A diary of the thought process behind my investment decisions
Hi Tsachy,Sorry to bother you on weekend, but what do you think about France AAA rating cut? When US AAA rating was cut over weekend market went crazy.http://www.bloomberg.com/news/2011-12-16/france-s-aaa-outlook-cut-as-fitch-reviews-ratings-of-italy-spain-belgium.html
The US AAA rating cut had no real world effect. Treasuries, which are essentially what were cut, are trading at record levels. The effect was psychological in that it really scared the retail investor. We had a record week for mutual fund redemptions following the cut.The real world effect of France's AAA rating being cut should be minimal as everybody knows its coming. Psychologically I believe the effect will be a lot less than the US cut because everybody knows its coming and the US cut came as a surprise. Its possible we even see a rally once the cut finally arrives.
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