Trailer-Park Deserts - 1st May

Trailer-park deserts…never!
*With so much of the world either in or about to enter a brief yet much needed Labour-day holiday period (really nothing more than a long-weekend across Europe and US, slightly longer for those living in Asia) it’s interesting to reflect on the choices offered for the purpose of the all-important job of winding-down – with very little money seemingly available in personal coffers these days and a prevailing sense of saving every penny “just-in-case”, it doesn’t seem right anymore to book one’s family into an expensive and luxurious resort for some pampering. Not only that, but with pig-flu flying around the urge to jump on a plane and explore abroad has suddenly dissipated. Why travel to a place where you will encounter infuriating communication problems by virtue of not understanding the language, and where disappointment will invariably arise from the level of service received for the price paid. Travel now also poses a possible threat to your future well-being thanks to the swines!

So what choice does one have? Well, there’s a reason the entertainment industry that provides endless hours of fun on DVD and other forms of media are flourishing – many are choosing to sit at home. What if you’ve been sitting at home for the last few months though? Many have resorted to doing something they normally would have considered beneath themselves – discovering their own backyard and travelling around the very country they reside in. In the US, cross-country holidays are the norm, but in recent months record-sales of caravans and other multi-purpose vehicles have been recorded across Europe and Asia. That is all well and good, but it doesn’t really work for the Middle East I’m afraid. Any self-respecting local family (or many ex-pat families for that matter) would rather be declared bankrupt than caught driving their family around in a big-camper. On top, the joy of driving from terrain to terrain as one might expect in Europe as you move from the flowing fields of rural France to the mountainous magnificence of Switzerland, or the ease with which borders can be crossed with multi-nation agreements, doesn’t translate so well in the GCC. Moving from one vast sand dune landscape to another, wait, yes another sand dune landscape, is really not that thrilling – trust me. Ever (I doubt it very much) wanted to drive from Dubai to Doha? Well – you can’t. Saudi has taken care of that. You have to pass Saudi controlled land once leaving the UAE before you can then enter Qatar. Difficult enough when you are alone in a car, I can’t expect much more luck when the border-crossing guards spot you driving up in your family-camper singing road-trip songs.

Could this be the reason GCC states are experiencing a strong recent period of credit-crunch resilience? Even with all of Dubai’s property woes and endless discussions in the international press about just how deep the crisis has destroyed the joie-de-vivre and lavish lifestyles many strived for, a distinct desire to continue enjoying life-to-its-fullest has once more taken hold. As with many crisis-hit cities, the initial two/three month aftermath was quite dire. Anyone visiting the GCC will definitely have noticed just how hard the proverbial had hit the fan in Dubai and spread across the entire region back in December. It seemed depression was all around. Of course, the press and silly media reports focusing on nothing but the negatives did not help matters, but the truth was plain for all to see as many packed-up and left either out of choice or unfortunate necessity. Without wanting to re-hash those darkest of times, it was certainly a heavy-period.

Group therapy…
In what will prove to be a great study of human-socio-psychology in later years, Dubai in particular has expressed a most bizarre reaction to the darkest days of the crisis. Despite prices not having adjusted yet (yes, you Zuma) in many parts of the economy outside of property, there was a sudden and almost herd-like acceptance of the situation many had found themselves in, and then an almost telepathic agreement to get out and frequent restaurants, clubs and bars. Call it denial, call it simply not giving-in or even the best expression of human optimism, but the buzz of life returned to Dubai in one fell swoop (funnily enough it was around the same time UAE’s Central Bank, aka Abu Dhabi, came in to support a $10bn Dubai bond issue). Now, this has happened to many other cities as well in past weeks, as seen in recent reporting from London for example, and will continue as the overriding emotion to enjoy oneself takes hold, but it is the magnified manner in which Dubai expressed such a sudden seismic shift in attitudes that is notable.

One weekend, parts of the city were apparent ghost-towns. Literally a week later, you were unable to reserve a table or step into an establishment without having to plead with the host to allow you to squeeze in – it was as if a mass text-message had been sent out by UAE authorities ordering all residents to get-out and have fun. In such a small city with such limited areas to choose from, it was a real eye-opener to just how easily influenced individuals can be when played into groups. The traditional “I don’t’ want to be left out” insecurity of many that reside in cities like Dubai certainly had a part to play, but it is more simply that attitudes had adjusted and there is certainly a new appreciation for value-for-money. Whilst many bars and clubs are indeed full to the brim, any cursory conversations with management will reveal a marked decrease in volume of trade – people are ordering less, and hence paying less. So whilst on the surface of things it looks as though cities like Dubai and others have returned to form, the only thing that has really returned is the undeniable need for people to take pleasure in life.

Markets – hit upwards but not out of the ball-park
This human toughness has certainly had its repercussion on the markets. It’s actually been a big week for markets – as we saw yesterday, all the majors were strong across the globe. The problem is that the US opened higher by 1.5% only to shed all of the gains over the course of the trading day and even ended off -0.22% at the close. The reason? Many actually…from a realisation that the recent markets moves were extremely welcome but still nothing more than a much needed re-allocation of vast piles of cash that money-managers had been sitting on for too long.
At some point, the people trusting you to invest their hard-earned savings will start questioning why they continue to pay 2% annual management charges for apparently little more than maintaining the fund’s plush offices.

*Much of Asia is closed for the traditional May holiday today– Tokyo is going into its holiday period next week but traded today along with Australasia and Indonesia (all slightly up). There was also confirmation that in Japan that SMFG will buy all of Citigroup’s Japanese brokerage businesses for $5.5bn – should help Citi shore up its capital base ahead of the stress-test results the Treasury will be releasing early next week.
*On the stress-tests, seems the Treasury has realised what a mess of the entire process they have made that rather than releasing nothing more than a summary of the results they will provide a full detailed analysis for all to see.

*All of Europe is shut except the UK (poor things – but they get Monday off) where the FTSE has traded quite flat ahead of the US open – where futures are currently indicating a decent opening: DJIA +27pts and S&P 3.6pts.
*Gold and oil have both slightly slipped today, but crude is still above the all-important $50/brl. We’ve seen a close return to USD/Yen of 100 which is a good sign for future moves in Japan’s industry-exporting dominated markets and possibly a future indicator for trade.