Here’s what we have for you today:
• Rainy days ahead
• Tech tycoon on offensive
• Rainmakers no more
Financial weather forecast
Sacking review: Goldman Sachs currently forecasting a 35% chance of a U.S. recession in the 2023 calendar year based on concerns over the banking sector.
Small pains: Goldman states “increased near-term uncertainty around the economic effects of the stress on small banks.”
Overall consensus: Bloomberg notes that Goldman’s estimate is still significantly lower than the median forecast of 60% among economists surveyed by the outlet.
Elon bearing down his motives
His opinion: Among posting his narrative on influencing public perception on political and social views, Elon also target external organizations on his social media.
Hindsight or? Elon mentions “I’m still confused as to how a non-profit to which I donated ~$100M somehow became a $30B market cap for-profit. If this is legal, why doesn’t everyone do it?”. He was talking about OpenaAI, which at one point he helped to start.
Despite: Not too much was brought to light exactly why Elon resigned from the board in 2018.
Now: After Microsoft invested $10 billion in OpenAI after coming out as capped for-profit, Elon instigates “Microsoft fired their AI safety team?”. Surely, he is not too happy about how this whole thing panned out.
Credit ratings from the 3 raters
Big 3: Moody’s, S&P Global, and Fitch are three big credit ratings agencies that control about 95% of the credit ratings in the financial markets.
Measurements: Each of the big three agencies expresses credit ratings on a different scale, but they are generally in the form of letters in the alphabet. They go from AAA to D at S&P Global and Fitch, to AAA to C at Moody’s.
Bad scenario: If a company face troubles, investors could stop receiving interest payments and risk their principal investments (constituting a default). Hence, credit ratings agencies provide independent assessments of the risk that this could happen.
Case study: Moody’s communicated to the SVB that it was preparing to downgrade its rating as the value of its bonds was falling due to rising interest rates. To avoid the downgrade, Silicon Valley Bank sold a bond portfolio; triggering steps leading to its downfall.
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