Moral of the story

Weekenders…
A lot of activity over the weekend amongst financial commentators as they all look forward to 2010 and another year of fun and games (and stress) across markets and the broader economic field, grappling with further discussions of unfettered capitalism versus government control, risk-taking traders versus neutered (ouch) bankers and even a good amount of reflection on whether the very banks that tax-payers helped bail-out should be allowed to release the shackles of compensation caps by paying some of the government money back. After Bank of America last week, Citi today attempting to win approval to repay a (small) amount ($20bn) of the money received during those dark days of the crisis - not looking too likely. A rather more liberated organisation in Kuwait (KIA) went ahead and sold its entire holding in Citi for a 37% return after just two years, netting almost $1.1bn in profits. Nice.

The fight to flee imposed pay caps continues. The story will consistently gain momentum as the public backlash increases. The timing (strangely coincidental) is centred around the financial industry’s traditional bonus period, and many out there are aggrieved at the speed with which bankers want to pay themselves bumper pay packages so soon after their near demise, and too soon when the lack of mortgage-lending and other forms of liquidity that should be finding its way to the average consumer rather than simply going through the banks’ trading department into treasuries are considered.

Saudi’s morals…
Bubbling under the surface over the weekend was another possible Middle East-originated-spat, involving Saudi this time - even as we recover from the over-reaction to Dubai’s corporate default (seems some of the international banks will end up owning a chunk of Dubai equivalent in size to Manhattan – might take a while before you can get a good slice of pizza like on Park and 32nd there though). In what may escalate into quite a row if the lovely British press have their way, Saudi’s apparent decision to favor local institutions over international lenders in the Saed Al Manea and Al Gosaibi financial bankruptcy/dispute/family disagreement has apparently angered those international bankers who are demanding they ought to be treated fairly and equally as debt holders, and (wait for it) as stipulated by “moral codes”.

Ok, hold on, hold on. Bankers are upset that the money they “invested” in other international entities under the domain of semi-dictatorial and tribal governments might not be fairly repaid? At the risk of sounding incendiary, are they really surprised that the Saudis might want to favour Saudi institutions? Honestly, with all the trouble bankers are in throughout the western world, the attempt to argue on “moral” grounds I fear may end with tears and a lack of sympathy from the growingly unforgiving consumer base. Whether the Saudi banks do or do not re-pay “fairly” the Brits (or anyone else for that matter) thinking they might be able to strong-arm the oil-controlling Saudis may have to rethink their strategy. Somehow it does not seem too likely the Saudi royal family will lose sleep over a few international banks shying away from facilitating less than 0.5% of their own domestic earmarked spend – should be fun to read all the nonsense the international press (hungry after tasting the joy of Dubai’s bloodletting) will conjure up in nationalistic reaction.

Snoozing along…
As global leaders gather in Copenhagen for the climate change summit (don’t hold your C02 filled breaths for anything more than even more hot air unfortunately), global markets are at best plodding along at a leisurely pace with marked falls in volumes. Asia was mixed with China putting in a gutsy performance (CSI300 + 90bps) and even Japan managing to close higher (NKY +1.45%) despite falls in HK (-77bps), India (-89bps) and slight gain in Singapore only (+21bps). Europe has opened the week in a negative mood, falling about -60bps across the majors, despite the (apparently) excellent jobless figures out of the US last week. US itself looks set to kick the week off lower as well, with futures there trading down 30pts on the DJIA. Gold has pulled back a little ($1,146/oz) and the Saudi’s are in a strong negotiating position with Oil still above $75/brl.

Could be many a money-manger/trader has started to snooze along to Christmas and the New Year period – as if an excuse were needed after the exhausting 11months - and first few days of Dubai December. Traders and fund managers alike are thanking their lucky stars for whatever positive returns (no thanks again to Dubai’s best efforts) are inked into their spreadsheets, with many not willing to risk a change to a decent number in unpredictable markets.

Train games…
Along with the anecdotal observation that there were many more than the usual collection of Abu Dhabi registered cars driving around the busy streets of Dubai during the Eid holidays – presumable touring their conquered lands and cherry picking the best properties to “buy” (is it still “buying” when going for 1cent on the $?), a number of discounts have already begun appearing across the still functioning city – even lower prices have been reported for essential breakfast items in the DIFC – a strong sign of a new lower-pricing strategy. We’re all still waiting for “rip-off-drinks” Zuma to join in though.

Finally, what better way to start the week than taking inspiration from a creative bout of entrepreneurial activity from our friends in Japan - content to advertise certain rooms in their hotels as having a great “rail side view”. Apparently there are enough train crazy Japanese visitors to such hotels to warrant a special premium for these “guaranteed track view” sought-after rooms. Maybe some of the hoteliers here in Dubai should take note and start making the most of their Dubai Metro facing facilities – considering the track goes right along in front of nearly every hotel along the main road, and the trains themselves were designed in Japan, Dubai’s normally slick marketing machine may have missed a Far-East-trick.