🇺🇸 The US is slipping

The US's credit score was downgraded| The listing of Arm is shaping up to be huge | [TOGETHER WITH]( Hi {NAME}, here's what you need to know for August 3rd in 3:15 minutes. 👉 In life, it's always nice to have options – and that can be equally true when you're investing. So join OptionsDesk's James Proudlock for [How To Harness The Power Of Options]( this Thursday, and find out how options trading could expand your playbook. [Get your free ticket]( Today's big stories - The US’s credit rating just got downgraded - These are the winners, losers, and opportunities in Asian stock markets this year – [Read Now]( - SoftBank’s listing of Arm looks set to be a whopper Credit Where Credit’s Due [Credit Where Credit’s Due] What’s going on here? The US’s [credit rating]( just [got]( a [downgrade](. What does this mean? Governments have credit scores, just like regular folks. And when credit rating agencies think a country’s ability to repay loans has dropped, those scores take a hit. Uncle Sam learned as much this week, when Fitch – one of the three big agencies – knocked the US down a peg from AAA to AA+. See, the country has been living a bit beyond its means. Tax cuts, spending initiatives, and higher interest payments mean that the yearly deficit – the gap between its tax revenues and what it spends – is ballooning. And that’s put US debt on track to hit 118% of the annual size of its economy by 2025, nearly triple the average for countries rated AAA. Throw in the risk of a recession and the risky debt ceiling debacle, and it was a risk too far for Fitch. Why should I care? For markets: Maybe just a molehill. A downgrade like this is a big deal: investors use these ratings to assess risk, and a lower rating usually means the country will face higher borrowing costs. But while the initial reaction might be negative – the VIX “[fear index](” was up 10% on Wednesday – the long-term effects could be limited. See, in times of economic turmoil, US government debt is the ultimate safe harbor, so it seems unlikely this will make investors shun the country in the long run. And history backs this up: when Standard & Poor’s cut the US’s rating over a decade ago, the long-term effects were pretty negligible. The bigger picture: Living on borrowed time. The move was criticized by some economists, especially given the resilience the US has been showing recently. And that demotion comes as the group of countries with top ratings from all three credit rating agencies ([including]( the likes of Australia, Germany, Singapore, and Switzerland) is growing increasingly exclusive. Now, though, this unexpected twist has sparked worries members of that elite group could be next. You might also like: [The US economy is defying the laws of gravity. Here's how.]( Copy to share story: [/credit-where-credits-due]( 🙋 [Ask a question](mailto:questions@finimize.com?body=Ask us a question: Where are you writing from? Let us know and we'll mention it when we reply.&noapp=true&subject=Credit Where Credit’s Due&utm_campaign=daily-global-03-08-2023&utm_source=email) Analyst Take How It’s Been (And How It’s Going) For Asia’s Stocks [How It’s Been (And How It’s Going) For Asia’s Stocks]( The US’s S&P 500 has [shot up 20%]( this year but the key Asian stock market index has only risen 3%. The [momentum in artificial intelligence]( and a post-Covid bounceback in tourism certainly helped Asia, but it was partly offset by China’s spluttering economic recovery. Still, if you’re invested in [Asian tech stocks]( – particularly those in Taiwan and Korea – and managed to avoid Malaysian and Chinese shares, to name a few, you’re probably sitting pretty. From here on out, though, things are looking different: earnings growth is expected to pick up by the end of the year, and [valuations are lower]( than US and European stocks. That’s today’s analysis: [the Asian winners to stick with, losers to twist on, and the outlook for the region’s stocks through the rest of 2023.]( [Read or listen to the analysis here]( SPONSORED BY MAGNIFI Your new pen pal wants to help you invest You might be lucky enough to have a financially savvy family member or coworker on speed dial. But they’re only human. If you’re sending them a handful of investing questions every day, there’s a high chance they won’t always know the answers – or they’ll get plain fed up. So best meet [Magnifi](. This investing assistant is like a 24-hour chatbot, [using the power of artificial intelligence to answer your burning questions]( whenever they arise. Just ask away (think: “What stocks do well in times of falling inflation?”), and Magnifi will [condense professional sources of investing intelligence into an instant, personalized answer](. Better still, it’ll never ignore your calls. [See how conversational artificial intelligence could fine-tune your investing process for free](. DisclaimerAdvisory services are offered through Magnifi LLC, an SEC Registered Investment Advisor. All investments involve risks, including possible loss of principal. Diversification does not guarantee a profit or protect against a loss in a declining market. It is a method used to help manage investment risk. See Terms and Conditions at magnifi.comFree trial available for new Magnifi members only. [Find Out More]( When you support our sponsors, you support us. Thanks for that. An Arm And A Leg [An Arm And A Leg] What’s going on here? SoftBank’s listing of Arm, its mammoth chip designer, is [shaping up]( to be a bonanza. What does this mean? Bankers had previously suggested that Arm’s listing could value the company anywhere between $30 billion and $70 billion. But now SoftBank’s reportedly shooting for the upper end of that range, targeting a valuation of between $60 and $70 billion. The reason: a surge in interest in AI chips. Arm’s tech is found in nearly every smartphone worldwide, but it’s their advanced offerings for cloud and AI applications – among the most expensive and profitable offerings in the industry – that are really turning heads. All in all, Arm is hoping to raise around $10 billion from the listing, which would make it one of the biggest tech listings ever. Why should I care? For markets: A shot in the Arm. SoftBank, which bought Arm for $32 billion in 2016, is keen to chalk up a win after some costly startup investments – and this listing could be just the ticket. For one, industry giants like Nvidia and Intel are reportedly in talks to become big “[anchor investors](”, which could further stoke interest. Plus, with a lull in [IPOs](, investors hungry for AI could throw their cash at one of the year’s biggest market debuts. The bigger picture: Within Arm’s reach. Some of Arm’s executives are reportedly whispering about an $80 billion valuation, but that could be a long shot. See, even if you take the [enterprise value-to-sales ratio]( – a key valuation metric – of a leading firm like Nvidia, and apply it to Arm, then the firm would still only be expected to pull in $67 billion. Given Nvidia’s leadership in the space, it’s a stretch to imagine Arm outpacing it – and it’ll be a feat if it even comes close. You might also like: [Three AI chip plays that are cheaper than ASML and Nvidia.]( Copy to share story: [/arm-and-leg]( 🙋 [Ask a question](mailto:questions@finimize.com?body=Ask us a question: Where are you writing from? Let us know and we'll mention it when we reply.&noapp=true&subject=An Arm And A Leg&utm_campaign=daily-global-03-08-2023&utm_source=email) 🪧 Forget the billboards Old-school tactics won't engage [modern investors](. 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The difference is that this pot can make you a smarter investor by summarizing financial news in [quick, witty, jargon-free blasts](. Give your customers that little bit extra: [check out the Finimize API](. [Find Out More]( 🎯 On Our Radar 1. Musk's missing mark. The "X" sign at the company's San Francisco headquarters [has been removed](. 2. ESG investing isn’t just a feel-good theory. Here’s how you could [put principles into practice](.* 3. Ghostly grandeur. China's [abandoned mansions]( are a sight to behold. 4. Beneath the launch pad. A [4,000-year-old cemetery]( lies under a future rocket launch site in the UK. 5. Heatwave havoc. Extreme heat can [affect your brain and mood](. When you support our sponsors, you support us. Thanks for that. 🌍 Finimize Live 🥳 Coming Up In The Next Week... 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