Cryptocurrencies Plunge, Wiping Out All 2025 Gains

Posted on January 9, 2025 by Ignacio Teson

Cryptocurrencies fell for the third consecutive session, with Bitcoin dropping 2.8% in the last 24 hours to $92,500. Ethereum broke below its support level at $3,300, now trading at $3,200.

Bitcoin Hit $100K Milestone For the First Time in 2025 Amid ETF Boom and Optimism

Meanwhile, other altcoins saw widespread declines of up to 7%, led by Stellar, followed by Dogecoin (-3.7%) and Avalanche (-3%). Amid this downturn, cryptocurrency ETFs recorded their second worst day in history.

[[BTC/USD-graph]]

Leveraged Positions and Market Data

According to CoinGlass data, the recent sell-offs triggered liquidations of leveraged long positions worth a total of $1 billion. These declines have also pushed Bitcoin below its 2024 opening price. Companies tied to the crypto sector, such as MicroStrategy and TeraWulf, also suffered significant stock price drops.

Additionally, spot Bitcoin ETFs experienced net outflows of $582 million—the second-largest since their approval in 2024, surpassed only by $680 million in outflows on December 19. Spot Ethereum ETFs also saw outflows nearing $160 million, marking the largest withdrawal since late July.

Federal Reserve Policy and Bitcoin

This wave of sell-offs follows a surge in U.S. 10-year Treasury yields, which hit their highest levels since April. Experts attribute this rise to growing concerns about the future of the U.S. economy, especially after stronger-than-expected macroeconomic data.

While the relationship between [[BTC/USD]] and global liquidity isn’t strictly linear, the strengthening of the U.S. dollar and rising bond yields highlight mounting economic pressures. These forces intensified following the Federal Reserve’s December meeting, underscoring the importance of monitoring macroeconomic trends.

During the Fed’s latest meeting, interest rates were cut by 25 basis points, and expectations for further cuts in 2025 were revised down to just two.

Wall Street Closes Mixed After a Day of Volatility

Posted on January 9, 2025 by Ignacio Teson

The three major Wall Street indexes delivered mixed performances on Wednesday, following a negative start to the session.

Investors digested key economic reports and remarks by Donald Trump that fueled market uncertainty.

The Dow Jones Industrial Average, comprising 30 major companies, rose 0.25% to close at 42,635.20 points. The S&P 500, representing the most valuable companies, edged up 0.16% to 5,918.25 points. Meanwhile, the Nasdaq Composite fell 0.06% to 19,478.88 points.

[[SPX-graph]]

Economic Reports in Focus

Investors assessed data from ADP showing a sharp slowdown in private payroll growth in December. In contrast, the U.S. Labor Department reported a decline in initial jobless claims, hinting at some resilience in the labor market.

The Federal Reserve’s meeting minutes, also released Wednesday, revealed growing concerns among policymakers about persistent inflationary pressures, exacerbated by potential tariff policies anticipated under Trump’s administration.

Tariff Fears and Bond Yields

Market sentiment took a hit following a CNN report that Trump might use the Emergency Economic Powers Act to implement a new tariff program. This heightened concerns about prolonged inflation and its impact on monetary policy.

In this context, the yield on the 10-year U.S. Treasury note climbed to 4.73%, its highest level since April 25, before easing slightly to 4.681%. The rise in yields added pressure to equities, contributing to the market’s volatile trading.

U.S. markets have faced headwinds this week amid fears of stickier inflation and its potential impact on the Federal Reserve’s anticipated rate-cut trajectory.

Mexican Peso Retreats Amid Donald Trump Concerns

Posted on January 9, 2025 by Ignacio Teson

The Mexican peso weakened on Wednesday, impacted by speculation that U.S. President-elect Donald Trump might declare a national economic emergency to implement a sweeping tariff strategy.

The exchange rate closed at 20.4164 pesos per dollar, according to Mexico’s central bank (Banxico). This marks a depreciation of 12.12 cents or 0.60% compared to the previous day’s close of 20.2952 pesos. During the session, the dollar traded in a range between 20.3133 pesos and 20.5301 pesos.

[[USD/MXN-graph]]

The Dollar Index (DXY), which measures the greenback against six major currencies, rose 0.30% to 109.03 points by the close. Media reports suggested that Trump may declare an economic emergency to push through his tariff plan, causing risk aversion in markets.

Although his transition team has not confirmed this, the uncertainty led to a spike in the dollar, driving it from 20.31 pesos to 20.53 pesos.

Ongoing Depreciation Pressure

The [[USD/MXN]] remains vulnerable to Trump’s comments on trade and security. Earlier this week, Trump denied reports that his tariff strategy would target only products critical to U.S. national and economic security, dampening recent optimism in the markets.

Broader Market Impact

The yield on the U.S. 10-year Treasury note reached an eight-month high, fueled by concerns that Trump’s policies could reignite inflation as he seeks to accelerate economic growth.

Expectations of rising inflation supported bets that the Federal Reserve will make fewer interest rate cuts this year. According to CME’s FedWatch tool, the first 25-basis-point cut, to a range of 4.00%-4.25%, is anticipated at the June meeting.

Minutes from the Fed’s most recent policy meeting indicated that most members favor a cautious approach in the coming quarters. While the Fed may slow its pace of tightening, risks of rising inflation remain a significant concern.

European Wind Companies Fall After Trump Slams Turbines

Posted on January 8, 2025 by Ignacio Teson

U.S. President-elect Donald Trump stated on Wednesday that he would work to ensure “no wind turbines are built” during his term, triggering a sharp decline in European wind energy stocks.

His remarks, made less than two weeks before his inauguration, have raised concerns about the future of the U.S. wind energy market, the world’s second-largest after China.

Impact On Stocks and Comments

Shares of major offshore wind developers, including Denmark’s Ørsted and Germany’s RWE, as well as turbine manufacturers Siemens Energy, Nordex, and Vestas, dropped between 2.9% and 7.3% following the comments.

In a press conference at his Florida resort on Tuesday, Trump called wind energy “the most expensive form of power,” adding, “It’s many, many times more costly than clean natural gas.” He went on to describe wind turbines as “a disaster,” stating, “They litter our country like garbage in a field. They rust, they decay, they collapse, and nobody wants to remove them because it’s too expensive.”

Market and Regulatory Uncertainty

Trump’s renewed criticism of wind energy has fueled investor fears of regulatory shifts during his second term, prompting companies to reconsider or delay expansion plans. However, implementing such policies could prove complex, given the significance of wind energy in Republican strongholds like Texas.

Argentina’s Stock Market Drops 5% Amid Profit-Taking

Posted on January 8, 2025January 8, 2025 by Ignacio Teson

In New York, Argentine stocks also drop by up to 5.5%, while the country risk rises to 563 basis points.

The S&P Merval faces profit-taking on Wednesday, January 8, but has risen 9% in U.S. dollars so far this month.

Argentine stocks traded on Wall Street also lose up to 5.4%, while dollar-denominated bonds experience broad declines. The country risk reaches 563 basis points following a correction by J.P. Morgan.

Argentine Stock Market Performance

In this context, the S&P Merval falls 2.1% to 2,763,658.29 points. Among the leading stocks, the biggest losses are seen in: Edenor (-6.8%), Telecom (-6.2%), Cresud (-4.8%), Central Puerto (-4.6%), and BBVA (-3.8%).

In New York, Argentine stocks are experiencing profit-taking, with declines of up to 5.5%, led by Edenor, followed by Telecom (-4.1%) and Central Puerto (-2.1%). The government faces the largest sovereign dollar bond payments of the year, totaling around $4.341 billion on Thursday, according to data from the Congressional Budget Office (OPC).

These payments correspond to bonds restructured in 2020 and include both principal and interest. The bonds paying coupons include Bonares with Argentine law (AL29, AL30, AL35, AL38, and AL41) as well as Global bonds, issued under foreign law and denominated in dollars (GD29, GD30, GD35, GD38, and GD41) and euros (GE29, GE30, GE35, GE38, GE41, and GE46). In this context, country risk rises to 563 basis points, according to J.P. Morgan’s measurement.

Javier Milei’s Statements

In statements made today, Argentina’s president Javier Milei said:

“We will do it. We have a lot of hope of being able to lift the currency controls this year,” said President Javier Milei. He also expressed his willingness to reduce taxes, promised the economy will grow by about 5% next year, and stated that his dream of closing the Central Bank (BCRA) is becoming increasingly closer.

He spoke about economic growth, emphasizing that “the recovery of real wages, pensions, and the recovery of stocks are driving economic activity.” When asked about the tax burden, he responded, “I have no problem lowering taxes more, just tell me where to cut.”

Wall Street Closes Lower; Nasdaq Drops 1.89%

Posted on January 8, 2025 by Ignacio Teson

Shares of semiconductor giant Nvidia dropped 6.2% after reaching a record high yesterday. The decline followed the company’s unveiling of a new line of AI-enabled chips at the CES trade show in Las Vegas.

The three major U.S. stock indexes closed lower on Tuesday, weighed down by sharp declines in technology stocks such as Tesla and Nvidia, which dragged the Nasdaq down by 1.89%.

The Dow Jones Industrial Average fell 0.42% to close at 42,528.36 points, while the S&P 500 dropped 1.11% to end at 5,909.03 points. The Nasdaq Composite, heavily influenced by tech stocks, closed at 19,489.68 points, down 1.89%.

[[SPX-graph]]

Meanwhile, Tesla, Elon Musk’s electric car company, fell 4.8% after Bank of America downgraded its stock. The downgrade was attributed to elevated valuations following recent gains and risks associated with its strategic direction.

Tech Sector Performance

The technology sector led the losses, closing down 2.39%, followed by consumer discretionary stocks (-2.21%) and communication services (-1.05%). Within the Dow Jones, Amazon saw the second-largest drop after Nvidia, declining 2.42%, while Verizon fell 1.74%.

[[SPX-graph]]

Nvidia’s CEO, Jensen Huang, highlighted during the day that Micron Technology provides memory for its GeForce RTX 50 Blackwell gaming chips.

Meanwhile, shares of Aurora Innovation, a leader in autonomous driving technology, surged 38%. The rally was fueled by news of a long-term partnership with Nvidia and Continental to advance the development of autonomous trucks.

These collaborations underscore Nvidia’s expanding influence across gaming and autonomous vehicle technologies, even as its stock faced declines today.

Commodities Market

In the commodities market, oil prices rose on Tuesday, driven by concerns over potential supply restrictions from Russia and Iran due to Western sanctions, coupled with expectations of increased demand from China.

Brent crude futures gained 75 cents (0.98%) to close at $77.05 per barrel. Meanwhile, the West Texas Intermediate (WTI) crude rose 69 cents (0.94%) to settle at $74.25 per barrel.

The fear of sanctions limiting supply has spurred higher demand for Middle Eastern oil, reflected in Saudi Arabia raising its crude prices for Asia in February, marking the first increase in three months.

Mexican Peso Gains After a Day of Strong Momentum

Posted on January 7, 2025 by Ignacio Teson

The Mexican peso appreciated slightly on Tuesday after an initial dip during the session, as markets digested new data signaling strength in the U.S. economy.

The market also reacted to comments from Donald Trump dismissing expectations of limited tariffs.

The exchange rate closed at 20.2952 pesos per dollar, compared to an official close of 20.3096 pesos the previous day, according to the Bank of Mexico (Banxico). This represented a modest gain of 1.44 cents, or 0.07%, for the [[USD/MXN]].

[[USD/MXN-graph]]

During the session, the dollar traded within a range of 20.3969 pesos (high) and 20.2634 pesos (low). Meanwhile, the U.S. Dollar Index (DXY), which measures the greenback against six major currencies, rose 0.36% to 108.63 points.

Strong U.S. Data Drives Mixed Reaction

U.S. economic data released Tuesday showed stronger-than-expected activity in the services sector during December. Additionally, the JOLTS job openings report for November revealed an unexpected increase, boosting confidence in the U.S. economy.

Despite this, the peso’s erratic behavior followed a sharp rally the previous day, driven by optimism from a Washington Post report suggesting Trump’s tariff campaign might focus only on critical imports. However, Donald Trump, set to take office on January 20, rejected this speculation via his Truth Social account, reviving concerns over potential trade challenges for Mexico.

Technical Outlook

From a technical perspective, the Mexican peso appears to be entering short-term strong oversold territory. The first support level is seen at 20.20, with an extension to 20.10, while resistance stands at 20.45.

Markets are likely to remain cautious as trade policy uncertainties and U.S. economic strength continue to influence the peso’s performance.

European Inflation Rises in December, Pressuring ECB

Posted on January 7, 2025 by Ignacio Teson

The latest data on price trends suggest the European Central Bank (ECB) may adopt a more moderate approach to interest rate cuts moving forward. What did Christine Lagarde say, and what are analysts expecting?

Annual inflation in the eurozone rose to 2.4% in December, driven by a slight uptick in energy prices. This marks a continued rebound since hitting a three-year low of 1.7% in September 2024. The inflation rate is now above the ECB’s 2% target.

All of this has influenced the [[EUR/USD]] exchange rate for the worse, driving it down.

[[EUR/USD-graph]]

Inflation Data

According to Eurostat, the December inflation rate was influenced by a 0.1% rise in energy prices, which had declined by 2.0% in November. Processed food, including tobacco and alcoholic beverages, increased by 2.7%, while services advanced by 4.0%.

Core inflation—excluding energy and food prices—remained steady at 2.7%, the same level recorded since October 2024.

Among the eurozone’s largest economies, Germany posted a 2.8% inflation rate in December, followed by France at 1.9%, Italy at 1.4%, Spain at 2.8%, and Portugal at 3.1%.

European Inflation Outlook and Projections

As was the case in the second half of 2024, inflation levels are drawing attention to the ECB’s potential response. Analysts expect the ECB to continue lowering interest rates but at a slower pace. Inflation had exceeded 10% at the end of 2022, but aggressive ECB measures succeeded in curbing that trend.

In 2024, the ECB began gradually reducing interest rates due to signs of economic fragility. Analysts predict the ECB will likely cut rates only once during the first half of 2025, with additional reductions anticipated later in the year.

Argentine Stock Market Hits Record High

Posted on January 7, 2025 by Ignacio Teson

The market continues to deliver good news for Javier Milei’s government. J.P. Morgan’s country risk index showed another decline on Tuesday, adding to other indicators suggesting that economic activity will carry strong momentum into 2025.

Argentina’s new president Javier Milei gestures as he delivers his inaugural speech before the crowd, during an inauguration ceremony at the Congress in Buenos Aires on December 10, 2023. Libertarian economist Javier Milei was sworn in Sunday as Argentina’s president, after a resounding election victory fuelled by fury over the country’s economic crisis.

On Tuesday, January 7, Argentina’s country risk index reached its lowest level since May 2018, reflecting growing investor interest in local assets driven by projections of a significant economic recovery in 2025.

Argentine Country Risk

The J.P. Morgan index, as reported by Reuters dropped again, following a sharp decline on Monday when it broke below the 600-point mark.

Dollar-denominated bonds showed mixed movements. The Global 2035 bond rose by 0.6%, followed by the Bonar 2035 with a 0.4% increase, and the Global 2038 and 2041 bonds both advancing by 0.3%. In contrast, the Bonar 2029 fell by 0.5%, while the Global 2029 and Bonar 2038 declined by 0.4% and 0.3%, respectively.

Analysts suggest that if the current trend holds, the country risk could drop further, potentially reaching around 400 basis points in the coming days or weeks. This improvement is credited to the government’s robust fiscal and monetary policies in 2024 and favorable projections for 2025, including inflation falling below 30% and economic growth reaching 5%.

Fiscal Policy and New Stock Market Highs

Since Javier Milei took office in December 2023 and implemented strict orthodox economic policies focusing on fiscal discipline and inflation control, Argentina’s financial markets have reached new historical highs, supported by fresh capital inflows. The S&P Merval index has surpassed 2,400 points, setting a new record in real terms.

Among the leading stocks, Transportadora Gas del Sur rose 3.6%, BBVA increased by 2.9%, Grupo Galicia gained 1.7%, and YPF advanced 1.4%. Meanwhile, Edenor fell 2.3%, Central Puerto dropped 1%, and Banco Macro declined 0.9%.

In New York, Argentine ADRs also posted strong performances. BBVA led with a 7% increase, followed by Telecom with a 5.3% rise, Supervielle up 4.8%, Transportadora Gas del Sur gaining 4.6%, and Loma Negra advancing 4%.

Wall Street Closes Mixed Amid Trade Tariff News

Posted on January 6, 2025 by Ignacio Teson

The week began with mixed results on Wall Street as investors weighed reports on President-elect Donald Trump’s potential trade tariff plans and an early rally in technology stocks.

The Dow Jones Industrial Average, which tracks 30 market giants, edged down 0.06%, closing at 42,706.56 points. In contrast, the S&P 500, a barometer for the largest companies, rose 0.55% to finish at 5,975.38 points. Meanwhile, the Nasdaq Composite, dominated by tech firms, outperformed with a gain of 1.24%, ending the session at 19,864.98 points.

[[SPX-graph]]

Key Drivers of the Day

The session began on a positive note, buoyed by a report from Foxconn revealing record-breaking revenues in the fourth quarter. This was attributed to surging demand for artificial intelligence-related technologies, which spurred robust gains in the tech sector. Optimism also came from a Washington Post report suggesting that Trump’s trade tariffs might target only imports critical to U.S. national and economic security, reducing fears of broader economic disruption.

Among individual stocks, Nvidia stood out with a 3.43% gain after initially climbing over 5% during the day. Apple, which had been up more than 1% early in the session, faltered and closed 0.61% lower. The biggest headline came from FuboTV, whose shares skyrocketed by over 250%. This surge followed news that Disney is nearing a deal to merge Hulu + Live TV with Fubo’s sports streaming platform. Disney shares, however, dipped slightly by 0.10%.

Broader Market Sentiment

Despite some early optimism, the mixed closing results underscored lingering uncertainty among investors. Many are closely monitoring upcoming economic data releases and policy announcements, which could provide more clarity on market direction. While the technology sector showed resilience, broader market sentiment remains cautious as Wall Street navigates trade policies and other key catalysts expected to shape the economic landscape in the coming weeks.