"In mathematical jargon, short term price moving factors like events (e.g. US [COLOR=#DA7911 !important][FONT=inherit !important][COLOR=#DA7911 !important][FONT=inherit !important]debt[/FONT][/FONT][/COLOR][/COLOR] rating downgrade) will show fast movements in price and hence "fast stochastics" may come into play."- A Ganesha worshiping Technical Trader.
My two cents on the S&P downgrade of US Sovereign Debt as of 10:15 AM Houston time, Sunday (Aug 7, 2011). I am NOT a Ganesha worshiper, NOT a Technical Trader. I believe in the Fundamentals of the company, country etc.
American economy is on very sound economic fundamentals... the bond buyers know it, for they showed it in the last 30 days by buying US 10y T driving the yield down to 2.56% per year.
Yes, our politics is noisy and the whole world knows how we think, fight and solve intractable problems... Sunlight is the real cure for many of our problems... we have too much of Sunlight! That's a good thing which the S&P does not understand.
What will happen on Monday and next week after the S&P downgrade?
Nothing... the bond buyers will keep buying the US Treasury as usual, they will just ignore what S&P said... the yield on 10 Yr T will move between 2.5% to 3.5% over a long period (that is, depending upon what happens in Europe and Japan, the 10 Y T will move as per the fundamentals, totally ignoring what the S&P downgrade meant to be)
Post-Lehman, Enron and Bear Stearns, no one in the bond market listen to the opinions of the Rating Agencies including the S&P, who have all lost their credibility about 3 years ago... Bond buyers do their own due diligence BEFORE buying Govt Securities..
Cheers.
Ps. A lot of Indians and other Anti-Americans foam that US is showing its economic hegemony.. Well, listen, if any other country grows to be the largest economy (India could try this with its fast growing economy in about 30 years with its 1.7 billion people) and trading internationally in large volumes, its currency will become the dominant currency, and the bond market will treat that country with lots of respect... now it is the US who has the size, the strength and vitality... therefore, the hegemony is EARNED. About a century ago, Great Briton was the world leader, and Americans drove her away!
Maybe, Lord Ganesh can give God-fearing Indians that economic and intellectual clout to be hegemonic in the future... if HE really exists!
Lol.