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| === Credit Ratings === | | === Credit Ratings === |
| Credit ratings of the United States is a major catalyst for market activities. On 1st of August, Fitch downgraded the credit rating of the United States from the highest rating of AAA, to AA+. Fiscal deterioration and growing government deficit burden were the reasons behind this downgrade.<ref>https://www.bbc.com/news/business-66379366</ref> Previously, the credit rating downgrade of the US only occurred once in 2011, following the aftermath of 2008 Financial Crisis and the Federal Reserve's attempt to revive the economy with vast amount of quantitative easing and an increased balance sheet. | | Credit ratings of the United States is a major catalyst for market activites. On 1st of August, Fitch downgraded the credit rating of the United States from the highest rating of AAA, to AA+. Fiscal deterioration and growing government deficit burden were the reasons behind this downgrade.<ref>https://www.bbc.com/news/business-66379366</ref> Previously, the credit rating downgrade of the US only occured once in 2011, following the aftermath of 2008 Financial Crisis and the Federal Reserve's attempt to revive the economy with vast amount of quantitative easing and increased balance sheet. |
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| This downgrade is significant as investors began to question the economic strength of the US. With high macroeconomic sensitivity, the SOX index plummeted by 6% after the announcement. | | This downgrade is significant as investors began to question the economic strength of the US. With high macroeconomic sensitivity, the SOX index plummeted by 6% after the announcement. |
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| Credit Ratings of 10 US banks were downgraded by Moody's on 8th August 2023.
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| {| class="wikitable"
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| |+US Banks Downgraded by Moody's
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| !Bank Name
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| !Ticker
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| |-
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| |M&T Bank
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| |MTB
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| |-
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| |Webster Bank
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| |WBS
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| |-
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| |Pinnacle Financial Partners
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| |PNFP
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| |-
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| |BOK Financial Corp
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| |BOKF
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| |-
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| |Associated Banc-Corp
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| |ASB
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| |-
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| |Old National Bancorp
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| |ONB
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| |-
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| |Amarillo National Bank
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| |(private)
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| |-
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| |Commerce Bancshares
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| |CBSH
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| |-
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| |Prosperity Bank
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| |PB
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| |-
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| |Fulton Financial Crop.
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| |FULT
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| |}
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| Additional six banks are under review for a potential downgrade.
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| {| class="wikitable"
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| |+US Banks under review for potential credit rating downgrade
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| !Bank Name
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| !Ticker
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| !Market Capitalisation
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| |-
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| |Bank of New York Mellon
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| |MK
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| |$35.49B
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| |-
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| |U.S. Bancorp
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| |USB
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| |$61.462B
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| |-
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| |State Street Corp.
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| |STT
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| |$23.279B
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| |-
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| |Truist Financial Corp.
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| |TFC
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| |$42.57B
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| |-
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| |Northern Trust Corp.
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| |NTRS
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| |$16.52B
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| |-
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| |Cullen/Frost Bankers Inc.
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| |CFR
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| |$6.846B
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| |}
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| These downgrades indicate a deteriorating credit market following regional bank turmoil of collapse of Silicon Valley Bank, Signature Bank, First Republic Bank and so on. These banks are responsible for commercial real estate loans which is significantly underperforming with higher interest rates. With US office vacancy rates at an all time high<ref>https://www.axios.com/2023/04/13/office-vacancy-rate-remote-work-hybrid-work</ref>, this causes devaluation of those vacant buildings which reduces the availability of CRE loans for owners. With higher interest rates and increased difficulty of CRE loans, this sector in the market is in deep trouble with $1.5 Trillion of CRE loans to mature by 2025. <ref>https://themessenger.com/business/the-1-5-trillion-mortgage-crisis-looming-for-commercial-real-estate</ref> The severity of the debt crisis often brings downward pressure for growth stocks with high PER, including NVIDIA, thus Nvidia is likely to have downward pressure with deteriorating economic conditions.
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| === Debt Crisis === | | === Debt Crisis === |
