Banks/Rents/Cars/Small Business/China

With regards to the Moody's credit downgrade on a bunch of banks, here is what was said in what we can call their bottom line, "Moody's said the rating action reflects several sources of strain on the US banking sector: funding pressures, regulatory capital weaknesses and rising risks associated with commercial real estate exposures." 

In terms of specifics, "US banks Q2 earnings showed material increases in funding costs as well as profitability pressures related to the significant and rapid tightening in monetary policy and inverted Treasury curve, which will continue to lower profitability and implies a weaker ability to generate capital internally. Some banks have reduced loan growth, which preserves capital but also slows the shift in their loan mix toward higher yielding assets, even as their funding costs rise, which weighs on profitability."

Also, "Higher interest rates continue to reduce the value of US banks' fixed rate securities and loans and interest rate risk is not captured well in US bank regulation and thus can create liquidity risks." 

This is what was said on CRE, "Moody's believes small and mid-size banks that have greater exposures to CRE lending, especially construction and office lending, face higher risks because of high interest rates, a significant slowdown in US economy growth and reduced demand for office space driven by work from home trends. These forces are likely to result in deteriorating loan asset quality in certain CRE sectors, further pressuring the credit profiles of banks with more significant exposures to those sectors."