The last meaningful week of the trading year saw the same old themes continue to play out as equities headed lower on the back of trade concerns, interest rate uncertainty, and geopolitical tensions. Oil continues to be unimpressed by the Opec deal of a fortnight ago, while the dollar was afflicted by the renewed threat of a US government shutdown. What we learnt in the last week of the year was that none of the issues that have dogged markets in 2018 are likely to go away fast in 2019.
The main event of the week was the decision by the US Federal Reserve Open Market Committee to raise interest rates. The FOMC voted unanimously to raise interest rates by 25 basis points on Thursday as expected, taking the fed funds band to 2.25-2.5 per cent. However, the Fed cut its growth and inflation forecasts and lowered the dot plot to imply two hikes in 2019 instead of three. The new median projection puts the fed funds rate at 2.9 per cent by end of 2019 and 3.1 per cent by end of 2020, down from 3.1 per cent and 3.4 per cent in the September projections. At the same time the median estimate of the neutral rate was also lowered to 2.8 per cent, from 3 per cent. The statement said there was still a need for "some further gradual increases in the target range for the federal funds rate," although the addition of the word "some" tempered the impact slightly. The FOMC also said that the balance of risks is "roughly balanced" and it "will continue to monitor global economic and financial developments and assess their implications for the economic outlook", signalling greater data dependence going forward.
On the whole the Fed’s actions fell a little short of the "dovish" hike that was expected by the markets, with the FOMC shrugging off recent market turmoil and appearing intent on continuing the tightening process. So monetary policy will remain a source of uncertainty next year, with the US dollar’s reaction, first higher and then lower, illustrative of the low level of confidence that exists about where things will go from here. On top of this was added the renewed threat of a government shutdown after President Donald Trump refused to sign a Senate spending bill aimed at averting one. And with the year ending with more turmoil in the White House, with Defence Secretary James Mattis retiring, it is hard to believe that the political environment is going to become any less volatile – more likely quite the reverse.
At least China appears to be somewhat aware of the risks, certainly to its own economy, with top policymakers there saying that "significant" cuts to taxes and fees will be enacted in 2019, while also signalling an easier monetary policy stance. Facing renewed pressures over trade, the priority of the Chinese government appears to be much more clearly about boosting demand rather than dealing with its long-term structural problems.
From a regional perspective, Saudi Arabia also signalled that boosting demand is the way for the GCC to move forward in 2019, releasing an expansionary budget by pledging to raise spending by 7 per cent to try and encourage growth in the non-oil economy. Total spending is expected to hit 1.1 trillion riyals ($295 billion). The government also announced it would maintain its cost-of-living allowance for public sector workers of around $266 per month. Saudi Arabia does not publish a fiscal breakeven price for its oil exports but other estimates for next year which include similar sized increases in government spending imply an oil price of around $80 per barrel in order for the kingdom to record a neutral fiscal balance. With oil prices again falling sharply and given an increasingly poor outlook for next year, it is likely that Saudi Arabia will again need to turn heavily to debt markets to finance any shortfall, with other regional economies likely to do the same.
This year is ending with many of its pivotal issues, both globally and regionally unresolved. Brexit and European populism are also themes that look set to continue well into next year, and of course there will be new threats, issues and opportunities that will emerge as the year evolves many of them overlapping. Taken together 2019 already looks likely to be a particularly challenging year.
Tim Fox is Chief Economist & Head of Research at Emirates NBD.
Padmaavat
Director: Sanjay Leela Bhansali
Starring: Ranveer Singh, Deepika Padukone, Shahid Kapoor, Jim Sarbh
3.5/5
Trolls World Tour
Directed by: Walt Dohrn, David Smith
Starring: Anna Kendrick, Justin Timberlake
Rating: 4 stars
The specs
Engine: 1.4-litre 4-cylinder turbo
Power: 180hp at 5,500rpm
Torque: 250Nm at 3,00rpm
Transmission: 5-speed sequential auto
Price: From Dh139,995
On sale: now
Specs
Engine: Dual-motor all-wheel-drive electric
Range: Up to 610km
Power: 905hp
Torque: 985Nm
Price: From Dh439,000
Available: Now
Sweet%20Tooth
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Five famous companies founded by teens
There are numerous success stories of teen businesses that were created in college dorm rooms and other modest circumstances. Below are some of the most recognisable names in the industry:
- Facebook: Mark Zuckerberg and his friends started Facebook when he was a 19-year-old Harvard undergraduate.
- Dell: When Michael Dell was an undergraduate student at Texas University in 1984, he started upgrading computers for profit. He starting working full-time on his business when he was 19. Eventually, his company became the Dell Computer Corporation and then Dell Inc.
- Subway: Fred DeLuca opened the first Subway restaurant when he was 17. In 1965, Mr DeLuca needed extra money for college, so he decided to open his own business. Peter Buck, a family friend, lent him $1,000 and together, they opened Pete’s Super Submarines. A few years later, the company was rebranded and called Subway.
- Mashable: In 2005, Pete Cashmore created Mashable in Scotland when he was a teenager. The site was then a technology blog. Over the next few decades, Mr Cashmore has turned Mashable into a global media company.
- Oculus VR: Palmer Luckey founded Oculus VR in June 2012, when he was 19. In August that year, Oculus launched its Kickstarter campaign and raised more than $1 million in three days. Facebook bought Oculus for $2 billion two years later.
Saturday's results
West Ham 2-3 Tottenham
Arsenal 2-2 Southampton
Bournemouth 1-2 Wolves
Brighton 0-2 Leicester City
Crystal Palace 1-2 Liverpool
Everton 0-2 Norwich City
Watford 0-3 Burnley
Manchester City v Chelsea, 9.30pm
Gender pay parity on track in the UAE
The UAE has a good record on gender pay parity, according to Mercer's Total Remuneration Study.
"In some of the lower levels of jobs women tend to be paid more than men, primarily because men are employed in blue collar jobs and women tend to be employed in white collar jobs which pay better," said Ted Raffoul, career products leader, Mena at Mercer. "I am yet to see a company in the UAE – particularly when you are looking at a blue chip multinationals or some of the bigger local companies – that actively discriminates when it comes to gender on pay."
Mr Raffoul said most gender issues are actually due to the cultural class, as the population is dominated by Asian and Arab cultures where men are generally expected to work and earn whereas women are meant to start a family.
"For that reason, we see a different gender gap. There are less women in senior roles because women tend to focus less on this but that’s not due to any companies having a policy penalising women for any reasons – it’s a cultural thing," he said.
As a result, Mr Raffoul said many companies in the UAE are coming up with benefit package programmes to help working mothers and the career development of women in general.
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
The biog
Favourite food: Tabbouleh, greek salad and sushi
Favourite TV show: That 70s Show
Favourite animal: Ferrets, they are smart, sensitive, playful and loving
Favourite holiday destination: Seychelles, my resolution for 2020 is to visit as many spiritual retreats and animal shelters across the world as I can
Name of first pet: Eddy, a Persian cat that showed up at our home
Favourite dog breed: I love them all - if I had to pick Yorkshire terrier for small dogs and St Bernard's for big
The%20specs
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A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Director: Laxman Utekar
Cast: Vicky Kaushal, Akshaye Khanna, Diana Penty, Vineet Kumar Singh, Rashmika Mandanna
Rating: 1/5
Race card
6.30pm: Emirates Holidays Maiden (TB), Dh82,500 (Dirt), 1,900m
7.05pm: Arabian Adventures Maiden (TB), Dh82,500 (D), 1,200m
7.40pm: Emirates Skywards Handicap (TB), Dh82,500 (D), 1,200m
8.15pm: Emirates Airline Conditions (TB), Dh120,000 (D), 1,400m
8.50pm: Emirates Sky Cargo (TB), Dh92,500 (D)1,400m
9.15pm: Emirates.com (TB), Dh95,000 (D), 2,000m
