Tuesday brought two seismic announcements in the business world. First, ExxonMobil was stripped of its AAA rating by S&P, which it held since 1949. The downgrade was thanks to a ballooning of debt, driven in part by a share buyback and dividend program that continued even as the price of oil fell. Hours later, tech giant Apple announced its first quarterly revenue loss in 13 years.
At first glance, these two stories appear unconnected, just two bits of bad news for a couple of corporate giants. But in reality, they are part of a larger trend that reflects just how disconnected stocks — and the capital markets in general – have become from corporate fundamentals and the real economy.
