RJ and Makay

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Fears of a Eurozone debt default have pressured world stock markets for months, particularly stocks that are perceived to have large exposure to European debt.  This type of news-driven selling can provide buying opportunities for patient, value driven investors, according to Seeking Alpha, which has identified Morgan Stanley as a stock that has great upside potential once Eurozone hysteria settles down.

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Securities regulators have issued subpoenas to hedge funds and other trading firms as it probes possible insider trading prior to the U.S. government’s long-term credit rating cut last month, the Wall Street Journal reported, citing people familiar with the matter.  SEC officials have demanded more information concerning specific positions taken shortly before the August 5 Standard & Poor’s (S&P) downgrade of the U.S. sovereign debt rating to AA+ from AAA.

Though in the offing for some time, it's still a shock to see a credit agency move toward downgrading U.S. debt. Today, Standard & Poor's (S&P) Ratings Services reduced its outlook on the U.S. to "negative," potentially setting the stage for a downgrade from triple-A status in the near future.

"More than two years after the beginning of the recent crisis, U.S. policymakers have still not agreed on how to reverse recent fiscal deterioration or address longer-term fiscal pressures," explains S&P credit analyst Nikola G. Swann. The chance of a U.S. downgrade within two years is at least one in three, Swann estimates.