As the world’s romantics (and suckers for commercialised holidays) return to their desks content their feelings have been adequately expressed and requited for another year, a busy week awaits ahead: Afghanistan is embroiled in yet another “surge” by coalition forces as they run amok the mountains of a land that refuses to give in to any intruding force, Iran declares itself a veritable “nuclear force” alongside increased calls for pre-emptive strikes from either US or Israeli forces (same thing no?), Hilary Clinton tours some of the world’s largest oil (Saudi) and gas (Qatar) producers in the Gulf region presumably ensuring undisturbed supplies of their most precious exports in events related to the preceding sentence and economic figures suggest Japan’s economy is not quite ready to relinquish its position as the world’s second largest economy to China just yet (despite Toyota’s woes), at the same time as our ever-market-savvy friends here in Dubai briefly stun investors with rumours of a 7yr haircut-debt-deal – since denied but doing nothing to assuage tired/cynical/fed-up investors devoid of patience.
With the Chinese New Year taking us into the Year of the Tiger, most major markets across Asia are shut for the extended celebrations, leaving Japan to fall moderately (Nikkei -0.78%) and little to steer investors on this Monday morning through the usual barrage of upcoming economic indicators: including (from the US) Fed meeting minutes on Wednesday and much-focused on inflation figures via PPI (+0.8% cons) on Thursday, as well as the much-anticipated details of a European (basically German) deal to “facilitate” Greece’s problems – maybe Greece could rein in some of the huge spending they seem to love on advertising their bountiful tourist attractions across almost every major new network every fifteen minutes – seems a strange juxtaposition sandwiched between commentaries on sovereign meltdowns and irresponsible public spending – a lesson Dubai never learnt when deciding to “open” a (since closed) record-breaking-tower in the midst of its own debt issues. It’s quite tough out there for any sovereign spending huge amounts of money whilst simultaneously running out of cash and in the unlucky position of possessing neither a globally used currency nor a globally feared military – well played Uncle Sam.
What about moves in commodities given heightened anxiety across the Gulf region? History would dictate that a short-term spike in the price of oil (currently trading slightly lower today in fact just below $74/brl) will occur the moment aggressive rhetoric inevitably turns into action leading to pain and disgust across motorists at fuel pumps from Berlin through London to Texas (hybrids still not too high on the agenda for the nature-lovers there - a Prius just doesn’t have enough room for all those essential rifles). Oil has in fact hovered around $75/brl since falling at the end of Jan, almost sitting around waiting for something interesting (dangerous also) to happen, or already fully-pricing in any supply disruptions. In conjunction with a renewed desire to hold US$s (Cable 1.56, Euro/US$ 1.36) and a slight return of risk-aversion, a semblance to markets this time last year currently exists. Optimists out there will welcome this as long as a strong period of rising performance prevails somewhere around March…and if not…well..that’s the fun of markets. European bourses are putting in a good performance at the start of the week, the FTSE, DAX and CAC40 all rising more than 70bps as pressure relieves amongst investors preoccupied by Greek, Spanish and Portuguese jitters. US futures are pointing to a less than inspiring open – DJIA -21pts, S&P -2.2pts.
With the geo-political scene immersed in what is looking like the beginning-of-the-end-game vis-à-vis the Iranian nuclear issue (Hillary’s trip as documented above a slight give-away) the Carnivale celebrating Brazilians have been more distracted by the furore created over the choice of a 7-yr old girl to lead the traditional parade in Rio de Janeiro. Disputes over whether a sexually-tinged role should be represented by such a young-girl dominated media there for days on end and spilled over into debates on even Fox News, where some dim-witted conservative said “nothing like this would ever happen in the US!” Really?? What about the 5yr-old dolled-up “junior beauty queens” you endlessly parade around middle-America huh? Anyway, at the crucial moment of her role it seems she broke down in tears when overcome by the pressure of leading the parade. The reason for her succumbing to the intense scrutiny at that precise moment in time a mystery to her father and many that knew her as they were confident in her ability to handle the situation. Commentators were equally saddened but then focused on the crowds filled with celebrities that had attended the festivities and spotted Madonna sitting in the stands – that poor 7-yr old girl must have thought she had come to save her and adopt her to a better home in the US and cried out of fear!
Best Rgds,
Hani
Monday, 15 February 2010
Friday, 12 February 2010
Convenient Support
Apologies for the lack of consistent market commentary in the last couple of weeks but travel itineraries have proved slightly hectic with many visiting delegations travelling-the-well-trodden-path through the Middle East - the weather around the Gulf is lovely this time of year, making for an attractive destination for a number of visiting professionals on supposedly “official business”.
As Europe plans to save Greece (and itself), Bernanke prepares markets for an end to the spending-spree at the same time as China’s figures express another surge in bank lending, Iran demonstrates against (or celebrates, depending on which news channel you are watching) to mark the Islamic (31st anniversary) revolution. The world watches in anticipation of another attempt by the disenfranchised Iranian youth to rock the ruling authority’s (increasingly isolated) boat as recent sabre-rattling has peaked (even animals have been catapulted into space!) amid worrying signs of persistent internal friction. The authorities have apparently learnt from perceived mistakes though, as tighter internet controls and preventive measures are imposed to curtail past widespread use of technology to convey opposition to the incumbent powers. Who has ended up getting the sharp-end of the stick again after a recent bad experience in China? – yep, that apparently-oh-so-evil expression of Western hegemony – Google! Might help avoid further problems for the internet-leader if Google moved its headquarters to somewhere a little less controversial – like North Korea maybe.
Car-trouble…
Bad news for another company persists and damages Japan’s once-glowing reputation as blood-thirsty Western (read: Fox news) media pounce again and again on every piece of PR damaging Toyota woes, delivering mighty blows to once-stuff-of-legendary-quality Toyota processes - tarnishing the world’s largest car-company. Toyota seemingly forgot to check the blind-spot when changing lanes, causing a collision of immensely significant negative repercussion. Tales of deaths caused by faulty/shoddy manufacturing striking deep into the proud mindset of corporate Japan. Disaster mitigation will dictate a difficult time ahead for the company in the short-term, as recalls and safety-aware buyers pick other manufacturers. Amazing how things can change. Even implying that a Toyota was not of immaculate construction just a year ago was akin to denouncing a Big Mac as “tasteless”. Then again, McDonald’s suffered its own moment of near-path-to-destruction a few years back amidst a health-driven dramatic fall in sales, so it seems the mightiest do indeed fall the hardest. Hopes are that Japan’s well-documented and less than swift to address-internal-issues culture does not get in the way of Toyota re-accelerating away from a potentially destructive stall.
Where’s the return?
As discussed in January, these markets are providing a slight case of indigestion for those expecting much simpler-softer times after the incredible events of 2009. Without exception, every major developed market is posting a disappointingly negative YTD return (avg -5%), with the normally smile-inducing emerging markets adding to the losing team performance (Chile the only star in all Latin America etching out +4.7%). Where have things gone wrong? They haven’t really. This was expected after the fatigue inducing non-stop rally of 2009. The dips are the best times to get back in. Risk appetite has waned, expressed by the rise of the US$ (Cable 1.56, Eur/USD 1.37) as Gold ($1,078/oz and Oil ($75/brl) have both stabilised as investors remain unsure how the rest of the year’s “recovery” will pan-out. Emotional responses to uncertainty across global market recovery and a general lack of consensus prevailing at present. Sticky and frankly difficult markets are most likely to continue until the next major positive catalyst that will again express itself in the form of a rebound in employment. Until then, these markets remain the domain of day traders and ulcer-immune investors.
Paying-for-it…
On a sadder note, read that the affable (if you like partying) US congressman Charlie Wilson passed away yesterday. His life was chronicled in a recent Hollywood movie, describing his prime role in financing the covert war in Afghanistan in the 1980s to repel Soviet forces through funding of the well(US)-armed Mujahideen (modern day Taliban). So much could be written about how the US often repeats its mistakes in backing a certain group of people when in their interests to do so, only to then ignore their basic demands and requirements when no longer ‘strategically” important to them. With the latest set of events in Iran and undoubtedly an underlying level of support against the incumbent powers from US and Western influences, mistakes being learnt from lessons past is high on the agenda again.
Best Rgds,
Hani
As Europe plans to save Greece (and itself), Bernanke prepares markets for an end to the spending-spree at the same time as China’s figures express another surge in bank lending, Iran demonstrates against (or celebrates, depending on which news channel you are watching) to mark the Islamic (31st anniversary) revolution. The world watches in anticipation of another attempt by the disenfranchised Iranian youth to rock the ruling authority’s (increasingly isolated) boat as recent sabre-rattling has peaked (even animals have been catapulted into space!) amid worrying signs of persistent internal friction. The authorities have apparently learnt from perceived mistakes though, as tighter internet controls and preventive measures are imposed to curtail past widespread use of technology to convey opposition to the incumbent powers. Who has ended up getting the sharp-end of the stick again after a recent bad experience in China? – yep, that apparently-oh-so-evil expression of Western hegemony – Google! Might help avoid further problems for the internet-leader if Google moved its headquarters to somewhere a little less controversial – like North Korea maybe.
Car-trouble…
Bad news for another company persists and damages Japan’s once-glowing reputation as blood-thirsty Western (read: Fox news) media pounce again and again on every piece of PR damaging Toyota woes, delivering mighty blows to once-stuff-of-legendary-quality Toyota processes - tarnishing the world’s largest car-company. Toyota seemingly forgot to check the blind-spot when changing lanes, causing a collision of immensely significant negative repercussion. Tales of deaths caused by faulty/shoddy manufacturing striking deep into the proud mindset of corporate Japan. Disaster mitigation will dictate a difficult time ahead for the company in the short-term, as recalls and safety-aware buyers pick other manufacturers. Amazing how things can change. Even implying that a Toyota was not of immaculate construction just a year ago was akin to denouncing a Big Mac as “tasteless”. Then again, McDonald’s suffered its own moment of near-path-to-destruction a few years back amidst a health-driven dramatic fall in sales, so it seems the mightiest do indeed fall the hardest. Hopes are that Japan’s well-documented and less than swift to address-internal-issues culture does not get in the way of Toyota re-accelerating away from a potentially destructive stall.
Where’s the return?
As discussed in January, these markets are providing a slight case of indigestion for those expecting much simpler-softer times after the incredible events of 2009. Without exception, every major developed market is posting a disappointingly negative YTD return (avg -5%), with the normally smile-inducing emerging markets adding to the losing team performance (Chile the only star in all Latin America etching out +4.7%). Where have things gone wrong? They haven’t really. This was expected after the fatigue inducing non-stop rally of 2009. The dips are the best times to get back in. Risk appetite has waned, expressed by the rise of the US$ (Cable 1.56, Eur/USD 1.37) as Gold ($1,078/oz and Oil ($75/brl) have both stabilised as investors remain unsure how the rest of the year’s “recovery” will pan-out. Emotional responses to uncertainty across global market recovery and a general lack of consensus prevailing at present. Sticky and frankly difficult markets are most likely to continue until the next major positive catalyst that will again express itself in the form of a rebound in employment. Until then, these markets remain the domain of day traders and ulcer-immune investors.
Paying-for-it…
On a sadder note, read that the affable (if you like partying) US congressman Charlie Wilson passed away yesterday. His life was chronicled in a recent Hollywood movie, describing his prime role in financing the covert war in Afghanistan in the 1980s to repel Soviet forces through funding of the well(US)-armed Mujahideen (modern day Taliban). So much could be written about how the US often repeats its mistakes in backing a certain group of people when in their interests to do so, only to then ignore their basic demands and requirements when no longer ‘strategically” important to them. With the latest set of events in Iran and undoubtedly an underlying level of support against the incumbent powers from US and Western influences, mistakes being learnt from lessons past is high on the agenda again.
Best Rgds,
Hani
Tuesday, 2 February 2010
** Soft-Shell Crab Index 2.0 - Clawing Back ** Tuesday 2nd February
An entire month and no special focus on the UAE…well, let’s make up for lost time:
Still clawing
Ahhh Dubai Dubai – or “Doobie” as some fondly call it – what an action-packed-boom-to-bust-epic-infused-roller-coaster-ride you have provided us in the last twelve months. The thrills and spills, bluffs and calls, highs and (very) lows entwined with such generous helpings of underlying personal and business scores (read: vendettas) being settled, worthy of a high-budget-mini-series lavished with luxury-fittings.
The important opening and even more significant renaming of Burj Khalifa at the turn of the year proved a watershed for the much-derided and clearly walking-injured-once-shining state. Plenty of misguided, overly-aggressive and almost venomously vengeful criticism encircled the stricken-city’s gleaming towers during those dark-publicity days. Copious amounts were written, reported and spun (much of it inaccurate) and the sooner much of it is forgotten - as only fickle mass-crowd-memories can swiftly manage – the better and fairer.
What of the lingering issues though? No, I’m not talking about the mountain-of-debt that must still be addressed and the will-they-won’t-they rename the DIFC (Dubai International Financial Centre) alongside a fried-chicken-retail-outlet – that’s KFC for those of you that couldn’t figure it out – yep, Khalifa Financial Centre..catchy no?...we’re not talking about the reduction in traffic and sense of slowdown apparent across once-buzzing construction sites and hyper-driven-marketing offices, that’s all old news and this piece is not interested in senselessly badmouthing Dubai, it’s intended to facilitate its rehabilitation. Sometimes the path to redemption starts with some hurtful truths.
Like the much-touted Internet 2.0 revolution taking place, Dubai is re-inventing itself as any good city that experiences and survives a boom-and-bust scenario must. Dubai 2.0 is only at the very early stage of incarnation and the general look-and-feel of what the city will be/offer/do is still to be decided and clarified. What is certain is that the magnitude of events witnessed since the last time we investigated a snapshot of relative cost-of-living across the city would be expected to result in a rather forceful re-shaping of Dubai’s ethos. Well…has it?
Some of you will recall an analysis of the relative cost-of-living looked at almost exactly a year ago through the Soft-Shell-Crab-Index a (cruder and simpler of course) equivalent to the Economist’s "Big Mac Index" - where PPP (Purchasing Power Parity) is calculated in US$-terms to determine whether a particular currency is under/overvalued based on the price of a Big Mac at every McDonald's in every capital city in the world where one is sold. The soft-shell-crab-index is inspired by the ever-growing presence (welcome to the Nobu-Zuma fray Okku and Nozomi – you’ve had it easy till now!) of Asian “con-faux-fusion” eateries, all struggling to attract the rather limited crowd of affluent(ish) diners capable and willing to fork-out the necessary spend for a decent night out.
Let’s get straight to the claw of the issue – last year, through the index and at the height of the global economic crisis that felled great cities from Hong Kong across to New York and ushered in a new-era of lower prices, Dubai was found to confusingly buck-the-trend and out-price similar establishments by a full 25%. Yep, that’s Dubai 25% more expensive than its illustrious peers. That was with only two restaurants at the time serving the dish in an up-market environment. There are now at least five all serving rather similar fare, and although with an increase in supply you would assume a case for lower prices through economies-of-scale (lower import costs etc.) guess what the reality is? Yep, almost too obvious to keep you waiting….Dubai is still in fact almost 25% more expensive than the average cost of Tokyo, Singapore (a new entrant), Hong Kong, Mykonos (welcome also), London, Miami (fun defined), New York, Las Vegas (no people, it’s not like Dubai) and Los Angeles in current US$ terms*.
How can that be I hear you scream?! After everything that has happened in this vibrant and resilient city, where real-estate bubbles have burst with a bubble-gum like twang splattering the faces of many a happy-go-lucky punter (back to Blighty boyz), prices remain significantly higher across the soft-shell-crab-loving board than some of the most historically over-priced and wealth-attracting-centres of business and entertainment. Again, indirect taxes set-aside, especially for the (so)overpriced drinks capable of inducing a headache long before the hang-over has even had a chance to kick-in ($45 for a double-premium-vodka-on the-rocks, wo-awww-ww), the discrepancy is quite simply ridiculous and frankly indecent. That many do not own-up-to-the-fact is not an acceptance of the over-priced regime they face, rather a strange collusion-of-silence brought on by the unwillingness of many here to be the first to admit as much. Last year, it was questioned how much longer this would continue. Now the question must be why is it being allowed to continue?
A nasty case of the crabs aside, the often painful-on-the-wallet price discrepancy continues throughout the very fabric of so-called “cost-of-living” barometers. Without looking at mundane baskets such as milk and eggs etc, average lifestyles in Dubai consist of shopping and luxury items after all (that’s the image the city strives for is it not? Not of people going shopping for a carton-of-semi-skimmed and a farmer’s dozen, but of finely attired night-owls looking to taste the gold-lined edge of the high-life) - but even here the “tax-free” myth of the city does not pull-through into competitive prices. With the Dubai Shopping Festival in full-swing at the moment, shops across the vast (and impressive) Dubai Mall advertise 50% discounts and “bargain prices’. A cursory check of items found throughout other chain-outlets and department stores in London and New York provided a rather worrying trend – even at “sales” prices, eight out of ten “luxury” items came in a staggering 30% more expensive.
Come on, that’s just ridiculous you franchise owners out there. How can you ask Dubai residents (ex-pats at least, not the lucky locals born on a field of literally-liquid-gold-dreams – just jealous I hear you say?... damn right.aren’t you?!) to put up with prices intended to capture a captive-tourist market and shopping-demographic that never even see (nor have to care about) the mightier-than-black-charge-card bill at the end of the month. Even a well-practiced rip-off city, through many years of perfecting itself as a slick-tourist-trap destination - like Venice - understands the price differential game; restaurants there have separate menus for tourists and residents, with residents having to present an ID card for the honour of being handed the vastly better-value-for-money (70% lower) price lists. Now that’s smart and progressive. Take note Dubai.
So where do we go from here? Well it’s the same old message which I’m afraid simply is not translating fast enough into action. Although hotel prices have reportedly been slashed and bargain package holidays are touted throughout the internet to visiting sun-seeking hordes, the average Dubai dweller is still having to pay a ridiculous premium on the perceived right to enjoy oneself by eating and drinking well. Of course, Dubai is part of an Islamic state and alcohol is technically illegal etc., but a 100% premium on a Vodka-Martini (always ordered “very dirty”) when compared to one of the most expensive bars in notoriously-expensive Vegas (again, no real comparison) is really stretching the home-advantage a little too far.
Dubai has plenty going for itself, its success as the number one viable-choice for those wanting to live and work across the region absolutely secured and unlikely to be rivalled given the critical-mass it has achieved. What about being fair to those making that choice though? The only policy that will ensure economic success on top of destination-of-choice-awards will be an honest pricing policy where paying for quality eating/dining/shopping does not have to feel as if one is unwittingly partaking in a heavily burdensome debt-repayment plan.
Soft-Shell-Crabs can be battered, deep-fried, sautéed or sometimes grilled. For all the positive aspects of residing here, pricing policy can sometimes make living in Dubai feel like all four methods of preparation in one.
* All pricing information attained from enquiries carried-out between 1st and 2nd February by contacting (or checking online) each represented establishment where soft-shell-crab is known to be served in the listed cities. Variances in size and quality may of course exist but calculations are based on the limitations of the information provided. The above is personal market commentary
Best Rgds,
Hani
Still clawing
Ahhh Dubai Dubai – or “Doobie” as some fondly call it – what an action-packed-boom-to-bust-epic-infused-roller-coaster-ride you have provided us in the last twelve months. The thrills and spills, bluffs and calls, highs and (very) lows entwined with such generous helpings of underlying personal and business scores (read: vendettas) being settled, worthy of a high-budget-mini-series lavished with luxury-fittings.
The important opening and even more significant renaming of Burj Khalifa at the turn of the year proved a watershed for the much-derided and clearly walking-injured-once-shining state. Plenty of misguided, overly-aggressive and almost venomously vengeful criticism encircled the stricken-city’s gleaming towers during those dark-publicity days. Copious amounts were written, reported and spun (much of it inaccurate) and the sooner much of it is forgotten - as only fickle mass-crowd-memories can swiftly manage – the better and fairer.
What of the lingering issues though? No, I’m not talking about the mountain-of-debt that must still be addressed and the will-they-won’t-they rename the DIFC (Dubai International Financial Centre) alongside a fried-chicken-retail-outlet – that’s KFC for those of you that couldn’t figure it out – yep, Khalifa Financial Centre..catchy no?...we’re not talking about the reduction in traffic and sense of slowdown apparent across once-buzzing construction sites and hyper-driven-marketing offices, that’s all old news and this piece is not interested in senselessly badmouthing Dubai, it’s intended to facilitate its rehabilitation. Sometimes the path to redemption starts with some hurtful truths.
Like the much-touted Internet 2.0 revolution taking place, Dubai is re-inventing itself as any good city that experiences and survives a boom-and-bust scenario must. Dubai 2.0 is only at the very early stage of incarnation and the general look-and-feel of what the city will be/offer/do is still to be decided and clarified. What is certain is that the magnitude of events witnessed since the last time we investigated a snapshot of relative cost-of-living across the city would be expected to result in a rather forceful re-shaping of Dubai’s ethos. Well…has it?
Some of you will recall an analysis of the relative cost-of-living looked at almost exactly a year ago through the Soft-Shell-Crab-Index a (cruder and simpler of course) equivalent to the Economist’s "Big Mac Index" - where PPP (Purchasing Power Parity) is calculated in US$-terms to determine whether a particular currency is under/overvalued based on the price of a Big Mac at every McDonald's in every capital city in the world where one is sold. The soft-shell-crab-index is inspired by the ever-growing presence (welcome to the Nobu-Zuma fray Okku and Nozomi – you’ve had it easy till now!) of Asian “con-faux-fusion” eateries, all struggling to attract the rather limited crowd of affluent(ish) diners capable and willing to fork-out the necessary spend for a decent night out.
Let’s get straight to the claw of the issue – last year, through the index and at the height of the global economic crisis that felled great cities from Hong Kong across to New York and ushered in a new-era of lower prices, Dubai was found to confusingly buck-the-trend and out-price similar establishments by a full 25%. Yep, that’s Dubai 25% more expensive than its illustrious peers. That was with only two restaurants at the time serving the dish in an up-market environment. There are now at least five all serving rather similar fare, and although with an increase in supply you would assume a case for lower prices through economies-of-scale (lower import costs etc.) guess what the reality is? Yep, almost too obvious to keep you waiting….Dubai is still in fact almost 25% more expensive than the average cost of Tokyo, Singapore (a new entrant), Hong Kong, Mykonos (welcome also), London, Miami (fun defined), New York, Las Vegas (no people, it’s not like Dubai) and Los Angeles in current US$ terms*.
How can that be I hear you scream?! After everything that has happened in this vibrant and resilient city, where real-estate bubbles have burst with a bubble-gum like twang splattering the faces of many a happy-go-lucky punter (back to Blighty boyz), prices remain significantly higher across the soft-shell-crab-loving board than some of the most historically over-priced and wealth-attracting-centres of business and entertainment. Again, indirect taxes set-aside, especially for the (so)overpriced drinks capable of inducing a headache long before the hang-over has even had a chance to kick-in ($45 for a double-premium-vodka-on the-rocks, wo-awww-ww), the discrepancy is quite simply ridiculous and frankly indecent. That many do not own-up-to-the-fact is not an acceptance of the over-priced regime they face, rather a strange collusion-of-silence brought on by the unwillingness of many here to be the first to admit as much. Last year, it was questioned how much longer this would continue. Now the question must be why is it being allowed to continue?
A nasty case of the crabs aside, the often painful-on-the-wallet price discrepancy continues throughout the very fabric of so-called “cost-of-living” barometers. Without looking at mundane baskets such as milk and eggs etc, average lifestyles in Dubai consist of shopping and luxury items after all (that’s the image the city strives for is it not? Not of people going shopping for a carton-of-semi-skimmed and a farmer’s dozen, but of finely attired night-owls looking to taste the gold-lined edge of the high-life) - but even here the “tax-free” myth of the city does not pull-through into competitive prices. With the Dubai Shopping Festival in full-swing at the moment, shops across the vast (and impressive) Dubai Mall advertise 50% discounts and “bargain prices’. A cursory check of items found throughout other chain-outlets and department stores in London and New York provided a rather worrying trend – even at “sales” prices, eight out of ten “luxury” items came in a staggering 30% more expensive.
Come on, that’s just ridiculous you franchise owners out there. How can you ask Dubai residents (ex-pats at least, not the lucky locals born on a field of literally-liquid-gold-dreams – just jealous I hear you say?... damn right.aren’t you?!) to put up with prices intended to capture a captive-tourist market and shopping-demographic that never even see (nor have to care about) the mightier-than-black-charge-card bill at the end of the month. Even a well-practiced rip-off city, through many years of perfecting itself as a slick-tourist-trap destination - like Venice - understands the price differential game; restaurants there have separate menus for tourists and residents, with residents having to present an ID card for the honour of being handed the vastly better-value-for-money (70% lower) price lists. Now that’s smart and progressive. Take note Dubai.
So where do we go from here? Well it’s the same old message which I’m afraid simply is not translating fast enough into action. Although hotel prices have reportedly been slashed and bargain package holidays are touted throughout the internet to visiting sun-seeking hordes, the average Dubai dweller is still having to pay a ridiculous premium on the perceived right to enjoy oneself by eating and drinking well. Of course, Dubai is part of an Islamic state and alcohol is technically illegal etc., but a 100% premium on a Vodka-Martini (always ordered “very dirty”) when compared to one of the most expensive bars in notoriously-expensive Vegas (again, no real comparison) is really stretching the home-advantage a little too far.
Dubai has plenty going for itself, its success as the number one viable-choice for those wanting to live and work across the region absolutely secured and unlikely to be rivalled given the critical-mass it has achieved. What about being fair to those making that choice though? The only policy that will ensure economic success on top of destination-of-choice-awards will be an honest pricing policy where paying for quality eating/dining/shopping does not have to feel as if one is unwittingly partaking in a heavily burdensome debt-repayment plan.
Soft-Shell-Crabs can be battered, deep-fried, sautéed or sometimes grilled. For all the positive aspects of residing here, pricing policy can sometimes make living in Dubai feel like all four methods of preparation in one.
* All pricing information attained from enquiries carried-out between 1st and 2nd February by contacting (or checking online) each represented establishment where soft-shell-crab is known to be served in the listed cities. Variances in size and quality may of course exist but calculations are based on the limitations of the information provided. The above is personal market commentary
Best Rgds,
Hani
Thursday, 28 January 2010
Mountains of jobs
Mountain top diplomacy…
A freezing-cold-and-isolated mountain top village may not sound like the ideal place for a gathering of the world’s business and political (too often too similar) leaders, as the Davos summit kicked off this week with an emphasis on the “road-to-recovery” – just the name pinned to the gathering is intended to evoke positive emotions amongst the uninvited (and warmer) public, eager to learn how the exalted ones will continue to spend..we mean “think” of course…their way out of the dangerous depths of economic recession and slowing growth. As the leaders lead, (denied) rumours of China averting a Greek tragedy increase – as strange as it first sounded when hitting the news-wires, China’s huge reserves ($2.4trn) would hardly notice the necessary out-flux of cash to end Greece’s embarrassing troubles and would serve as another expression of the much-touted shift in global influence to the East.
Toyota’s own red-face-inducing troubles have sadly amplified with a recent US recall spreading to vehicles delivered across Europe (1.1m are affected) – sharp falls in the company’s share price (-14% in 7 days) pointing to long-lasting damage to a once untouchably-lofty reputation. Seems Japan’s leading car-maker’s troubles are arriving exactly when most needed by struggling US firms – coincidentally, Ford and Chrysler have just launched suspiciously Japanese-like compact vehicles (for US car firms “compact” once meant less than 15ft-wide behemoths) not that there is any insinuation of corporate wrongdoing of course, that’s saved for the dispute between the French government and Renault, with Renault complaining they are being pressured to move production of eastern-European made vehicles back to France – no no, c’est pas vrai..the socialist-French-government would never interfere in corporate affairs now would they?
Which Job?
Jobs Jobs Jobs – not Steve Jobb’s new iPad, which does definitely look cool but can’t understand where it will fit (immediately at least) into the market between a phone and a laptop, not big enough to be a useful laptop (with no actual keyboard) but too big to fit into your pocket as a phone replacement – Obama’s jobs are in focus today. With US unemployment still hovering around 10%, in a typically eloquent and rallying State of the Union speech, where for a few moments - in front of the television cameras at least - US politicians did actually look united, a focus on continual job creation pandered to the masses - we’re talking the good old-fashioned hardened get-up-in the-morning and produce something useful to society during the day kinda job. Investment banking doesn’t really tick many of those boxes – in its modern super-destructive-super-derivatives-form at least.
Coupled with the (Volcker) proposed bank reforms, recently backed by George Soros but opposed by some (surprise surprise) bank heads, the White House administration is certainly trying its best to live up to the promise to relate to the very people that voted them in to power, rather than be influenced by even more powerful corporate lobbying groups and other “special interest” fund-raisers – a tough job to say the least and once that may unfortunately seal Obama’s fate as a one-term President. Despite declaring “the worst of the storm has passed” in reference to the economic crisis, one cannot help but feel the clouds above his head are only now gaining strength.
Over the jitters….
As all the above shapes its way into financial models and analyst forecasts, altering perceptions of possible future government measures, exit plans, re-entry plans and even planning plans, investors have been faced with a difficult month’s trading. We examined the emotional responses underlining investment decisions, suggesting these dips were offering good opportunities to increase positions in markets where recovery and market performance will combine for decent returns in what will surely be a tough 2010. So far today, Asia has put in a gutsy performance after a clearly difficult week, with China’s gentle push on the stimulus brake amplifying and affecting investor sentiment – today’s rise ends the worst falling streak for the MSCI Asia-Pac Index since 2004, Europe has picked-up on this positive turn and opened strong (+1.2% across the CAC40, FTSE and Dax right now), with US futures singing-along too – DJIA indicating +42pts and S&P 5.4pts. Gold and Oil have both hovered around levels reached earlier in the week ($1,092/oz, $74.3/brl respectively) as the USD oscillated and fell slightly in the last 24 hours (cable at 1.62) – some concerns US fiscal stimuli spending will continue to pressure the greenback
Warming up…
Investors are starting to recover from the sudden jitters that filtered through after the realisation that excessive amounts of lending will not continue forever, the return-to-earth slightly jarring for some but necessary. Now that the impulsive reaction has passed, long-term money-managers and the more strategically focused will once more set their sights on the general global recovery outlook, hoping that decent levels of GDP growth in many parts of the emerging world can continue to push the more developed markets through their restructuring (de-leveraging) periods.
Hopes will remain that those leaders “summiting” in Davos and shivering in the cold high-altitude winds will remain warm enough to make globally beneficial decisions. Nothing warms the hearts, hands and heads of a true-capitalist like the promise of mountains of cash.
A freezing-cold-and-isolated mountain top village may not sound like the ideal place for a gathering of the world’s business and political (too often too similar) leaders, as the Davos summit kicked off this week with an emphasis on the “road-to-recovery” – just the name pinned to the gathering is intended to evoke positive emotions amongst the uninvited (and warmer) public, eager to learn how the exalted ones will continue to spend..we mean “think” of course…their way out of the dangerous depths of economic recession and slowing growth. As the leaders lead, (denied) rumours of China averting a Greek tragedy increase – as strange as it first sounded when hitting the news-wires, China’s huge reserves ($2.4trn) would hardly notice the necessary out-flux of cash to end Greece’s embarrassing troubles and would serve as another expression of the much-touted shift in global influence to the East.
Toyota’s own red-face-inducing troubles have sadly amplified with a recent US recall spreading to vehicles delivered across Europe (1.1m are affected) – sharp falls in the company’s share price (-14% in 7 days) pointing to long-lasting damage to a once untouchably-lofty reputation. Seems Japan’s leading car-maker’s troubles are arriving exactly when most needed by struggling US firms – coincidentally, Ford and Chrysler have just launched suspiciously Japanese-like compact vehicles (for US car firms “compact” once meant less than 15ft-wide behemoths) not that there is any insinuation of corporate wrongdoing of course, that’s saved for the dispute between the French government and Renault, with Renault complaining they are being pressured to move production of eastern-European made vehicles back to France – no no, c’est pas vrai..the socialist-French-government would never interfere in corporate affairs now would they?
Which Job?
Jobs Jobs Jobs – not Steve Jobb’s new iPad, which does definitely look cool but can’t understand where it will fit (immediately at least) into the market between a phone and a laptop, not big enough to be a useful laptop (with no actual keyboard) but too big to fit into your pocket as a phone replacement – Obama’s jobs are in focus today. With US unemployment still hovering around 10%, in a typically eloquent and rallying State of the Union speech, where for a few moments - in front of the television cameras at least - US politicians did actually look united, a focus on continual job creation pandered to the masses - we’re talking the good old-fashioned hardened get-up-in the-morning and produce something useful to society during the day kinda job. Investment banking doesn’t really tick many of those boxes – in its modern super-destructive-super-derivatives-form at least.
Coupled with the (Volcker) proposed bank reforms, recently backed by George Soros but opposed by some (surprise surprise) bank heads, the White House administration is certainly trying its best to live up to the promise to relate to the very people that voted them in to power, rather than be influenced by even more powerful corporate lobbying groups and other “special interest” fund-raisers – a tough job to say the least and once that may unfortunately seal Obama’s fate as a one-term President. Despite declaring “the worst of the storm has passed” in reference to the economic crisis, one cannot help but feel the clouds above his head are only now gaining strength.
Over the jitters….
As all the above shapes its way into financial models and analyst forecasts, altering perceptions of possible future government measures, exit plans, re-entry plans and even planning plans, investors have been faced with a difficult month’s trading. We examined the emotional responses underlining investment decisions, suggesting these dips were offering good opportunities to increase positions in markets where recovery and market performance will combine for decent returns in what will surely be a tough 2010. So far today, Asia has put in a gutsy performance after a clearly difficult week, with China’s gentle push on the stimulus brake amplifying and affecting investor sentiment – today’s rise ends the worst falling streak for the MSCI Asia-Pac Index since 2004, Europe has picked-up on this positive turn and opened strong (+1.2% across the CAC40, FTSE and Dax right now), with US futures singing-along too – DJIA indicating +42pts and S&P 5.4pts. Gold and Oil have both hovered around levels reached earlier in the week ($1,092/oz, $74.3/brl respectively) as the USD oscillated and fell slightly in the last 24 hours (cable at 1.62) – some concerns US fiscal stimuli spending will continue to pressure the greenback
Warming up…
Investors are starting to recover from the sudden jitters that filtered through after the realisation that excessive amounts of lending will not continue forever, the return-to-earth slightly jarring for some but necessary. Now that the impulsive reaction has passed, long-term money-managers and the more strategically focused will once more set their sights on the general global recovery outlook, hoping that decent levels of GDP growth in many parts of the emerging world can continue to push the more developed markets through their restructuring (de-leveraging) periods.
Hopes will remain that those leaders “summiting” in Davos and shivering in the cold high-altitude winds will remain warm enough to make globally beneficial decisions. Nothing warms the hearts, hands and heads of a true-capitalist like the promise of mountains of cash.
Monday, 25 January 2010
Down…but not out
Ufffff….despite wishing there was a more positive opening tone to what is the last week (already) of the first month of the year – next thing you know we’ll be wishing one another a Happy Easter, having swiftly passed through the fake-but-commercially-viable mine field that is Valentine’s Day – there is not much to be jumping up and down about with joy. In fact, since the terrible Haiti disaster, unfortunate plane-crashes, shrinking bonuses (ok, certainly nowhere near as bad as the first two but still a little disturbing for some), set-backs for Obama losing that Massachusetts seat, the now well-documented desire to overhaul the “too-big-to-fail” system of banks – read: re-introducing Glass-Steagall – not to mention jitters cruising through the investor community as a slew of US earnings miss a few targets or at least fail to out-do expectations, markets and general attitudes to the strength of late 2009’s recovery have stuttered, shuddered and now slanted steadily south.
Losing steam…
Whereas some may be tempted to return to (negative and disheartening – so I hear) talk of bear markets, double-dips, hidden monsters-in-the-unemployment-closet, not to mention prolonged reliance on the investment community drug-of-choice otherwise known as “super-huge-amounts-of-liquidity”, recent falls which may well continue in the short-term do not necessarily signal the beginning-of-the-end. Sure, 2009 was a great year for equities…we all loved the great big green numbers on our screens after a rather aggressive yet welcome bear market bull-run that started in April and never-looked-back, but logic would indeed dictate that fast-paced momentum eventually loses steam.
That “hiss” of deflating market returns you heard at the end-of-last-week was the first release of built-up-anxious-vapour..a pause in the midst of an optimistic movement. With red on the screen for the last few days, and again today as Asia falls at least around 50bps across most markets, with China’s CSI even lower (-1.1%), Hong Kong shedding 62bps and recently well-performing but now back in negative YTD return land Japan falling 74bps on its Nikkei flagship, the very human desire to slow-things down when a watershed presents itself has made itself apparent. Apart from the obvious turn of the year divider, Obama’s (or we should be honest and say Volcker’s) bank-busting-plan provided more than enough reason to relieve pressure on the accelerator for a moment, or two, or three…
Can’t really blame such emotive responses over the weekend (prophesising huge market trouble ahead) when considering the S&P amongst other global markets have just experienced their worst performance in over 5 months. These market woes are being reflected in Obama’s Oval Office – serious creaks in his administration and a continuing resistance to his new wave of thinking. His short-lived “yes we can” period of hope replaced by such silly initiatives symptomatic of the less amiable elements of US politics; allowing unlimited payments to political parties from lobbyist groups for example. Worries about just how far the US really travelled down “the new path” growing with each day he loses more influence.
Not-so-blind-faith…
So what to do in the next few days and weeks faced with such volatile markets? Many would suggest you take caution along with the rest and sit back. They would be wrong. Instead, sit-up and think about what we are going through and it may become clear that now is actually a great time to buy into the dips for the medium-to-long-term. As mentioned above, we had a great run for most of 2009. Don’t forget that before the bulls took over, markets had continued their stomach-churning falls through till March, dropping almost 30% across the majors. Sentiment turned quickly then, and through the eye-of-the-storm of the “twilight zone” – where earnings forecasts are downgraded even as markets start to rise – great gains were made (+40% YoY for many major indices) by those that were first to respond and believe, before any proof was offered – faith in other words.
A modicum of faith is now required if the dips are to be bought into. We are not talking blind-faith though as history - as it so often does - points the way. After the rush comes the pause for rest. Once rested, the fitter are the first to speed-up again. It was seen in the 1930s (where there were several dips and surges), in the recessions of the 70s and 80s, and even after the tech-bust in 2001. Those that feel they missed out last-year should be the first to feel lucky to have the opportunity to get in for their turn in 2010. Those that did well in 2009 will likely exercise more caution but again – that’s only human. Those stocks and markets that brought (moderate) joy to investor spreadsheets over the last few months will make way for the laggards and the overlooked. Much of it is in the charts, and much of it is in the gut.
Intravenous
There are gains to be made across emerging markets (again) some forgotten developed markets (Japan) and some well-chosen firms listed in weak markets (the UK) but operating internationally and effectively in emerging markets (Cadbury, now Kraft, springs to mind).
Markets and the general economic environment will be tough for the rest of the year, notwithstanding that the investor community will face a difficult recovery process once their super-caffeinated-infused-directly-into-the-artery-liquidity-drink runs out of its juice.
Losing steam…
Whereas some may be tempted to return to (negative and disheartening – so I hear) talk of bear markets, double-dips, hidden monsters-in-the-unemployment-closet, not to mention prolonged reliance on the investment community drug-of-choice otherwise known as “super-huge-amounts-of-liquidity”, recent falls which may well continue in the short-term do not necessarily signal the beginning-of-the-end. Sure, 2009 was a great year for equities…we all loved the great big green numbers on our screens after a rather aggressive yet welcome bear market bull-run that started in April and never-looked-back, but logic would indeed dictate that fast-paced momentum eventually loses steam.
That “hiss” of deflating market returns you heard at the end-of-last-week was the first release of built-up-anxious-vapour..a pause in the midst of an optimistic movement. With red on the screen for the last few days, and again today as Asia falls at least around 50bps across most markets, with China’s CSI even lower (-1.1%), Hong Kong shedding 62bps and recently well-performing but now back in negative YTD return land Japan falling 74bps on its Nikkei flagship, the very human desire to slow-things down when a watershed presents itself has made itself apparent. Apart from the obvious turn of the year divider, Obama’s (or we should be honest and say Volcker’s) bank-busting-plan provided more than enough reason to relieve pressure on the accelerator for a moment, or two, or three…
Can’t really blame such emotive responses over the weekend (prophesising huge market trouble ahead) when considering the S&P amongst other global markets have just experienced their worst performance in over 5 months. These market woes are being reflected in Obama’s Oval Office – serious creaks in his administration and a continuing resistance to his new wave of thinking. His short-lived “yes we can” period of hope replaced by such silly initiatives symptomatic of the less amiable elements of US politics; allowing unlimited payments to political parties from lobbyist groups for example. Worries about just how far the US really travelled down “the new path” growing with each day he loses more influence.
Not-so-blind-faith…
So what to do in the next few days and weeks faced with such volatile markets? Many would suggest you take caution along with the rest and sit back. They would be wrong. Instead, sit-up and think about what we are going through and it may become clear that now is actually a great time to buy into the dips for the medium-to-long-term. As mentioned above, we had a great run for most of 2009. Don’t forget that before the bulls took over, markets had continued their stomach-churning falls through till March, dropping almost 30% across the majors. Sentiment turned quickly then, and through the eye-of-the-storm of the “twilight zone” – where earnings forecasts are downgraded even as markets start to rise – great gains were made (+40% YoY for many major indices) by those that were first to respond and believe, before any proof was offered – faith in other words.
A modicum of faith is now required if the dips are to be bought into. We are not talking blind-faith though as history - as it so often does - points the way. After the rush comes the pause for rest. Once rested, the fitter are the first to speed-up again. It was seen in the 1930s (where there were several dips and surges), in the recessions of the 70s and 80s, and even after the tech-bust in 2001. Those that feel they missed out last-year should be the first to feel lucky to have the opportunity to get in for their turn in 2010. Those that did well in 2009 will likely exercise more caution but again – that’s only human. Those stocks and markets that brought (moderate) joy to investor spreadsheets over the last few months will make way for the laggards and the overlooked. Much of it is in the charts, and much of it is in the gut.
Intravenous
There are gains to be made across emerging markets (again) some forgotten developed markets (Japan) and some well-chosen firms listed in weak markets (the UK) but operating internationally and effectively in emerging markets (Cadbury, now Kraft, springs to mind).
Markets and the general economic environment will be tough for the rest of the year, notwithstanding that the investor community will face a difficult recovery process once their super-caffeinated-infused-directly-into-the-artery-liquidity-drink runs out of its juice.
Wednesday, 20 January 2010
Excess CO2
Quicker than usual today as have been experiencing the joys of travelling around the GCC (when exactly did they say that train network will be ready?) and will be doing so again shortly.
Politics? – markets don’t care
As US markets have risen to another 15-month high overnight (Dow 10,725, S&P 1,150) despite further losses reported from Citi (nothing unexpected though), signs of inflation in a still badly-positioned UK economy and another rise towards $80/brl for crude – along with a sharply appreciating USD – bull market players are continuing to push those attempting to exercise more caution aside. Some bad news has hit our favourite halo-wearing US President as a traditionally Democratic seat in Massachusetts was lost to the Republicans which will cause some trouble for the make-or-break healthcare reforms the current White House administration has put so much (well-intentioned and well-needed) effort behind since last summer.
Markets have already reacted across some of those healthcare related names that may take advantage of a turn in reform sentiment but more worrying for Obama the fall-out from a possible reneging on one of his most important campaign promises – not the best time to be meeting with an upset President, as leaders of the financial industry must surely be worrying some aggression will find an outlet their way.
Elsewhere, rumours that China is increasing efforts to reign-back back lending and bring-about a serious slow-down in economic stimulus measures has jittered most investors across Asia, with some significant falls on the CSI300 this morning (-3.22%) spilling over into HK (Hang Seng -1.88%) and surely dampening any positive follow-through from that strong S&P showing last night (+1.25%), indeed Europe looks set to open slightly lower.
20 days into the New Year and still nothing to write about lothario-legend Silvio Berlusconi! Where is our prolific charmer? Must still be recovering from “corrective surgery” following his last moment of crowd interaction.
Plenty of it..but renew anyway…
Watching an extremely oil-rich nation spend so much time and energy (pun intended) on investigating and then rewarding the best alternative power-generating resources would strike many as a long-sighted necessity but a bit of a waste of time (and money) for at least the next 50 years – not for the leaders of Abu Dhabi though. The “Future Energy Summit” currently underway in the UAE’s capital city has attracted a great deal of attention from international energy firms intent on getting a foothold into Abu Dhabi’s much-touted Masdar City initiative – a city that is being built with the intent of being totally carbon-neutral and self-sustaining.
The irony of an oil-producing nation spearheading the world’s first eco-friendly city is of course not lost on anyone but the vision and effort should be applauded - whether or not you are one of the more cynical that does not believe in all the climate-change mumbo-jumbo anyway (remember those damning emails released shortly before the inconclusive Copenhagen summit).
Taking advantage of current access to wealth and a bit-of-a-wave in eco-friendly solutions is a smart move that will not only placate many negatively inclined to a “dirty-energy” exporting nation such as the UAE, but also bring about one of the region’s most needed and essential elements capable of producing a viable and sustainable economy – manufacturing. Whilst we have discussed this at length a few times, the position Saudi, Qatar and Abu Dhabi find themselves in today requires a strong manufacturing sector for both economic and political requirements.
As populations grow and wealth spreads (it spreads slowly, the rich in this part of the world do not really like to throw it around the masses) discontent threatens to increase as more find themselves out of work, dependent on the state and envious of those that do in fact control the nations’ resources (and supercars, and yachts and…). This may take some time of course, say another 50-75 years, but it is certainly smart to prevent a problem from occurring rather than trying to solve one once it has taken shape.
The Mastercard move…
By providing and creating the opportunity for global firms to set-up shop across the Middle East with more intensive purposes than simply distribution, manufacturing in all shapes and forms will create an outlet for a regional population growing in number through natural demographics and immigration, preventing the restlessness that often evolves through inaction – Saudi’s spurt in fundamentalism and a worrying trend towards radicalism in 2001-2006 prompted the Kingdom’s ruler to focus steadily on gearing up the manufacturing sector there. Abu Dhabi is a long way off in terms of Saudi’s population numbers, but with forecasted growth figures pointing to a 200% increase by 2050, spending money now to keep money coming in tomorrow in a peaceful society is clearly viewed as priceless.
The summit itself appeared extremely well-organised and equally well-attended with a lavish award-giving ceremony (no Ricky Gervais hosting unfortunately) recognising the year’s best innovation in renewable energy. Walking around the venue one could not help but wonder what exactly extremely short-dresses and high-heels - that attractively attired “stand helpers” - had to do with environmentally-friendly efforts(?) but the fact large numbers of attendees were walking around (and around, and around), spending a lot of time attentively locked into deep discussion with the aforementioned helpers (clearly knowledgeable about all aspects of their represented business, sure) meant for whatever reason, it was working – possibly a little too much needless conversation-induced-carbon-dioxide being produced though.
Politics? – markets don’t care
As US markets have risen to another 15-month high overnight (Dow 10,725, S&P 1,150) despite further losses reported from Citi (nothing unexpected though), signs of inflation in a still badly-positioned UK economy and another rise towards $80/brl for crude – along with a sharply appreciating USD – bull market players are continuing to push those attempting to exercise more caution aside. Some bad news has hit our favourite halo-wearing US President as a traditionally Democratic seat in Massachusetts was lost to the Republicans which will cause some trouble for the make-or-break healthcare reforms the current White House administration has put so much (well-intentioned and well-needed) effort behind since last summer.
Markets have already reacted across some of those healthcare related names that may take advantage of a turn in reform sentiment but more worrying for Obama the fall-out from a possible reneging on one of his most important campaign promises – not the best time to be meeting with an upset President, as leaders of the financial industry must surely be worrying some aggression will find an outlet their way.
Elsewhere, rumours that China is increasing efforts to reign-back back lending and bring-about a serious slow-down in economic stimulus measures has jittered most investors across Asia, with some significant falls on the CSI300 this morning (-3.22%) spilling over into HK (Hang Seng -1.88%) and surely dampening any positive follow-through from that strong S&P showing last night (+1.25%), indeed Europe looks set to open slightly lower.
20 days into the New Year and still nothing to write about lothario-legend Silvio Berlusconi! Where is our prolific charmer? Must still be recovering from “corrective surgery” following his last moment of crowd interaction.
Plenty of it..but renew anyway…
Watching an extremely oil-rich nation spend so much time and energy (pun intended) on investigating and then rewarding the best alternative power-generating resources would strike many as a long-sighted necessity but a bit of a waste of time (and money) for at least the next 50 years – not for the leaders of Abu Dhabi though. The “Future Energy Summit” currently underway in the UAE’s capital city has attracted a great deal of attention from international energy firms intent on getting a foothold into Abu Dhabi’s much-touted Masdar City initiative – a city that is being built with the intent of being totally carbon-neutral and self-sustaining.
The irony of an oil-producing nation spearheading the world’s first eco-friendly city is of course not lost on anyone but the vision and effort should be applauded - whether or not you are one of the more cynical that does not believe in all the climate-change mumbo-jumbo anyway (remember those damning emails released shortly before the inconclusive Copenhagen summit).
Taking advantage of current access to wealth and a bit-of-a-wave in eco-friendly solutions is a smart move that will not only placate many negatively inclined to a “dirty-energy” exporting nation such as the UAE, but also bring about one of the region’s most needed and essential elements capable of producing a viable and sustainable economy – manufacturing. Whilst we have discussed this at length a few times, the position Saudi, Qatar and Abu Dhabi find themselves in today requires a strong manufacturing sector for both economic and political requirements.
As populations grow and wealth spreads (it spreads slowly, the rich in this part of the world do not really like to throw it around the masses) discontent threatens to increase as more find themselves out of work, dependent on the state and envious of those that do in fact control the nations’ resources (and supercars, and yachts and…). This may take some time of course, say another 50-75 years, but it is certainly smart to prevent a problem from occurring rather than trying to solve one once it has taken shape.
The Mastercard move…
By providing and creating the opportunity for global firms to set-up shop across the Middle East with more intensive purposes than simply distribution, manufacturing in all shapes and forms will create an outlet for a regional population growing in number through natural demographics and immigration, preventing the restlessness that often evolves through inaction – Saudi’s spurt in fundamentalism and a worrying trend towards radicalism in 2001-2006 prompted the Kingdom’s ruler to focus steadily on gearing up the manufacturing sector there. Abu Dhabi is a long way off in terms of Saudi’s population numbers, but with forecasted growth figures pointing to a 200% increase by 2050, spending money now to keep money coming in tomorrow in a peaceful society is clearly viewed as priceless.
The summit itself appeared extremely well-organised and equally well-attended with a lavish award-giving ceremony (no Ricky Gervais hosting unfortunately) recognising the year’s best innovation in renewable energy. Walking around the venue one could not help but wonder what exactly extremely short-dresses and high-heels - that attractively attired “stand helpers” - had to do with environmentally-friendly efforts(?) but the fact large numbers of attendees were walking around (and around, and around), spending a lot of time attentively locked into deep discussion with the aforementioned helpers (clearly knowledgeable about all aspects of their represented business, sure) meant for whatever reason, it was working – possibly a little too much needless conversation-induced-carbon-dioxide being produced though.
Monday, 18 January 2010
Blue and Dry
Weekend aftermath…
Stick or carrot? Management gurus and psychologists the world-over have spent the weekend locked in argument over bonus-payments as they discuss the pros and cons of promising large wads of cash for good performance, mainly in the hope of assuaging the immense levels of discontent throbbing amongst the masses (mostly in the UK and US – the media to blame, naturally) as due dates for bonus-payment near ever closer. Concerns over China’s break-neck growth were beginning to surface, as articles increasingly focus on similarities between their large levels of fiscal and monetary stimulus, rises in asset prices across the spectrum and levels of productivity per capita with those of Japan in the late 80s before their bust and “lost decade”. China is nowhere near Japan’s equivalent level of development and wealth in the late 80s though (look closer to the late 60s instead) so in-depth analysis and comparisons leave the majority of such arguments without merit – many more years of wealth generation lay ahead for the Chinese. Dubai World debt is reportedly being offered by some of its smaller institutional holders in the market, a sign that discussions have met with disapproval from some creditors who likely want to exit and be done with the whole affair – seems Abu Dhabi is holding steady at refusing to implement a total sweep of its neighbours’ troubles, pushing negotiations to the limit – fair enough. Also, what seemed a long-shot in the Arabian Gulf is surprisingly nearer to conclusion after announcements that the GCC have agreed on details for implementing a region-wide train network in a (much needed and efficiency inducing) $15bn project - let’s hope there’s no disagreement about whose country’s leader’s portraits will adorn each carriage and let’s not even begin thinking about the arguments that will be held when they initiate “conversations” (shouting is not really conversing) to decide what on earth they are going to name it!
A year since the inauguration of not only a new President in the US but a new, warmer and more charming chapter in the continuing story of international relations, a reminder of what “once was” popped up on our screens when Obama invited Clinton (not such a bad thing) and his predecessor Bush (far more frightening) to provide a consolidated response to the ongoing Haiti crisis. As Bush re-took the podium he so seldom dared to step-upon during his actual tenure as so-called “leader of the free world” (he neither led nor provided evidence of freedom for others) a horrified hush crept across the gathered reporters re-living those dark days but late-night TV comedians across the country rubbed their hands in glee at the prospect of gathering priceless new material for days to come – alas, despite his message containing the usual informal tendencies it was serious enough to hear him out, just. As the aid continues to flow, exposing the better side of human generosity, the uglier angle of political wrangling and bureaucracy is hampering efforts, with even France (mon dieu) lobbing a couple of badly-timed insults across the pond in a blame-game with the US – important not to lose sight of the individuals left homeless and without food or water who could not care less whose fault it is that essential supplies are bottle-necked at the airport.
Holiday but ok…
Markets have kicked off the week without the usual prospect of a US open later in the afternoon - with holidays there for remembering Martin Luther King – falling a little from the outset across most of Asia after a rather weak performance at the end-of-last-week: Hong Kong off about -1%, Japan -1.2%, some small gains in Korea (+60bps), Singapore (+27bps) and China shrugging off global-media concerns about its future growth prospects with the CSI gaining just under +1%. Japan Airlines is keeping investors guessing as it flirts between American Airlines and Delta offers, the one offering greater autonomy likely to win. With little direction from major US earnings and bereft of major market-moving news, not such a bad performance overall to get us going in the third week of Jan (remember, no more Happy New Year salutations so late in the game unless you want people to know how little you value them). Still early trading in Europe but so far so good, with about +40bps of gains across the majors there. Currencies have moved in the USD’s favour since the middle-of-last-week, appreciating 2% versus GBP (cable at 1.638 right now) and 1% versus Eur (New Yorkers will be smiling as they remember how their city was practically conquered by strong-Euro wielding French over the holidays walking on “Fis-avenoueee”), Gold has managed to stay out of the news for a few weeks but has quietly remained above $1,130/oz (only 7% shy of its recent high) and surprisingly no-one is even mentioning Oil in the news at the moment despite a quite volatile week of trading which saw oscillation between almost $84/brl and a steep drop to $77.8/brl (-7.5%).
Drying the rate…
With all the talk of China’s continued surge but worries growing over a possibly overheated economy, worth stopping and taking a look at our fair-weathered-friend-of-an-indicator, the Baltic Dry Index (BDI). In the last 60days the cost of transporting a container of goods has actually dropped by almost 30% and is still a full 75% lower than what it cost to move items around in May 2008. How can one of the world’s largest exporters be overheating if something as simple as the BDI is at an exceptionally low-level historically? Inventory levels have improved somewhat around the world, and it was certainly a decent Christmas for many retailers by recent anecdotal evidence (which will be confirmed in Q4 numbers as the month wears on), but were shoppers really buying the latest items or taking full-advantage of troubled retailers who were having to dump all they could find onto the display shelves in a bid to generate revenue from otherwise dead stock? From what was seen across the sales of London and New York (even Dubai, where it’s on sale even if not officially “on sale” – just ask for a discount and it will be gladly provided) there is good volume buying but of items that had been gathering dust for at least the last couple of years. Until the ability to amass disposal income powerful enough to purchase fully priced “new” items spreads throughout the ranks of consumers both high and low, a full-blown recovery is not likely in full swing.
The blues…
Amidst continuing geo-political troubles, that beacon of all things great and fake (yet strangely entertaining) Hollywood’s protagonists lashed on the make-up and sponsored outfits (and the girls got dressed too) gathering to oh-so-melodramatically initiate the start of their “awards” season – should people doing what they love and getting paid millions for it really be handed a golden-statue on top-of-it-all? Apart from smiling that no one else was amused by most of host Ricky Gervais’s jokes (that pond between UK humour and US sensibilities is still quite deep), that a totally fabricated and absolutely fantastical CGI-reality-fusion film (Avatar) walked away with two of the most significant awards speaks volumes on where the human psyche is currently gravitating – unable (or unwilling) to deal with the tough realities of earth-bound life, audiences prefer to watch a (blue) alien race toiling for their own survival in a distant planet, albeit still at the hands of evil men.
If bonuses are dealt as harsh a blow as the blood-thirsty public are vying for, a certain earth-bound-clan of self-styled-masters who prefer to entitle their power to the rest of the universe will ensure those aliens won’t be the only blue group of people out there.
Stick or carrot? Management gurus and psychologists the world-over have spent the weekend locked in argument over bonus-payments as they discuss the pros and cons of promising large wads of cash for good performance, mainly in the hope of assuaging the immense levels of discontent throbbing amongst the masses (mostly in the UK and US – the media to blame, naturally) as due dates for bonus-payment near ever closer. Concerns over China’s break-neck growth were beginning to surface, as articles increasingly focus on similarities between their large levels of fiscal and monetary stimulus, rises in asset prices across the spectrum and levels of productivity per capita with those of Japan in the late 80s before their bust and “lost decade”. China is nowhere near Japan’s equivalent level of development and wealth in the late 80s though (look closer to the late 60s instead) so in-depth analysis and comparisons leave the majority of such arguments without merit – many more years of wealth generation lay ahead for the Chinese. Dubai World debt is reportedly being offered by some of its smaller institutional holders in the market, a sign that discussions have met with disapproval from some creditors who likely want to exit and be done with the whole affair – seems Abu Dhabi is holding steady at refusing to implement a total sweep of its neighbours’ troubles, pushing negotiations to the limit – fair enough. Also, what seemed a long-shot in the Arabian Gulf is surprisingly nearer to conclusion after announcements that the GCC have agreed on details for implementing a region-wide train network in a (much needed and efficiency inducing) $15bn project - let’s hope there’s no disagreement about whose country’s leader’s portraits will adorn each carriage and let’s not even begin thinking about the arguments that will be held when they initiate “conversations” (shouting is not really conversing) to decide what on earth they are going to name it!
A year since the inauguration of not only a new President in the US but a new, warmer and more charming chapter in the continuing story of international relations, a reminder of what “once was” popped up on our screens when Obama invited Clinton (not such a bad thing) and his predecessor Bush (far more frightening) to provide a consolidated response to the ongoing Haiti crisis. As Bush re-took the podium he so seldom dared to step-upon during his actual tenure as so-called “leader of the free world” (he neither led nor provided evidence of freedom for others) a horrified hush crept across the gathered reporters re-living those dark days but late-night TV comedians across the country rubbed their hands in glee at the prospect of gathering priceless new material for days to come – alas, despite his message containing the usual informal tendencies it was serious enough to hear him out, just. As the aid continues to flow, exposing the better side of human generosity, the uglier angle of political wrangling and bureaucracy is hampering efforts, with even France (mon dieu) lobbing a couple of badly-timed insults across the pond in a blame-game with the US – important not to lose sight of the individuals left homeless and without food or water who could not care less whose fault it is that essential supplies are bottle-necked at the airport.
Holiday but ok…
Markets have kicked off the week without the usual prospect of a US open later in the afternoon - with holidays there for remembering Martin Luther King – falling a little from the outset across most of Asia after a rather weak performance at the end-of-last-week: Hong Kong off about -1%, Japan -1.2%, some small gains in Korea (+60bps), Singapore (+27bps) and China shrugging off global-media concerns about its future growth prospects with the CSI gaining just under +1%. Japan Airlines is keeping investors guessing as it flirts between American Airlines and Delta offers, the one offering greater autonomy likely to win. With little direction from major US earnings and bereft of major market-moving news, not such a bad performance overall to get us going in the third week of Jan (remember, no more Happy New Year salutations so late in the game unless you want people to know how little you value them). Still early trading in Europe but so far so good, with about +40bps of gains across the majors there. Currencies have moved in the USD’s favour since the middle-of-last-week, appreciating 2% versus GBP (cable at 1.638 right now) and 1% versus Eur (New Yorkers will be smiling as they remember how their city was practically conquered by strong-Euro wielding French over the holidays walking on “Fis-avenoueee”), Gold has managed to stay out of the news for a few weeks but has quietly remained above $1,130/oz (only 7% shy of its recent high) and surprisingly no-one is even mentioning Oil in the news at the moment despite a quite volatile week of trading which saw oscillation between almost $84/brl and a steep drop to $77.8/brl (-7.5%).
Drying the rate…
With all the talk of China’s continued surge but worries growing over a possibly overheated economy, worth stopping and taking a look at our fair-weathered-friend-of-an-indicator, the Baltic Dry Index (BDI). In the last 60days the cost of transporting a container of goods has actually dropped by almost 30% and is still a full 75% lower than what it cost to move items around in May 2008. How can one of the world’s largest exporters be overheating if something as simple as the BDI is at an exceptionally low-level historically? Inventory levels have improved somewhat around the world, and it was certainly a decent Christmas for many retailers by recent anecdotal evidence (which will be confirmed in Q4 numbers as the month wears on), but were shoppers really buying the latest items or taking full-advantage of troubled retailers who were having to dump all they could find onto the display shelves in a bid to generate revenue from otherwise dead stock? From what was seen across the sales of London and New York (even Dubai, where it’s on sale even if not officially “on sale” – just ask for a discount and it will be gladly provided) there is good volume buying but of items that had been gathering dust for at least the last couple of years. Until the ability to amass disposal income powerful enough to purchase fully priced “new” items spreads throughout the ranks of consumers both high and low, a full-blown recovery is not likely in full swing.
The blues…
Amidst continuing geo-political troubles, that beacon of all things great and fake (yet strangely entertaining) Hollywood’s protagonists lashed on the make-up and sponsored outfits (and the girls got dressed too) gathering to oh-so-melodramatically initiate the start of their “awards” season – should people doing what they love and getting paid millions for it really be handed a golden-statue on top-of-it-all? Apart from smiling that no one else was amused by most of host Ricky Gervais’s jokes (that pond between UK humour and US sensibilities is still quite deep), that a totally fabricated and absolutely fantastical CGI-reality-fusion film (Avatar) walked away with two of the most significant awards speaks volumes on where the human psyche is currently gravitating – unable (or unwilling) to deal with the tough realities of earth-bound life, audiences prefer to watch a (blue) alien race toiling for their own survival in a distant planet, albeit still at the hands of evil men.
If bonuses are dealt as harsh a blow as the blood-thirsty public are vying for, a certain earth-bound-clan of self-styled-masters who prefer to entitle their power to the rest of the universe will ensure those aliens won’t be the only blue group of people out there.
Subscribe to:
Posts (Atom)