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Red Christmas on Wall Street: Touching the lowest values ​​since April 2017 – December 24, 2013



On the eve of Christmas came another black day on Wall Street. Meanwhile, oil prices also fell: in the New York Stock Exchange, the barrel of "light sweet crude oil" (WTI) ended at $ 42.53, the lowest since June 2017.

Stock prices touched the lowest level since April 2017, according to the news agency Bloomberg, due to the turmoil in Washington between Donald Trump and the Federal Reserve with the rise in interest rates.

The S & P500 (an index of 500 major companies listed on the stock exchanges) was on the verge of calling in jargon "bear market" or to carry a market after the negative sequence that is not seen since August 2015.

Thus, the three major indices of Wall Street (Industrial Dow Jones, Nasdaq and S & P) are already a record losses in one year of more than 11%. Thus, only on Monday, December 24, Dow Jones dropped 2.91%, Nasdaq 2.21% and S & P 500, 2.71%.

On the night before this autumn, US Treasury Secretary Steven Munich announced publicly that he is linking the heads of the largest US banks as a backup, in a dispute between Donald Trump and Fed's owner Jerome Powell for raising rates.

What happened to the highs? Powell, a week ago, set the Federal Reserve's interest rate at 2.5 percent. Although the market has reduced this rate increase, the expectations were that the Fed will ease plans for future increases for 2019. Therefore, the next day, Wall Street's main indexes reacted by dropping to 2%.

Bear market

Just 48 hours later from closing the G20 summit in Buenos Aires – It ended with a supposedly commercial truce between the United States and China and a raging stock jump a day later – Wall Street deepened the path to the downside and evaporated all expectations of a truce after the arrest of the executive power of Huawei.

The G20 drop followed in October and February. On October 10 this year, Wall Street suffered its biggest drop since February, Nasdaq had the worst since June 2016 when it was Brexit.

On February 5, 2018, the Dow Jones suffered the highest drop in points in its history, with a drop of 1,175.21 units. To size: this Monday fell to 653 points.

Country risk

Due to these external, but also local factors, because the trade war between China and the United States of the cause of the notebooks, Argentine shares in New York (called ADR) also had a year of collapse.

What are they? Shares called ADR are listed in the New York Stock Exchange (NYSC) and in Argentina, but are still the same property. It is the same company that only quotes in two places, and the difference is the price adjusted for the exchange rate. In this context, there are banking documents with more than 75% loss in dollars a year.

The context also hit the bond map. The spread (difference) between Global 2021 and Global 2019 is already at 800 basis points. The first one has a TIR (yield rate) of the order of 11.74%, while Global 19 gives 3.67%. In this differential, it is to say that the higher the yield, the greater the risk assessment, the fear of default.

Local sovereign bonds in dollars, both in the short section of the curve, and in the longest segments, were also written off in the year with losses of almost 40%.

In this context, State risk already drilled 800 points.

What does that mean? This means that if Argentina wants to take a 10-year debt, it should pay 8 percentage points more (800 basis points, pb) than the US pays.


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