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The heart of Toronto’s financial district at King and Bay Streets.
The heart of Toronto’s financial district at King and Bay Streets.
(KEVIN VAN PAASSEN/THE GLOBE AND MAIL)

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Bank downgrades a sign of the coming times

Over the past two decades, betting against Canadian banks stocks has been a suicidal investment strategy. Monday’s downgrades by Moody’s signal a new longer-term economic backdrop less amenable to outsized bank profit growth.

The Globe and Maiil's Sean Silcoff is completely accurate in his assessment that in the short term, lowering the banks’ credit ratings will have next to no impact on investors. It is also true, however, that the secular trends underlying long-term bank profits have run their course