Son of a Fitch Downgrade!

You can tell just how spoiled and irresponsible our politicians have become by their visceral whining to the Fitch downgrade of U.S. debt last evening after the bell. But perhaps even more of a travesty was the sheer amount of pearl-clutching by various economists and market pundits who immediately slammed the ratings agency for the timing of the downgrade. 

In reality, the downgrade should have come much, much sooner, especially in light of how ludicrous the overreaction to Silicon Valley bank was in March by both The Fed and Treasury. 

But better late than never, as they say.

Speaking of better late than never, we finally have the bonds down (rates up)/stocks down/volatility up scenario I have been expecting to materialize for a good while now. 

As you would expect, bulls are playing it cool with the selloff and viewing it as a routine profit-taking reset before a new leg higher. Frankly, that is precisely the sort of sentiment I want to see at the outset of a meaningful decline, which I still expect, in order to catch many off-guard as the selling figures to intensify in the coming weeks and months. 

After a lack of urgency (and perhaps even some shady business) back in 2008, some of the ratings agencies this time around are trying to not totally fall asleep at the switch. Ultimately, this is still likely the tip of the iceberg of the problems we are facing in terms of sovereign debt, the bond market, inflation, and the like, which means that this selloff is just beginning with a complacent equities market still historically rich and stretched.