratings agencies are outperforming the index year-to-date? Still both above 100 while index at <90.

  3. James says:

    The perception in Washington that the rating agencies have too much power and must be ‘reined in’ will undoubtedly by reinforced by S&P’s decision

    Laughable . . . lawmakers find faith only after they’re the ones downgraded . . . any hearings on this subject will be every bit as politically polarized as the recent debt ceiling debate. BUT, almost certainly great entertainment.

  4. [...] The market is none too happy with the rating agencies.  (Big Picture) [...]

  5. Transor Z says:

    I read about this guy once that had big problems with McGraw-Hill when they refused to publish portions of his book that were critical of S&P and the other ratings agencies. “Creative differences,” I guess. (The author took issue with S&P’s very creative AAA ratings.)


  6. Francois says:

    Like Jon Stewart said: “How cab anyone trust a rating agency which name translates as Average & Below Average?”


  7. ana says:

    Maybe the problem is outsourcing? Cpnflict of interest with the US??

    Standard & Poor’s to Broaden Presence in China with New Greater China Headquarters in Shanghai

    Underscores Shanghai’s Growing Significance as a Global Financial Center


    ” Looking ahead, S&P also will look to draw on China’s rich talent base to provide data and analytical support for S&P’s businesses worldwide. Shanghai offers attractive outsourcing capabilities with a growing pool of multilingual financial professionals that can help S&P grow its regional and global businesses.”

  8. blackjaquekerouac says:

    the fact of the matter is if the result of the downgrade is a “murders row” on Wall Street then the downgrade was precisely the right thing to do. the government must be protected at all cost and if what has been revealed is criminal speculation among the monied class and the media then ratings Agencies have just done the USA the biggest favor in its history. the current national security structure is perfectly trained to extirpate this menace for all time and all history should it be needed. it will be a glorious day indeed if this is in fact true.

  9. Camari Ellis says:

    McGraw Hill faces a 3rd risk of an IRS audit, due to their downgrade.