The Economist: Wall Street Is Optimistic About 2026, Despite High Valuations

Posted on January 1, 2026 by Ignacio Teson

The British weekly The Economist points to a broadly constructive outlook for equities in 2026, even as concerns about elevated valuations and a potential global bubble persist.

Wall Street has Overvaluation Worries and Macro Uncertainty Hit Sentiment — Wall Street has Overvaluation Worries.

According to the publication, optimism on Wall Street remains strong. Only about 8% of market participants expect a severe correction in the S&P 500—defined as a drop of more than 30% from current levels—at some point in 2026. This figure is broadly in line with the historical average of around 7%, suggesting that fears of a major crash are not unusually elevated despite lofty prices.

Options markets provide further insight into investor sentiment. Prices of put options, which give holders the right to sell an asset at a predetermined price, embed the market’s perceived probability of a broad sell-off. These signals indicate that, notwithstanding growing discussion of a potential global equity bubble—driven largely by mega-cap technology stocks and enthusiasm surrounding artificial intelligence—investors appear more concerned about missing another rally than about a sharp market collapse.

Estimates based on current options pricing suggest that the probability implied by the market of the S&P 500 rising 30% is close to 11%. While higher than the likelihood assigned to a major downturn, it is still not compelling enough to fully convince those who argue that equity markets are in bubble territory.

Stocks Remain Expensive, but Expectations Are Tempered

Equity prices in the United States remain near record highs. Analysts at Goldman Sachs note that current valuations are higher than in roughly 90% of observations over the past two decades. In this context, elevated prices are no longer confined to technology stocks alone, but reflect a more generalized valuation backdrop.

Even so, expectations for 2026 appear more moderate. A survey conducted by Bloomberg shows that investors anticipate the S&P 500 will rise about 9% over the course of next year—well below the 23% annualized gains recorded over the past three years. Among forecasts, the most optimistic respondents see upside of around 18%, while the most pessimistic project gains of just 1%.

Taken together, the data suggest that while Wall Street acknowledges stretched valuations, confidence in equities remains intact—driven less by the absence of risk than by the persistent fear of being left behind.

Bitcoin Tops $88,000 While Altcoins Climb as the Year Kicks Off

Posted on January 1, 2026 by Ignacio Teson

Bitcoin ended 2025 with a decline of nearly 6.4%, but succeeded in consolidating a new phase of global adoption.

On the first trading day of 2026, the cryptocurrency market has extended the calm tone that closed out last year. Bitcoin (BTC) is trading above the $88,200 level, roughly in line with its average range throughout much of 2025, a year that ended with a modest pullback of close to 6.4%.

The world’s largest cryptocurrency was last trading at $88,250.55, up 0.9% on the week. Ethereum (ETH) edged higher by 0.2% to $2,986, consolidating a weekly gain of 1.8%.

Altcoins posted broader gains of up to 2.8%, led by the memecoin Dogecoin (DOGE), which climbed to $0.1244. Cardano (ADA) followed with a 1.5% increase to $0.3469, while Tron (TRX) rose 0.5% to $0.2843.

[[BTC/USD-graph]]

Elsewhere, Ripple (XRP) advanced 0.1% to $1.86, while Solana (SOL) slipped 0.6% and BNB declined 0.4%, trading at $124.79 and $858.62, respectively. Meanwhile, Figure Heloc (FIGR_HELOC)—a relatively new token that has climbed to 11th place by market capitalization—fell 1% to $1.03.

Bitcoin’s 2025 Consolidation and Long-Term Outlook

Despite the high volatility that characterized the crypto market throughout 2025, there is broad agreement that the ecosystem—particularly Bitcoin—made meaningful progress in terms of global adoption by governments and corporations.

Following Donald Trump’s return to the White House, the United States took the lead in advancing a more favorable regulatory framework for digital assets in 2025. This shift was echoed, to varying degrees, by other major economies, which showed growing interest in the regulation of exchanges and the broader potential of tokens and stablecoins. In Latin America, Brazil and El Salvador stood out for their continued institutional support of the crypto ecosystem.

Looking further ahead, some long-term projections place Bitcoin’s price target as high as $1.42 million by 2035, driven by the assumption that it could capture roughly one-third of the expanding global market for stores of value.

China Imposes Tariffs on Argentine Beef

Posted on January 1, 2026 by Ignacio Teson

The measure will take effect in January 2026 and remain in force for three years. Argentina will be allowed to export up to 511,000 tons per year at the standard 12.5% tariff, while shipments above that threshold will face a significantly higher levy.

Brazil and Uruguay have also been assigned country-specific quotas.

China’s Ministry of Commerce of China announced on Wednesday that it will impose safeguard measures on beef imports beginning January 1, 2026. The policy includes additional tariffs of up to 55% on shipments that exceed country-specific quotas.

The decision follows the conclusion of a safeguard investigation launched on December 27, 2024, into beef imports. According to China’s state news agency Xinhua, the measures will remain in effect for three years, through December 31, 2028, and will be implemented via tariff-rate quotas assigned by country.

Quotas and Tariffs

Under the new framework, Argentina will be granted an annual quota of 511,000 tons eligible for the standard 12.5% import tariff. Any exports exceeding that volume will be subject to the higher 55% tariff.

While the quota broadly matches Argentina’s current export volumes, the regulation effectively caps future growth in shipments to the world’s largest beef-importing market.

Brazil was assigned a quota of 1.1 million tons, while Uruguay will be allowed to export up to 324,000 tons per year. Australia and the United States were allocated limits of 200,000 tons and 164,000 tons, respectively.

Falling Domestic Prices and Oversupply

Chinese authorities justified the safeguard measures by pointing to a sustained decline in domestic beef prices in recent years, driven by excess supply and weakening demand amid the broader slowdown of the world’s second-largest economy.

At the same time, beef imports have risen sharply, reinforcing China’s role as a key destination for major exporters such as Argentina, Brazil, Uruguay, Australia, and the United States. The combination of rising imports and softer domestic consumption prompted Beijing to act in order to protect its internal market.

Wall Street Fell for a Fourth Straight Session, but 2026 is Here

Posted on January 1, 2026 by Ignacio Teson

U.S. equities were among the few global markets operating normally on Wednesday, December 31, but trading ended lower as investors remained cautious in the final session of the year amid thin liquidity and the New Year holiday.

Major Wall Street indexes closed in the red. The Dow Jones Industrial Average fell 0.63% to 48,063.29 points, while the S&P 500 declined 0.73% to 6,845.77 points. The tech-heavy Nasdaq Composite dropped 0.76% to 23,241.99 points.

December delivered mixed results for U.S. benchmarks. The Dow gained 0.72% over the month, while the S&P 500 slipped 0.04% and the Nasdaq edged up 0.01%.

[[SPX-graph]]

Thin Liquidity and Fed Caution Weigh on Markets

Trading volumes remained light, with many investors already sidelined ahead of the holiday. U.S. bond markets also closed early on Wednesday, further reducing activity.

Markets were still digesting losses from the previous session, extending a late-December pullback that unsettled investors. Sentiment was pressured by the release of minutes from the December policy meeting of the Federal Reserve, which revealed sharp divisions among policymakers over the outlook for interest rates in 2026.

Although the Fed delivered a 25-basis-point rate cut at the meeting, the minutes showed that some officials are growing increasingly cautious about further easing, citing persistent inflation pressures and uncertainty surrounding the economic outlook. Others warned that maintaining a restrictive stance for too long could risk slowing growth excessively.

Santa Rally Optimism Fades

Investors entered the final days of December expecting the traditional “Santa Claus rally,” a period that historically delivers gains in the last sessions of the year and early January. Those hopes faded as equities continued to slide.

“A pullback took hold as 2025 came to a close, suggesting that the Santa rally may have arrived early,” said Katie Stockton, managing partner at Fairlead Strategies, in a research note.

Analysts pointed to weak market leadership and profit-taking after a strong year for major indexes as key factors dampening seasonal optimism. With few economic releases scheduled during the holiday-shortened week, markets were driven largely by technical factors, policy expectations, and year-end portfolio adjustments.

Notable Movers

Shares of TransDigm Group rose 1.1% after the company announced a definitive agreement to acquire Stellant Systems for approximately $960 million in cash. Stellant Systems, a portfolio company of Arlington Capital Partners, designs and manufactures high-power electronic components for aerospace and defense markets.

Hyatt Hotels Corporation fell 2% after the company disclosed that damage from Hurricane Melissa will keep seven properties in Jamaica closed until late 2026, weighing on its financial outlook. The announcement came alongside the completion of Hyatt’s $2 billion sale of the Playa to Tortuga Resorts real estate portfolio.

Meanwhile, RLX Technology advanced 1.3% after extending its share buyback program by an additional 24 months through December 31, 2027. Under the program, the company is authorized to repurchase up to $500 million of its American Depositary Shares.

Despite Milei, Argentine Assets End 2025 in Negative Territory

Posted on December 31, 2025 by Ignacio Teson

Argentine stocks listed on Wall Street traded broadly lower, with no clear local catalysts to guide price action.

Argentina’s president Javier Milei gestures as he delivers his inaugural speech.

Despite the ruling party’s victory in the midterm elections under President Javier Milei, Argentine assets signaled that expectations had been set extremely high. Markets appear to be reassessing the pace and depth of the reform agenda, while acknowledging that significant political risks remain.

In addition, structural constraints continue to weigh on the outlook, particularly the limited inflow of foreign capital, which has so far failed to materialize at scale and remains a key obstacle to sustaining long-term growth and asset revaluation.

Argentine Asset Performance

With domestic markets closed due to a banking holiday, Argentine equities trading in the U.S. via ADRs posted widespread losses, with only a handful of exceptions. The weakest performers included IRSA (-1.62%), followed by Cresud (-1.62%), Grupo Supervielle (-1.34%), and Grupo Financiero Galicia (-0.93%).

Argentine companies that trade directly on Wall Street also moved lower. MercadoLibre slipped 0.30%, while Bioceres fell 1.15%.

On the upside, only a few ADRs managed to post gains in the final sessions of the year. YPF rose 0.17%, Transportadora de Gas del Sur added 0.16%, Central Puerto climbed 0.63%, and Telecom Argentina advanced 1.26%.

Merval, Bonds, and Country Risk

On Tuesday, Argentina’s benchmark S&P Merval fell 1.6% in pesos to 3,051,616.77 points, while its dollar-denominated version declined 1% to 2,007.60 points. Over the full year, the index gained 20.4% in local currency, but fell 6% in dollar terms, as the CCL exchange rate rose more sharply.

In fixed income, dollar-denominated sovereign bonds closed mixed. Losses were led by Bonar AL29 (-0.9%) and Global GD29 (-0.6%), while gains were posted by Global GD38 (+0.9%) and Bonar AL30 (+0.6%).

The latest available reading for Argentina’s country-risk premium stood at around 571 basis points, unchanged from Monday. Compared with the end of 2024, the indicator has fallen by 64 points, although it is worth noting that it peaked at 1,456 points in September, amid concerns over exchange-rate sustainability and the ruling coalition’s electoral prospects.

Overall, Argentine assets are set to close 2025 in negative territory, reflecting a year marked by volatility, currency pressures, and shifting investor sentiment.

Wall Street Extends Losses in the Final Session of a Record Year

Posted on December 31, 2025 by Ignacio Teson

U.S. equities are among the few major markets trading normally on Wednesday, December 31, as Wall Street closes out a record-setting year dominated by technology stocks.

Broad Market Strength Signals Renewed Risk Appetite Across Wall Street

Major indexes are edging lower in the final trading session of 2025. Despite recent declines, markets are on track to end the year on a solid footing after months of volatility driven by tariff uncertainty under U.S. President Donald Trump and an unprecedented surge of enthusiasm surrounding artificial intelligence.

By mid-session, the S&P 500 was down 0.18%, while the tech-heavy Nasdaq Composite slipped 0.17%. The Dow Jones Industrial Average was also lower, falling 0.20%.

[[SPX-graph]]

A Volatile but Profitable Year

Wall Street’s annual performance was initially expected to lag the strong gains of the previous two years. In April, Trump’s so-called “Liberation Day” tariffs triggered a sharp sell-off in global markets, clouding the outlook for monetary policy in the world’s largest economy and pushing investors away from U.S. equities early in the year.

However, easing trade tensions—combined with strong gains in AI-related technology stocks and interest-rate cuts by the Federal Reserve—helped markets recover. U.S. equities have since returned to record highs, with technology stocks leading the advance.

Among the standout performers was NVIDIA, which gained 13.6% this year and became the first publicly traded company to reach a market capitalization of $5 trillion. The rally was fueled by continued demand for AI chips and data-center infrastructure.

Another major winner was Alphabet, which surged more than 65%, putting it on track for its best annual performance since 2009. The stock benefited from multiple catalysts, including major AI partnerships, a $4.9 billion investment from Berkshire Hathaway, and a favorable ruling in a high-profile antitrust case.

As the year draws to a close, Wall Street appears poised to finish 2025 with record gains—despite ending it with a modest pullback—underscoring the dominant role of technology and artificial intelligence in shaping market leadership.

Mexican Peso Heads for a Historic Year, Up More Than 13%

Posted on December 31, 2025 by Ignacio Teson

The strong performance has been driven mainly by dollar weakness and effective management of Mexico’s relationship with the United States, which has helped limit pressure from President Donald Trump.

The Mexican peso edged higher against the dollar on Wednesday morning, the final trading day of the year. The currency is on track to close its strongest year on record, posting gains of more than 13%, amid thin trading and limited data releases.

The spot exchange rate stood at 17.9781 pesos per dollar. Compared with Tuesday’s close of 17.9959, according to official data from the Banco de México (Banxico), the peso strengthened by 1.78 centavos, or 0.10%.

[[USD/MXN-graph]]

During the session, the dollar traded within a range, reaching a high of 18.0131 pesos and a low of 17.9543. The U.S. Dollar Index (DXY), published by the Intercontinental Exchange, was up 0.13% at 98.36 points, reflecting modest dollar strength globally.

A Standout Year for the Peso

So far this year, the peso has gained more than 13%, supported by a weaker dollar, interest-rate cuts by the Federal Reserve, and a pragmatic handling of trade and diplomatic relations with the United States. These factors have helped shield the currency from renewed political pressure linked to the Trump administration.

Final Key Data of 2025

The last major U.S. data release of the year showed that initial jobless claims fell by 16,000 to a seasonally adjusted 199,000 in the week ended December 27, well below market expectations of 220,000.

The data were released a day earlier than usual due to reduced government and market activity ahead of the New Year holiday. With liquidity thinning sharply, trading conditions remain subdued and significant market moves appear unlikely.

In this low-volume environment, the peso has found modest support, while markets digest the U.S. labor data as the final reference point of 2025.

Country Risk in Latin America in 2025: Where It Fell the Most

Posted on December 31, 2025 by Ignacio Teson

The country-risk indicator compiled by JPMorgan Chase was heavily influenced by political developments across the region in 2025.

Throughout the year, bonds issued by higher-risk Latin American countries saw a meaningful compression in yields, reflecting improved investor sentiment and shifting political expectations.

Ecuador recorded the sharpest decline in country risk in the region. The indicator fell to levels not seen since mid-2019, breaking below 500 basis points for the first time in six years. The move followed the re-election of President Daniel Noboa, who defeated left-wing candidate Luisa González. The improvement came after significant volatility: on April 10, Ecuador’s country risk had spiked to 1,908 points.

In Bolivia, the presidential election that brought Rodrigo Paz to power—ending two decades of socialist rule—triggered a more favorable financial backdrop. On November 7, Bolivia’s country risk fell to 955 points, its first close below 1,000 since August 2023. It currently trades near 700 points.

In Argentina, the JPMorgan-compiled indicator stands at 574 points. After rising in late October, country risk declined following the legislative election victory of the libertarian coalition, allowing spreads to compress. Argentina reached a peak of 1,456 points in September after a key electoral setback, though its most significant risk compression occurred in 2024.

A special case is Venezuela, which will end the year above 12,000 points, the highest country-risk level in the world. Even so, its risk premium declined steadily throughout 2025, a move analysts attribute to investor speculation about a potential political regime change.

At the lower-risk end of the spectrum, Uruguay, Chile, Peru, and Paraguay remain the safest sovereign credits in Latin America. Brazil and Mexico occupy a middle tier, above 200 basis points, but both saw their bond spreads tighten during 2025.

Country Risk Levels in Latin America (End-2025, basis points)

Venezuela: 12,645
Bolivia: 709
Argentina: 574
Ecuador: 502
El Salvador: 328
Colombia: 266
Honduras: 237
Mexico: 224
Brazil: 198
Dominican Republic: 171
Panama: 156
Costa Rica: 143
Guatemala: 142
Peru: 132
Paraguay: 103
Chile: 91
Uruguay: 70

What Is Country Risk?

Country risk is measured using the Emerging Markets Bond Index (EMBI), produced by JPMorgan Chase. It reflects market perceptions of a country’s ability to meet its sovereign debt obligations by measuring the additional yield investors demand over U.S. Treasury bonds.

Mexican Peso Slips After Fed Minutes, Trades Near 18 per Dollar

Posted on December 30, 2025 by Ignacio Teson

U.S. Treasury yields rose and the dollar strengthened after the release of the Federal Reserve’s meeting minutes, which signaled support for keeping the benchmark interest rate unchanged.

The Mexican peso weakened against the dollar on Tuesday, giving back some of the gains that had taken it to its strongest level since July 2024 last Friday. The pullback came as markets head into year-end and digested the latest minutes from the Federal Reserve.

The exchange rate closed the session at 17.9959 pesos per dollar. Compared with Monday’s close of 17.9682, according to official data from the Banco de México (Banxico), the move represented a decline of 2.77 centavos, or 0.15%.

During the session, the dollar traded within a range, with a high of 18.0020 pesos and a low of 17.9203. The U.S. Dollar Index (DXY), published by the Intercontinental Exchange, rose 0.22% to 98.23 points, reflecting broad-based dollar strength.

[[USD/MXN-graph]]

Still Below the 18-Peso Threshold

The peso has remained below the psychologically important level of 18 per dollar since mid-December, consolidating in a range not seen in roughly 17 months. This move coincided with a third consecutive 25-basis-point rate cut by the Federal Reserve.

Investors were closely watching the minutes from the Fed’s final meeting of the year for clues on the future path of U.S. interest rates. Policymakers revealed divisions over whether inflation could stall, reinforcing expectations of a pause in the tightening cycle.

Rising Treasury yields supported the dollar, while the peso was pressured by expectations that the interest-rate differential between Mexico and the U.S. could narrow. According to FedWatch data, futures markets assign an 85% probability that the Fed will keep rates unchanged at its January meeting.

Strong Annual Performance

Despite the recent pullback, the peso remains one of the best-performing currencies this year. Compared with a close of 20.8829 pesos per dollar at the end of last year, the current level implies a gain of 2.88 pesos, or 13.82%, in 2025.

With liquidity thinning toward year-end, analysts see little chance of a significant shift in this positive balance. A year-end close in the 17.95–18.00 range points to short-term exchange-rate stability, helping to limit volatility for hedging and trade flows as markets await new catalysts.

Warren Buffett Steps Down Today as Berkshire Hathaway CEO

Posted on December 30, 2025 by Ignacio Teson

After nearly six decades at the helm, Warren Buffett is stepping back from the day-to-day management of Berkshire Hathaway, marking the beginning of a new chapter for one of the world’s most powerful conglomerates.

Buffett steps down after many years of leadership.

Widely regarded as one of the greatest investors of all time, Warren Buffett, 95, will relinquish the role of chief executive officer at the end of 2025. His successor will be Greg Abel, who has been groomed for years and will officially take over as CEO on January 1, 2026.

Buffett’s Role Going Forward

Although Buffett will step away from operational leadership, he will remain chairman of the board. He will no longer be the primary author of Berkshire’s annual shareholder letter nor the central voice at annual meetings, but plans to stay connected with investors through shorter reflections and messages of appreciation.

The transition reflects a long-planned succession process. Abel was formally named Buffett’s successor in 2025 and has held senior roles overseeing Berkshire’s non-insurance operations, gaining extensive experience across the group’s diverse businesses.

Under Buffett’s leadership, Berkshire Hathaway evolved from a struggling textile company into a sprawling conglomerate with wholly owned businesses such as GEICO, BNSF Railway, and See’s Candies, alongside major equity stakes in global icons like Apple and Coca-Cola.

Market Reaction and Legacy

Berkshire’s shares—particularly its Class A stock—have reached extraordinary levels after decades of consistent growth driven by Buffett’s disciplined investment philosophy. While the stock has risen this year, it has underperformed the S&P 500, a divergence some analysts attribute to uncertainty surrounding leadership without Buffett at the helm.

Buffett is also accelerating the transfer of his vast personal wealth to foundations run by his children, in line with his long-standing commitment to philanthropy. At the same time, he plans to retain a significant stake in Berkshire to help shareholders build confidence in Abel’s leadership, following the example set by Buffett and his late partner Charlie Munger.

Buffett’s departure as CEO marks the end of a remarkable era in global finance—but also the start of a carefully managed transition to a new generation at Berkshire Hathaway.