05/20/25 Afternoon CommStock Report – Moody’s Confirms We are Running Out of Time

Moody’s credit rating service finally followed suit, downgrading US debt quality from the highest level just as S&P did in 2011 and Fitch did in 2023. They were slow, giving Congress time to act, but they have been unable or unwilling to “course correct’. The trajectory of US debt growth and the persistent threat of inflation finally brought them to the conclusion that the US is becoming a less safe place to invest cash, thus requiring a higher interest rate. Treasury markets quickly responded. These are warnings that the current fiscal path we are on is unsustainable and that the debt is now compounding, reaching a trillion dollars a year in service cost and will eventually eat our lunch fiscally. The word “eventually” is important. There is an old joke about a newsbreak that NASA has discovered that a comet was tracking on a trajectory giving it a 93% chance of striking the earth that was 9 months away from impact.  This would be an extinction level threat. The stock markets opened trade down 50% but pared losses late in the session as bottom-pickers came in on expectations of better quarterly earnings. Similarly, in our real-life example, the stock markets…