A loss of credibility might be seen as a negative for U.S. asset investment. But it is notable that rating agencies are 'finally' flagging the Debt-risk we all know about. I think it was 'years ago' that S&P downgraded U.S. Debt; and now Fitch revised the United States outlook to 'negative' affirming AAA rating.  

Be a little cautious about jumping on the bandwagon of negativity. For the moment it probably will be little different than other developments that shakeout markets, only to see them come roaring back within hours barring a true black hole of liquidation.  

I do not believe we're there yet; but open-minded to it, given that August has some history of Dollar-related crunches. It was In August of 1987 that I warned of a 'crash' looming in the weeks ahead (live on the old FNN affiliate in San Jose that day); and it was on dollar concerns at the time. And we all know what ensued; followed by what I proclaiming was a 'generational buying opportunity for stocks'. Indeed it was.

Here's there's some differences; besides the obvious distinction between skeptics in the technical analysis field. (Some are just old cynics that preach gloom & doom for years; others are gold-bug permabears; and still more are typically older investors, some grouchy by nature, who could not manage to comprehend the S&P rallying off our March lows, in the face of what was going on with regard to the basic economy.)  

And the main difference is the dollar was 'shocked' then; this time it's been soft, so unless Fitch is trading the market and trying to assist the Greenback breaking what we have described as an inflection (rising bottoms longer-term) trend juncture; this in fact could create a little washout and reversal; also contrary to skeptic expectations.  

However the longer the market hangs tough, and without an effective Covid solution in-place, it is necessary to be 'on-guard' for a defensive move; though not primarily a result of what Fitch has to say. We are not jammed overbought; and the institutions of course continue their focus on the super-caps; as with serious money; that's all they can do.  

Meanwhile ... I noticed some spreading-out by mutual funds into smaller stocks this year of course (good prices were available in March along with our targeted low); but they're typically doing that with hundreds of thousands or a few millions, not so many millions of dollars they throw into the 'super-cap' universe (it can handle 'flow').  

That too is a point: they do have interest in smaller companies but they want volume, and some players (perhaps hedge funds) want options where a stock is priced high enough, so different strategies, including hedging, can be implemented at times. As a for-instance you can do that now with a speculative biotech like Sorrento; but not with a speculative growth stock like LightPath, where the low price made 'it' like an option. (Ideally as/if it moves towards double-digits in the future that will change.)  

'Wide spectrum of offerings' is a possibility by the way, for Sorrento Therapeutics. It's one reason that I was drawn to it particularly, over even the big expensive players (many lower after initially excited responses to first-genration vaccines). Sorrento has a 'portfolio' covering the full-gamut of 'on-site testing' (potentially very significant at the moment); a possible 'Pill' antiviral treatment (Holy Grail perhaps to take 'death off the table' where it sadly still is, and that's inexcusable on the part of those in-charge; even more obscene is a shortage of PPE at this stage); as well as vaccine (or two).  

Their partnerships with Columbia University and Mt. Sinai in New York, SmartPharm, and Chinese global license, are all very notable assists; and contribute to something Sorrento has worked hard to recover from (earlier cancer treatment day issues we don't even know, or need to know, details of) .... and that was dubious credibility that I too spotted from the way CEO Henry handled the CBS and CNBC interviews. That was too aggressive; but guess what; not as the questionable ethics of insider-sales by Moderna executives when their data studies came out. We avoided it altogether; while mentioning that their (mediocre?) vaccine could be combined with something a small biotech called Heat Biologics has; because of its T-cell emphasis.

But again; see how tricky all this is? We liked the 'portfolio of solutions' as offered (and growing) by Sorrento. We don't need to monitor every test and nuance of each of their products; just need one or more to succeed, which will determine how high it goes (the share price). I've speculated probably not less than mid-20's if just one is approved; and the sky's the limit if they succeed with more than one. CEO Henry of course knows that; it's his plan; so he's not embarrassed (back to cancer treatments that didn't pan-out) again; and SRNE soars on its own, or invites big-pharma suitors.

In-sum: the downgrade of the United States Debt is a reflection of ongoing profligacy is you'd like to trace it back any number of years; and more recently absolute panic in an effort to sustain the Nation from implosion during the ongoing pandemic.  

Driving this outcome is the perceive inability to keep this type of funding going; and in a sense it's Japan telling the truth about lack of internal growth; whereas the U.S. for sure is masking it. On the other hand certain technology or other stocks 'work' here, during the pandemic; and we've focused on 'our' reality consistently; while old fogies were being negative 'as if' the chasm between markets and economy mattered.  

Well it will matter; and Fitch is reminding the world of this. Unless we get an instant, or nearly so, effective treatment for Covid; and that's what everyone wants. Trouble is, politicians did what I said was irresponsible for the most part; they leveraged hope but did not prepare for the worst. As a market analyst I (or you) can hope and set-up our market moves accordingly. For politicians (State or Federal); hope cannot be the strategy. Better to have a surplus of PPE than not enough. How could they do this to constituents and shoot their election prospects in the foot? Ask them.