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Forbes
07-05-2025
- Business
- Forbes
U.S Debt Downgrade Looming - A Move To Crash S&P By 50%?
Something incredible happened in the United States about 14 years ago. S&P Global Ratings cut its top-tier AAA credit rating for the country in Aug 2011. The move reflected growing alarm over deepening political dysfunction and the country's expanding debt load. More than a decade later, in August 2023, Fitch followed suit - flagging the same core issues: elevated debt, political instability, and questions around governance. Since then, the situation has become more precarious - especially in 2025, we explain the triple impact of tariffs, taxes, and deportation here . Add to that an unsettled global environment, punctuated by escalating tariff tensions, and the stage may be set for yet another downgrade from credit watchdogs. If history is any guide, the ripple effects could be swift and sweeping. [1] A downgrade combined with, [2] foreign investors' already low confidence in the Trump administration's scattershot economic actions would imply dwindling demand for U.S. treasuries - no longer considered safe. So what? Treasury yields would rise. In 2025 itself, the Fed faces needs to refinance over $7 trillion of debt - under this environment of low demand and high deficit. Things could get bad - to state the obvious - democrats and now many republicans aren't exactly in sync with the Trump administration - dysfunction in Washington can lead to animosity. If things turn into a downward spiral, the U.S could actually default on its debt. Markets and S&P will swoon, the 50% drop we saw during the 2008-2009 period, will look small in comparison. Investors should prepare for sudden, steep declines that could wipe out trillions in market capitalization. Our dashboard How Low Can Stocks Go During A Market Crash captures how key stocks fared during and after the last seven market crashes . But it isn't all doom and gloom. Smart money rotates, as demand does not decline uniformly across industries. We adopt this macro-conscious approach in our High-Quality portfolio , which has outperformed the S&P 500 and achieved returns greater than 91% since inception. Stepping back, what are the facts that lead us to believe a rating downgrade is in the cards? By The Numbers, The U.S. Economy Has Deteriorated Since 2011 Back in 2011, the U.S. was crawling out of the Great Recession. So many key economic indicators were understandably worse off than they are now. More specifically, Inflation (CPI) is currently 2.4% vs. a figure of 3% in 2011. Unemployment rate is at 4.2% vs. a level of 9% in 2011 Real GDP growth for 2024 was 2.8% vs. 1.8% in 2011 But that's only half the picture. Here are some other key economic indicators that paint a worrying picture: The U.S. national debt figure currently stands at $36.2 trillion. That's a whopping 124% of the country's GDP. In 2011, the debt figure was less than half the current figure at $14.8 trillion - roughly 95% of U.S. GDP. The fed funds rate is currently at 4.3% as the Federal Reserve tries to ensure a 'soft landing' for the U.S. economy after inflation swelled to over 9% in mid-2022. While the current fed rate is better than the level of over 5% maintained over most of 2023 and 2024, the figure was near 0% in 2011 in response to the 2008 recession. The higher debt figure combined with higher interest rates mean that the U.S. is spending much more to service its debt. Nearly 4 times more. The country shelled out $230 billion in interest payments in 2011 and will be paying $952 billion in interest over 2025. Put simply: the U.S. is a lot more indebted today than it was in 2011, and servicing that debt is a lot more expensive. Adding Fuel to the Fire: The Ongoing Tariff War The escalating tariff war - particularly between the U.S. and China - is a new ingredient in the mix this time around. In 2011, trade tensions were low. But the uncertainty surrounding the current tariff war has made investors wary. Why? Because: Tariffs = inflationary pressure = higher borrowing costs = greater fiscal strain While President Trump's goals of reducing the country's trade deficit, encouraging domestic manufacturing, and pressuring other countries to lower their trade barriers should bear fruits in the long run, there will be near-term consequences everyone will have to bear. And Trump knows this well - hence his remark: 'Hang tough, it won't be easy.' Over the last few weeks, markets have been characterized by unusually high volatility. The benchmark S&P 500 index constituents have recorded a single-day loss of $3 trillion just as easily as a gain of $2 trillion. Investors don't like uncertainty. They don't like risk - definitely not these high levels of risk. The result: Foreign institutions and investors want less U.S. stocks, U.S. bonds, and yes, U.S. dollars. As investors dump U.S. assets in favor of foreign alternatives, stocks have suffered losses, bond yields have risen, and the dollar has weakened. This has happened in the past. Our dashboard How Low Can Stocks Go During A Market Crash captures how key stocks fared during and after the last seven market crashes . Political Gridlock Returns - Just Like Before S&P's 2011 downgrade cited "political brinksmanship" over the debt ceiling. That toxic mix is still very much alive. Strife between the Democrats and Republicans was intense in 2011. It's hard to argue that the Democrats' relationship isn't more bitter with Trump. And not to mention, there are disagreements among factions of the Republican party, too, this time around. The ingredients for another downgrade are already in the pot - all it needs is a spark. Once Burned, Ratings Agencies Aren't Taking Chances After the 2011 downgrade, S&P faced immense backlash, including a Justice Department lawsuit accusing them of misleading investors before the 2008 financial crisis. While the lawsuit was about mortgage bonds, the timing - right after the downgrade - was no coincidence. Fitch and Moody's stuck with AAA back then - knowing the political firestorm a downgrade could ignite. Fitch went ahead with the downgrade under calmer economic conditions in 2023. And Moody's has maintained its AAA rating with a negative outlook since November 2023. Notably, in a release earlier this month, S&P Global Ratings highlighted key risks to the U.S. economy that could warrant a downgrade from the current AA+ level. And many of those risks seem to be coming to a head. The math is getting harder for credit agencies to ignore. Another hit from any one of them isn't unthinkable - it's plausible. And if it happens, the ripple effect will be seen in the corporate playbook - see This $1.8 Trillion Debt Bomb Will Flip Corporate America's Playbook . The Signals Are Clear - Don't Ignore Them Markets have so far shrugged off the risks, believing America's 'full faith and credit' is untouchable. But history says otherwise - and the economic, political, and financial cracks are widening. The real question isn't "if" the U.S. credit rating could be downgraded again. It's whether you're prepared when it does. The last thing you want is for your investment portfolio to take an outsized hit when things head south. At the very least, you would like your investment to do better than the overall equity market - particularly during bad times. The Trefis High Quality (HQ) Portfolio , that roots itself in quality that seeks reliability, predictability and compounding growth, is an option you can explore. With a collection of 30 stocks, it has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics .
Hindustan Times
03-05-2025
- Politics
- Hindustan Times
Trump mocking Pope Francis' death? POTUS posts AI image in papal attire
President Donald Trump shared an AI-generated image of himself dressed in papal attire. While some social media users found the post humorous, others criticized it as insensitive, accusing Trump of mocking Pope Francis' death. 'This is disrespectful to the church and God himself… he's literally the antichrist,' one person commented. Another wrote, 'This is disgusting and entirely offensive.' A third person wrote, 'This is extremely disrespectful and narcissistic. republicans really voted for that.' Another person commented, 'How disrespectful to Catholics. That is what Trump and his maggots are all about, disrespect and meanness and stupidity. How dare you mock the process we Catholics go through to pick a new pope.' This is a breaking news story and will be updated with more information
Buzz Feed
02-05-2025
- Politics
- Buzz Feed
This Video Of AOC's Response When Asked If She'll Run For President Is Going Viral
If you didn't know, Senator Bernie Sanders and Rep. Alexandria Ocasio-Cortez have been drawing massive crowds on their Fighting Oligarchy tour across the US. The rallies and events aim to engage Americans in real conversations about "how we move forward to take on the Oligarchs and corporate interests who have so much power and influence in this country," according to the tour's website. And the two lefties aren't simply drawing out Americans in traditionally blue states — according to Bernie's staff, their appearance in deep-red Utah shockingly rallied about 20,000 people. Movements like these have many people wondering: Will AOC and Bernie run together on a 2028 presidential ticket? I'm saying it again: AOC will be president. It's purely just a matter of when she decides it's time. — ✨🪩Raquel🪩✨ (@eternallyRaq) April 22, 2025 Twitter: @eternallyRaq Last month, polling pundit Nate Silver officially predicted so when he announced his guess that AOC would be the 2028 Democratic presidential nominee. Well, a reporter asked AOC that very question, and her response is going viral. FOX: You thinking about running for president or senate? AOC: I think what people should be the most concerned about is the fact that the Republicans are trying to cut medicaid and people's healthcare is in danger and that's what my central focus is. This moment isn't about… — Acyn (@Acyn) April 30, 2025 Twitter: @Acyn In a video of the exchange, a reporter asks, "Are you thinking about running for president or senate?" "Listen," she responds. "Frankly, I think what people should be most concerned about is the fact that republicans are trying to cut Medicaid right now and people's healthcare is in danger. And that's really what my central focus is." "This moment isn't about campaigns or elections or about politics," she concludes. "It's about making sure people are protected." Well! That's where things are right now, but I'm curious. How would you feel about an AOC/Bernie presidency/vice-presidency? Let us know in the comments or by using the anonymous form below.
Yahoo
30-04-2025
- Automotive
- Yahoo
Trump in Michigan: Supporters and protestors react to the President's arrival in Warren
The Brief President Trump returned to Michigan to celebrate his first 100 days of his second term. He spoke to several thousand supporters at Macomb Community College. Autoworkers who organized for the President also sounded off on Day 100. WARREN, Mich. (FOX 2) - President Donald Trump returned to Michigan marking 100 days back in office amid a busy agenda focused on automotive jobs, reworking global trade and national security. Local perspective He spoke to several thousand supporters at Macomb Community College flanked by many high-profile members of his Administration, touting his flurry of executive orders that have trimmed the federal government and lumped tariffs on foreign nations. This included 25% in the auto industry. However, he approved new measures to ease that burden, meaning automakers will not pay added taxes on steel and aluminum. Trump supporter and My Pillow CEO Mike Lindell tells Fox 2 in a 1 on 1 interview the Trump tariffs have only been about fairness. "Canada has been doing this to My Pillow for I don't know: 6,7…8 years? I mean we have a 25% tariff. Why is that fair to all of us here in the U.S.?" he said. "This goes on all over the place. We were getting, as the president says, ripped off." Autoworkers who organized for the President also sounded off on Day 100. Trump called up Brian Pannebacker, a familiar face in GOP circles. "I want to say thank you to the autoworkers," Pannebacker said. "Everybody who works in the automotive field, the suppliers, the truck drivers - thank you so much for supporting the greatest president in our lifetimes." The other side But outside, scores of protesters made their message clear: Trump is not welcome here on his 100th day, or any day, in their view, as they oppose Trump's planned education cuts. "I'm also a teacher, so I'm here for all of the kids that couldn't be here cause I'm scared for them and sad," said one protester. "I have friends with green cards that can't be here because they could get kidnapped and deported," another said. "So that's why I'm here today. " What's next Meantime, Trump says he will push on, as he looks ahead to getting republicans elected in next year's midterms. The Source FOX 2 attended the Trump rally and spoke to protesters outside for information in this report.
Yahoo
12-04-2025
- Politics
- Yahoo
Students' rights bill clears Washington Senate
The Washington state Capitol on March 13, 2025. (Photo by Bill Lucia/Washington State Standard) Following a contentious floor debate, the state Senate approved a bill Friday that would guarantee public school students in Washington certain rights. Senate Democrats pushed the bill through on a party-line vote, 30-19. 'It's important that we ensure every student, and I mean every student, has access to a supportive environment and responsible environments,' said Sen. Claire Wilson, D-Auburn, who is the sponsor of a related Senate bill focused on parental rights. The students' rights bill is among the most divisive of this year's legislative session and is entwined with discussions around gender issues and diversity, equity and inclusion. Democrats say it will provide important safeguards for students and greater clarity with existing law. But republicans contend it will take control away from local school districts and is too punitive toward schools. And they say it weakens parental rights enshrined under a citizen initiative that lawmakers approved last year. 'This bill will erode parents' trust,' said Sen. Nikki Torres, R-Pasco. 'This bill is very disrespectful to parents and to families.' Senate approval takes the legislation one step closer to becoming state law. But because the Senate amended the bill, it must go back to the House before it can reach the governor's desk. When the session began in January, Democratic lawmakers introduced bills in each chamber — House Bill 1296 and Senate Bill 5181 — both of which addressed parental rights, but the House version also included language dealing with students' rights. In March, the House bill was amended in the Senate committee process to only address students' rights, leaving the Senate bill to tackle parents' rights. During Friday's Senate floor action, Republicans introduced seven amendments, including ones to remove parts of the bill establishing a complaint process and allowing the state to withhold funds for noncompliance. GOP lawmakers also tried to scrap an emergency clause that would allow the bill to take effect immediately and shield it from a potential voter referendum. All of the Republican amendments were rejected. 'I'm disappointed that none of the amendments we offered were accepted,' said Senate Minority Leader John Braun, R-Centralia. 'We tried to keep it focused on things that would make it a better bill.' Among the concerns Braun and others raised is that schools could get caught up in situations where federal and state laws conflict. This year's conversations about the rights of public school students and their parents stemmed from Initiative 2081, a citizen initiative that more than 400,000 residents signed onto and that lawmakers passed in the 2024 legislative session. Rep. Monica Stonier, D-Vancouver, said she introduced the House bill to help ensure every student feels comfortable at school and can thrive. 'We have talked for years about how important it is to make sure that every student feels that they're in a school setting where they belong so that they can learn,' Stonier said. The bill outlines a list of nine specific student rights, including the right to receive an education in a safe and supportive learning environment, free of harassment and bullying. It also says students have the right to receive copies of all school policies and procedures related to students and to have access to academic courses and instructional materials with historically and scientifically accurate information. Additionally, the bill makes clear students are free to exercise constitutionally protected rights at school. Schools would have to develop promotional materials that incorporate the statement of student rights and make it available on school websites, social media platforms, and other communication channels. It must be added to civics educational materials as well. The bill also requires that school districts 'immediately' notify parents if a student is a victim of abuse, sexual misconduct, or assault. Setting this standard, rather than requiring notification within 48 hours, was a point of contention earlier in the session. Republicans opposed the 48-hour option, saying it was too long to wait. GOP lawmakers also pushed against including provisions related to gender inclusive policies and procedures at schools. The bill originally included this language, but it was removed by an amendment in the Senate Early Learning and K-12 Education Committee. A floor amendment from Sen. T'wina Nobles, D-Fircrest, added language to protect students from discrimination based on ethnicity, sexual orientation, gender expression, and gender identities. The amendment also aims to protect students facing homelessness, those who lack citizenship status, and those who are neurodivergent from discrimination. 'We run public schools that are for the public, for everyone,' Nobles said. 'And while this bill is not just to protect students that identify as LGBTQ, it protects students that have a variety of differences.' The bill would apply to public schools, charter schools and state-tribal education compact schools. It calls for the Office of Superintendent of Public Instruction to develop a process to investigate complaints from students, parents, and others alleging that schools are not complying with state laws in areas like civil rights, nondiscrimination, harassment, and the physical restraint or isolation of students. Starting July 1, 2026, the office could investigate 'limited' and 'broad' complaints. A broad complaint is one that involves the entire student body or a subgroup of students. A limited complaint involves one or more individual students. The bill outlines steps that the Office of the Superintendent of Public Instruction would have to take once it intervenes, with the consequences for school officials and districts becoming more severe in cases where they are found to be willfully flouting state law. As a last resort, the office could withhold up to 20% of a district's state funds and redirect that money toward resolving the issues the state has identified. The bill also stipulates that school districts cannot terminate, demote, suspend, or take any other negative action against a school employee for supporting students exercising their legal rights or for teaching about historically marginalized and underrepresented groups.
