| Stress Test Event Descriptions |
| September 11, 2001 | Two hijacked passenger jets crash into the twin towers of the World Trade Center in New York. The impact of the crashes triggers the collapse of both towers. A third hijacked plane crashes into the Pentagon in Washington, and a fourth possibly heading for the White House, is diverted by passengers and crashes 20 miles south of Pittsburgh. |
| September 11, 2001 | The world watches the horrific sequence of events. Within hours, President George Bush places all United States armed forces on worldwide alert after a shell-shocked nation sustained its worst attack since Pearl Harbor. |
| September 11, 2001 | Financial markets plunge in Europe and Latin America before trading is halted. American markets do not open and will remain closed until Sept 17th; it will be first time the New York Stock Exchange remained closed for two full days since the Great Depression. Stocks fall 4.6 percent in Spain and 8.5 percent in Germany; price of Brent crude oil for November delivery jumps to $28.87 per barrel, up $1.50; price of gold at afternoon fixing in London rises $15.50, to $287 per ounce; US dollar is weak against major currency, falling to 119.20 yen from 121.04; euro rises to 91.5 cents from 89.8 cents, and strengthens against Latin American currencies. |
| September 12, 2001 | Economists fear the economic paralysis caused by the terrorist attacks on New York and Washington could tip the vulnerable US economy into recession over the next six months and drag the rest of the world down with it. Stock markets in Europe and Latin America continue to fall sharply after attacks; dollar falls against yen and euro; oil and gold prices continue to surge. Tokyo's Benchmark Stock Average plunged 6.63% to 9610.10, which was the lowest since December 1983, and the eighth largest percentage decline ever. In Taiwan stocks, the Benchmark Weighted Index opened down 274 pts (-6.56%) after a one-day suspension. |
| September 17, 2001 | In one of the most anticipated trading days in stock market history the US markets reopen. The US Federal Reserve and the European Central Bank both cut interest rates by 0.5% to head off recession. Large financial institutions become sellers and the Dow plunges 7.1% (684 pts) to 8920.70. The S&P 500 had its worst finish since October 1998, down 53.81 pts (4.9%). The New York Stock Exchange records its busiest day ever with over 2.3 billion shares traded. |
| September 17, 2001 | Asian markets closed with heavy losses amid fears of military conflict as the US readies for an attack on Afghanistan and worries of global recession. Japan's Nikkei fell 5.04% to its lowest level since December 1983. Korea's KOSPI index dropped 2.8%. Airline and insurance stocks led the retreat. Even Chinese investors, who normally ignore outside events were gripped by uncertainty after the attacks on the US. The Shanghai B share index tumbled over 6%. |
| September 18, 2001 | The Bank of England and Japan's central bank cut rates as part of a coordinated campaign to boost confidence, following similar moves by the US Federal Reserve and the European Central Bank. But with fears of a global recession growing, investors remain despondent. European markets all head lower, with the FTSE falling almost 100 points to 4,800. Paris was down 2.09%, while Frankfurt was off 1.48%. |
| September 18, 2001 | After an initial bounce, US markets quickly lose ground falling 43 points. This slip, combined with the previous day's 600-point plunge and the Dow officially enters a bear market, defined as a 20% fall from market highs. |
| March 2000 | The NASDAQ Composite reaches an all-time intra-day high of 5,132. The Composite is up a whopping 78% from November 1999, all in the midst of a higher interest rate environment. |
| March 21 | The NASDAQ 100 tracking stock, QQQ, is the third most heavily traded stock in the US with 33 million shares changing hands. This marks the first time in history that a stock linked to the performance of an index trades this actively, a prime indication of the prevalent steroid enhanced demand for technology stocks. The Fed tightens by another 25bps, which represents the fifth move in less than a year. |
| April 3 | Judge Thomas Jackson delivers his much-anticipated ruling in the Microsoft anti-trust case. Although no one is certain what the implications or ramifications the ruling might bring, everyone knows that it's very important. The NASDAQ falls. |
| April 4 | Both the Dow and the NASDAQ drop roughly 500 points in intra-day trading but rebound to finish the day with only modest losses. However, this will mark the beginning of a very volatile 2-month period, with the suffering the brunt of selling. The NASDAQ will be down 39% from its peak at one point. |
| April 2000 | Headline CPI for March registers at 0.8% following February's 0.6%. This is higher than anticipated and fuels inflationary concerns. The high use of margin is cited as a factor for the swift and steep decline in equity prices. |
| May - June 2000 | Equity markets begin to claw back as economic reports show signs of slowing and inflation indicators come back in line with consensus. The markets begin to increasingly sense that the Fed may be through raising rates. |
| June 1998 | IMF Director, Mchel Camdessus assures the world's financial markets that there is no reason to panic about Russia. 'Contrary to what markets and commentators are imagining,' Camdessus insists, ' this not a crisis.' |
| June 1998 | Russian credit spreads widen further, yielding more than comparable Nigerian bonds. Russians express concern that reserves may fall below $12 billion, less than half a year ago, if a meaningful credit facility is not extended. |
| Mid-July 1998 | the IMF announces a $17 billion bailout fund, to be distributed over 18 months. Officials hope that the package will buy the Russians time. |
| August 17 | Russia announces a wider trading band on the rouble and a moratorium on GKOs (Russian treasury bills), effectively devaluing and defaulting simultaneously. Russia indicates that it plans to devalue by 30%. |
| August 26 | Stanley Druckenmiller of Soros' Quantum Fund admits to losses of about $2 billion as a result of the Russian devaluation. Credit Suisse First Boston states that profits have shrunk by $250 million in 2 months. |
| August 27 | The rouble trades at R13/$ in the offshore market, representing a 50% devaluation. The government fixes the official rate at R7.86/$. Reserves have reportedly dipped below $13 billion. |
| September 1998 | International capital markets are in a state of panic. Equities plunge, at one point, the S&P 500 is down by 21% and the NASDAQ by 25% from its peak in July. US Treasuries rally. The 30-year bond yield falls to almost 4.5%. Credit spreads, including swap spreads, blow out causing widespread losses in the financial markets. Fearing global repercussions of a Long-term Capital Management (a large hedge fund speculating in highly leveraged transactions) collapse, a consortium of banks infuse the troubled hedge fund with a $3.5 billion rescue package. Other firms are reportedly in similar trouble. |
| September 1998 | The Fed cuts rates 3 times in the fall to inject liquidity into the financial markets. Equity markets remarkably bounce back by year's end. |
| January 1997 | Hanbo Steel, a Korean conglomerate, collapses under $6 billion in debt the first sign of increasing economic difficulties that will engulf the region in the months ahead. |
| March 10 | Thai authorities commit to purchasing $3.9 billion in bad property loans from financial institutions but fail to follow through with promises. IMF Director Michel Camdessus suggests that this crisis has no reason to develop further. |
| May 26 | Local conditions deteriorate in Thailand and equity prices continue to slide as the central bank fails to cut interest rates as planned. The baht is hit by massive speculation. Speculation spills over to the Philippines, forcing the central bank to raise overnight rates to 13%. |
| June 1997 | Thai PM Chavalit Yongchaiyudh states, "We will never devalue the baht", even as stocks slide to an 8-year low. The central bank announces its intent to tighten currency controls, restricting the flow of funds. Finance minister Amnuay Viravan resigns. |
| July 2 | Thai authorities announce a managed float of the baht, equities surge in local market terms. The baht weakens by 20%, beginning a contagion effect. The Philippine central bank steps in the markets to defend the peso. |
| July 11 | The baht touches record lows against the US dollar. The Philippine peso is freed to float in a wider band. |
| July 1997 | The Malaysian ringgit begins to collapse, prompting the government to raise interest rates further. Ultimately, authorities abandon its defense of the ringgit, and the currency sinks to a 38-month low. |
| August 14 | Indonesia also gives up its defense of the rupiah. The currency sinks 20%. |
| August 15-21 | Hong Kong rates soar to above 9% causing property share prices to crash. |
| August 1997 | The Malaysian government, in an attempt to discourage short selling, restricts trading in all 100 stocks that comprise the Kuala Lumpur Composite. PM Mohammed blames the crisis on George Soros, calling him a moron. |
| August 1997 | The IMF approves another $3.9 billion credit facility for Thailand, bringing total commitments to $16.7 billion. |
| September 1997 | Korean automaker, the KIA Group, halts debt payments putting in jeopardy $10 billion worth of loans. KIA requests the courts to mediate in order to seek protection from creditors. Meanwhile, in Indonesia, authorities decide to halt projects totaling R39 trillion in order to stem the budget shortfall. |
| October 1997 | Hong Kong Chief Executive Tung Chee-hwa promises to keep the Hong Kong dollar pegged to the US dollar. Moody's cuts Thailand's sovereign credit rating for the third time in 1997. Malaysian PM Mohammed imposes a total ban on F/X trading. The ringgit falls 4%. |
| October 31 | The IMF extends Indonesia a $23 billion support package. |
| November 1997 | The Korean won comes under increasing pressure as the Japanese yen weakens vis-à-vis the US dollar. Korean equities slide and international reserves dwindle. |
| November 17 | Korea halts intervention in the currency market, sending the won through the psychological threshold of W1,000/US$. |
| December 1997 | As regional currencies are pushed to recent lows against the US dollar, a record IMF-led bailout package of $57 billion for Korea is announced. This stems the tide temporarily but currencies soon resume a downward spiral. Usable reserves in Korea have reportedly dwindled to $6 billion. Three Asian countries see their sovereign debt rating fall to junk status. Liquidity in the markets remains thin. |
| December 26 | The Korean won rallies from W1,836 to W1,400 as the first installment of a $60 billion multilateral credit facility is distributed. The worst is considered to be over. |
| November 1994 | Mexico makes final preparations for presidential elections. International reserves presumably stand at $17 billion but the growing current account deficit looms. |
| December 1 | Ernesto Zedillo Ponce de Leon is sworn in as Mexico's new president. Reserves are reported at $14 billion. |
| December 9 | Mexican Finance Minister Jaime Serra Puche publicly announces that the Mexican currency will not be devalued amid growing concern of the current account deficit. |
| December 19 | Finance Minister Serra informs President Zedillo that jittery Mexicans are moving money out of the country at an increasingly alarming rate. Capital flight is characterized by "hot money". In fact, Mexico sees more than $1 billion leave the country in a single day. International reserves are significantly below earlier estimates, now at only $6.5 billion. The bolsa plummets. |
| December 20 | Mexican authorities unexpectedly widen the peso trading band to 15%. The peso drops immediately. Renewed uprisings in Chiapas are blamed. |
| December 21 | All limits on the peso are removed, effectively "free floating" the currency. The peso loses over 40% from pre-devaluation levels. |
| December 24 | The markets begin to focus on $58 billion in interest payments coming due in 1995, of which $20 billion will come due in the first 3 months. |
| December 29 | Finance Minister Jaime Serra Puche submits his resignation. Guillermo Ortiz will replace Serra. The bolsa and peso recover on confirmation that the US will package together a rescue fund. |
| January 3 | President Zedillo announces on national television his acceptance of the $18 billion international rescue package, funded largely by the US. The markets are unconvinced that this will be enough. The peso continues to stumble despite higher short-term rates. |
| January 30 | President Clinton confirms a global financial support package totaling $48 billion despite the lack of consensus in Congress. The final package will be closer to $53 billion. The markets react favorably. |
| March 1995 | After a month of respite, new worries mount throughout Latin America. The Mexican peso resumes its fall. Concerns over the banking sector as well the currency peg in Argentina grow. Argentine Finance Minister Domingo Cavallo insists that Argentina's peso will not be devalued. |
| March 1995 | Confidence in the region is slowly restored as banking reforms are announced and global market conditions improve. |
| October 3, 1990 | Germany is reunified. Although the German Government resists raising interest rates, the resulting debt burden is so large that an upward movement in interest rates becomes highly likely. |
| September 1990 | The UK joins the Exchange Rate Mechanism (ERM). The driving motivation for the UK's participation is the attractiveness of low interest rates. The low cost of financing is an integral component to stimulate Britain's sluggish economic growth. |
| February 1992 | The Maastricht Treaty is signed, but remains to be ratified. This document sets forth the timetable and conditions for the 12 member nations to converge to a single currency. Unfortunately, Europe's economic activity is far from converging. The UK and several other European states are faced with a deep economic slowdown. Germany, on the other hand, trying to stem inflationary pressures due to a relaxed monetary policy to facilitate reunification, has inched up rates recently. Friction begins to mount. |
| June 2 | The Danes reject the Treaty and tension rises. The French also decide to hold a referendum, scheduled for late September. |
| July 1992 | The Bundesbank raises the discount rate to 8.75%. The French clamor of a possible "no" vote. |
| August 1992 | Sweden decides to enter the European Community. To do so, lending rates are hiked 300bps to 16%. |
| September 1992 | With reserves almost depleted after trying to defend its currency, Finland opts to let the markka float. The currency depreciates 12%. Sweden, a rival exporter, is next targeted. Swedish authorities raise short-term, to 75% on one day, to defend the krona. The Italian lira and British pound are next in line. |
| September 13 | After failing to support the lira, the lira drops by 7% and the Bundesbank announces it will cut the Lombard rate. However, rates are eased less than expected. |
| September 16 | Even after raising interest rates to overnight rate to 12% from 10%, the pound succumbs to selling pressure. The UK and Italy are forced from the ERM. |
| September 19-20 | Group of Seven discussions end with no meaningful resolution on German interest rates. The British make it clear that they will not re-enter the ERM unless the Germans moderate their stance. Meanwhile, the French narrowly agree to the Maastricht Treaty. A single European currency is announced until 1999. |
| May 1990 | Saddam Hussein labels overproduction of oil by Kuwait and the United Arab Emirates as economic warfare against Iraq. |
| July 15-17 | Iraq accuses Kuwait of stealing oil from the Rumaylah oil field on the Kuwaiti-Iraqi border and warns of military reciprocity. |
| August 2 | Iraqi troops invade Kuwait and seize Kuwaiti oil fields. |
| August 9 | US authorities react quickly, sending troops to Saudi Arabia. The UN declares the Iraqi annexation of Kuwait null and void. |
| August 12 | International forces instigate a naval blockade of Iraq. All shipments of Iraqi oil are halted. |
| September 1 | Airfares predicted to rise as much as 30% due to higher fuel prices as a result of the Gulf War. |
| | The UN sets January 15, 1991 as the deadline for an Iraqi withdrawal from Kuwait. Hussein adamantly rejects all UN resolutions. |
| January 9 | Negotiations between US Secretary of State James Baker and Iraqi Foreign Minister Aziz end in stalemate. |
| January 12 | Congress grants President Bush authority to wage war upon Iraq. |
| January 17 | Operation Desert Storm begins. |
| January 24 | Allied ground campaign begins. |
| January 25 | Iraq begins an environmental war, pumping millions of gallons of crude oil into the Gulf. |
| February 26 | A month's worth of bombings batter Hussein's resolve. Hussein announces Iraq's withdrawal from Kuwait. The Iraqi exodus from Kuwait City results in the Highway of Death. |
| February 27 | Coalition forces enter Kuwait City. President Bush declares Kuwait liberated. |
| February 1987 | The Securities and Exchange Commission (SEC) announces that it is significantly expanding its initial investigation of Ivan Boesky and Drexel Burnham Lambert. |
| February 13 | Prominent investment banker Martin Siegel pleads guilty to a number of tax and securities charges. Siegel pays $9 million in fines and faces up to 10 years in prison. |
| April 27 | The SEC investigation into the practices of Drexel Burnham Lambert now focuses on the West Coast operations of Michael Milken. |
| April 29 | Both the US dollar and Treasuries plummet after the House of Representatives passes an amendment that will attempt to reduce the trade surpluses of many Asian nations. The markets fear that this move will prompt Asian investors to reduce their exposure to US investments. |
| October 16 | Iranian missiles hit a US-flagged tanker off the coast of Kuwait. The yield on the 30-year bond increases to 10.12%, a return on par with average historical returns in the stock market. Treasury Secretary James Baker expresses his concern about the recent dramatic increase in volatility of the stock market. |
| October 17-18 | Nervous investors fret all weekend over deteriorating economic conditions and increasing tensions in the Middle East. With long-term bond yields almost on par with long-term returns in the stock market, stocks look increasingly unattractive. |
| October 19 | At first light, two US warships shell an Iranian oil platform in the Persian Gulf. This is the last straw. The Dow Jones Industrial Average plunges an unprecedented 508 points, wiping 22.6% off the value of the stock market - the worst one-day decline since the start of World War I. On the trading floor, chaos reigns as many traders are flooded with sell orders. Many simply give up trying to sell. Program selling exacerbates depressed conditions. The volume of shares traded hits 604 million, almost twice the prior record of 339 million. |
| October 19 | The Fed injects $2.2 billion of liquidity through open market operations by November 4. Fed Chairman Alan Greenspan reassures the public that the Fed will continue to be a source of liquidity. Fed fund rates are driven down 179bps by month's end. |
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