Moody’s has announced this week its decision to lower the rating of 10 US banks, which should not come as a surprise to anyone, except maybe, the timing of the decision. On top of that, US bank #lending activity has decreased from recent highs of March by 1.63%, as you can see below. It doesn’t seem like a big retracement, but only in 3 prior instances has lending activity decreased by 1.5% or more, and in all of them (1971, 2001 and 2009-10) the S&P500 has corrected almost 50% of its value. In #italy and #Spain, governments have put a tax to the banking sector of 40%, and their stock values have taken a big hit, particularly in Italy. Banks in #china are carrying a gigantic burden on their books with trillions of dollars in unoccupied real estate. It is very difficult to see a continuation of a bull market without banks doing well. It is also very difficult yo have a healthy global economic growth if banks are not healthy.
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