Here’s a truth about Moody’s: They get made fun of a lot, except when they’re negative, in which case everyone’s reaction is, “Gee, even Moody’s is downgrading them, things must be bad.”
We expect that to be the reaction to the news that Moody’s is warning that the tax deal will blow out the deficit, and thus increases the odds of a negative change to the outlook of the US credit rating.
Our view: It’s Moody’s. Since when do you take it seriously regarding its sovereign credit calls?
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