Moody's has issued a warning about a possible downgrade of the US credit rating due to political dysfunction and rising debt. The announcement has cast a shadow over the upcoming meeting between President Biden and President Xi Jinping at the Asia-Pacific Economic Cooperation (APEC) summit. The US debt has surpassed $33 trillion, and political polarization is causing chaos in fiscal management. A downgrade would have significant economic consequences and could impact global financial markets. Moody's cites recent standoffs in Washington as evidence of the difficulty in building political consensus to address fiscal challenges. The article also highlights the potential for another government shutdown and the lack of progress in resolving spending levels and priorities. The author suggests that President Xi should raise concerns about the US credit rating with President Biden, given China's leverage over Washington. The potential impact of a Moody's downgrade on Asian economies and the challenges faced by central bank leaders in North Asia are also discussed [43dbd377].
The latest polls show a drop in confidence in President Biden's chances of victory, leading to more Democrats questioning his campaign. Moody's downgrade of U.S. credit from 'stable' to 'negative' is seen as a sign of skepticism towards Biden's economic policies. Concerns about Biden's mental state and his ability to perform presidential tasks are raised. Biden's meeting with Chinese President Xi Jinping resulted in promises to stop the flow of fentanyl and address climate change, but little substantive progress was made. Biden's renewal of sanctions waivers on Iran and enabling Iran to sell electricity to Iraq raises questions about funding a state sponsor of terrorism. Moody's downgrade of U.S. credit is attributed to factors such as inflation, the deficit, and debt. Reports of partying and misconduct among employees of the Federal Deposit Insurance Corporation are also mentioned.
President Joe Biden has largely exhausted his political capital, according to BCA Research analysts. Any significant negative developments from this point could destroy his presidency. Despite some successes, such as negotiating bipartisan budget deals and achieving a soft landing with the Fed, Biden's administration is struggling with weak popular support. Ongoing issues like inflation, foreign policy crises, and the prosecution of former President Trump are adversely affecting Biden's approval ratings and election prospects. BCA Research suggests that investors should favor defensive sectors, low-beta assets, and long-duration bonds until the election uncertainty is resolved over the next five months [28001405].