The day after the infamous downgrade of the U.S. credit rating by Standard & Poor’s, I had lunch with a long-time friend who has taught me much about the markets. I noted I was annoyed by what the agency had done and said people should dump McGraw Hill stock. She was more sanguine and said that S&P probably wanted to show some independence after the financial crisis of 2008 and its part in it. My response: Helluva time to show some spine.
And bad spine at that. As I read the S&P report and its sovereign committee’s reasoning behind it — in summary, Washington is broken — I admit to agreeing with some of the points. But as others have said, it should be the numbers, not the politics, that S&P is judging. Further, when a credit agency has been as much debased as S&P, its decision, to quote CME Chairman Terry Duffy, was “a joke.” (more…)
CME Group is in talks to buy Dow Jones Indexes, according to The Financial Times, which reports that a deal would cost CME Group $700 million. This Wall Street Journal story cites the advantages of the deal, including cost cutting (as CME Group now pays Dow Jones licensing fees) and protecting the CME Group’s existing business lines. It’s unclear how or if this would affect CME Group’s current exclusive licensing agreement with S&P indexes. A CME Group spokesperson would not comment on anything specific. Do you think the deal will happen? Would it affect your trading? Leave your thoughts in the comments section below.
Both the Dow Jones Industrial Average and S&P 500 dropped significantly on Friday settling below the multi-year low close from Oct. 10. The low close in the Dow, 8,378.95, goes back to April 2003 and the close in the S&P,866, goes back to March of 2003. Despite intraday losses each of the last two days, both indexes managed to stage strong end-of day rallies to settle above the Oct. 10 low close.
