Debt ratings downgrades are supposed to be bad, but sometimes they are not so bad for shareholders. General Electric Co. (NYSE: GE) took a credit rating downgrade from Standard & Poor's Ratings Services this morning.
What is interesting is that this has been effectively telegraphed for nearly three months. The tone of the downgrade may also be much "less bad" than many were expecting. The downgrade was taken to 'AA+' from 'AAA.' The rating outlook is also now listed as Stable.
AAA posts
FeedGE finally gets that S&P downgrade
Amid oil's pull-back, U.S. gasoline prices fall ... but slowly
For U.S. consumers, there's good news and bad news on the gasoline price front.First the good news: U.S. retail gasoline prices have fallen every day for about a month, CNNMoney.com reported Monday, citing motorist group AAA data.
Now the bad news: Prices are not falling nearly as fast - - or as proportionately - - as they rose, given the same dollar-move in a barrel of oil.
The AAA said the national, average price for a gallon of regular unleaded has fallen 30 cents to $3.81 from a record high of $4.11 set on July 16, 2008, CNNMoney.com reported Monday.
Gasoline prices: Quick to rise, slow to fall
However, during that time period oil has fallen about $25 to roughly $115 per barrel. Given the roughly 2-cent to 2.5-cent move for every $1 move in the price of oil, gasoline prices should have fallen 50-62 cents per gallon. Why haven't they?
Economist Peter Dawson told BloggingStocks Monday the answer is complex and contains many variables, but the strongest factors today appear to be gasoline station cash flow, and profit maximization.
As soon the price of oil increases, some gasoline stations will increase the price of gasoline, in anticipation of a price increase the oil company will institute for the next gasoline delivery, he said. "Failure to do so would create a monthly cash flow deficit for the gas station," Dawson said. "It's sort of like an additional monthly expense."
Continue reading Amid oil's pull-back, U.S. gasoline prices fall ... but slowly
Hedge fund letter outlines how we got into this mess
As investors, we are blessed by the willingness of hedge fund operators to write letters to investors that describe the current financial situation. One such letter helps me understand how financial alchemy transformed subprime mortgages into AAA-rated paper eagerly consumed by European and Asian investors eager to recycle the cash generated by high oil prices and trade surpluses with the U.S.
Barron's [subscription required] excerpted this letter from "A (bearish) hedge-fund operator," in a letter to his investors, describes how a senior Wall Street marketing director recounted the genesis of the current situation:
"'Real money' (U.S. insurance companies, pension funds, etc.) accounts had stopped purchasing mezzanine tranches of U.S. subprime debt in late 2003 and [Wall Street] needed a mechanism that could enable them to 'mark up' these loans, package them opaquely, and EXPORT THE NEWLY PACKAGED RISK TO UNWITTING BUYERS IN ASIA AND CENTRAL EUROPE!!
Continue reading Hedge fund letter outlines how we got into this mess
As the price of gas grows, will you limit your driving?
The average price for a gallon of regular unleaded gas hit a record $3.196, not accounting for inflation, according to the AAA and Oil Price Information Service. If using inflationary terms, 1981's $3.223, we're probably going to surpass that quite soon, heading into the Memorial Day weekend.
If you read Brian White's Gasoline prices go off the deep end on May 7th, you would have read nationwide gas prices surged to $3.07. In just two weeks we've seen a 12 cent bump, and some analysts don't expect the momentum to stop.
According to an AAA survey, some 38.3 million Americans are expected to drive more than 50 miles or more during the Memorial Day weekend, up 1.7% from last year.
With gas prices growing ever so quickly, where do you stand? Do you plan to cut down your traveling this weekend? Will the growing prices reduce your driving habits at all?
Closing Bell: Economic Catapult for Thanksgiving & Black Friday (WMT, TGT, GRMN, GOOG, MSFT)
Deere up on Q4 earnings performance
Reid Hoffman: LinkedIn will go public (at some point)
