Wall Street Hits New Highs as Spain's IBEX 35 Stalls Amid Oil Crash

Spain's IBEX 35 stalls as Wall Street hits new highs

Why was Wall Street setting records while Spain's IBEX 35 barely filled a page? In mid-December 2014, with oil prices collapsing and the Spanish benchmark hovering around 9,660 points, the gap between US market highs and the real economy became hard to ignore. The US was setting records, China joined the rally, but Spanish market activity faded to a minimum. Volatility brought no good news. The Dow kept rising, while Spain lived like Groundhog Day.

BBVA trade missed by 8 basis points

The session began with an intraday trade on BBVA. The system showed entry at €7.90; the investor added two cents of margin—since the market rarely hits the exact point—and waited for the drop. The price never reached that level. It stayed eight basis points away, touching it near close. No entry, no scare, and fortunately so: being open for spot trading over the weekend, with New York indices closing at lows, was a risk no one wanted to take.

Hitting the exact point became an obsession. A park oracle set 10,010 as the first support and 9,660 below. "The scenario breaks at 10,270-10,440," it stated. For BBVA, the advice was direct: do not look at your BBVA until €7.20. References repeated every session, acting as both compass and excuse during a nervous week.

For the average investor, the tactic was clear: enter the 9,660 zone and stay briefly. The scenario pointed to 8,000 unless a surprise central bank move like Japan's occurred. The underlying reading was pessimistic.

Oil plunge puts energy firms and funds under pressure

The oil crash was not an isolated story. Over the last year, those dominating 80% of the commodities futures market had exited the business. Post-crisis regulation—the Dodd-Frank Act and the rest of the derivatives framework—forced position unwinding, and volatility did the rest. Deutsche Bank laid off 200 commodities traders; JP Morgan sold its business to Mercuria.

The direct effect on banks will be limited, according to circulating analysis, but energy firms and funds are affected if the crash continues. A case serves as a warning: an operator who bet heavily on natural gas ended up sunk. Regarding the causes of the oil drop, one thesis repeats: low demand expected in coming years due to cooling activity. Saudi Arabia forecast the barrel at $80.

Central bank liquidity fails to reach the street

Central bank liquidity rounds aim to deleverage the web entities carry, but that money reaches only a fraction of the total amount. And since it does not reach street level, it does not produce the consistent growth expected. The result is seen in prices: near-global deflation with tons of banknotes flowing from central banks.

Electricity provides another uncomfortable indicator. Electricity demand in Spain continues to fall, a signal read as increased energy efficiency but also as lower activity. Without continuous and growing stimulus, the prevailing sensation is that much of world trade and ex-middle-class consumption is sustained on thin air.

Private debt falls, public rises: no one is deleveraging

The private sector reduces debt at €100 billion annually. The problem is that public debt consumes exactly those €100 billion each year. The country, as a whole, is not deleveraging: it remains trapped to unexpected limits. External debt had reduced by only 0.4% over twelve months. At this rate, a five-year purge could become eternal.

Against this backdrop, the prevailing remedy is resilience. The circulating idea is that almost everything is in surplus, revenues are falling, and the difference lies in how much each needs to live. Household economics admits extreme scenarios: those who believe they could live ten years without income coexist with those who remember that 20% of zero is still zero.

Wall Street rises as IBEX 35 sleeps the sleep of the just

While New York set records and the Dow Jones crossed 18,000, the Spanish benchmark moved in a narrow range. The forecast to close the week above 10,500 pointed to a less analytical reason: window dressing before December 31. Low volume and lack of references fueled the risk of an unpleasant gap at the start of the next week.

The trend rules, and the chart is clear, say those trusting the rally. Opposing them is the counterargument: that this rises only due to liquidity doses and that, once withdrawn, the economy will be unable to evolve upward. Between these extremes lies pure intraday trading, content with 50 or 100 points of correction and needing to believe in nothing.

With the Dow heading for highs and private debt falling while public debt grows, the scenario does not fit anyone's box. A rally explained by balance sheets, not factories. Let each decide if that is good news or the prelude to another hangover.