In general, investors abhor uncertainty; and if anything can be said about Donald Trump, it is that he is unpredictable in all things other than being belligerent and mercurial.
His inauguration speech was a populist, nationalist and insular manifesto that did little to persuade markets that the 45th president of the United States will maintain the stability brought by the Obama administration after rescuing the US economy from the crashing free fall into the red orchestrated by George W Bush’s misadministration.
In uncertain times, when leaders talk about trade wars, investors seek refuge. The initial refuge of choice after Mr Trump’s victory over Hillary Clinton was the US dollar. The rise in the dollar from early November to last week was explained as the result of Mr Trump’s pro-growth, pro-business, and regulation-friendly agenda.
However, after the lack of clarity in Mr Trump’s inauguration speech, we woke up to Asian investors selling the greenback. They sought safe haven in gold and sent bond yields higher. That followed the second straight week where investment funds bought gold while increasing their gross short on the US dollar, this is after having cut a net-long by 88 per cent from the record in July. This dissipates the fantasy of institutional investors having a positive outlook about the incoming administration.
Surprisingly we see equities remaining high throughout established markets, which makes us believe it is a great time to buy protective options and lock in gains.
Our chief economist and investment officer at Saxo Bank, Steen Jakobsen, has pointed out the likelihood of Mr Trump replicating former president Richard Nixon’s weak dollar policy from the 1970s. That is an agenda of browbeating the Federal Reserve to maintain inflation low – a populist approach.
Today presents a confrontation that will be worth watching. One point of consistency throughout Mr Trump’s campaign, his victory speeches and now his inauguration speech, is his commitment to invest big in America’s infrastructure. His promise to build roads, bridges, airports, tunnels and highways all across the US, in combination with his other consistent promise of tax cuts and fiscal stimulus, is a recipe for runaway inflation. The Fed will probably feel the need to provide a backstop by fixing the 10-year yield at around 1.5 per cent, deflating the dollar even more.
Such a scenario is sadly not far-fetched and is in line with Mr Jakobsen’s observations about Trump’s neo-Nixonian doctrine. It is wise to review Nixon’s executive order 11615 in line with the Economic Stabilization Act of 1970, which imposed a 90-day freeze on wages and prices to counter inflation. It was a move not seen in the US since the end of the Second World War.
At the time Nixon also imposed an import surcharge of 10 per cent to ensure American products would not be at a disadvantage from the expected fluctuation in exchange rates. Does that not sound a bit Trumpesque?
But not all is doom and gloom. There is a silver underlining to the 1970s lesson. Gold appreciated markedly and more importantly, Nixon was forced to resign to avoid being impeached for acting out his paranoia and disregarding the rule of law.
Another bullish theme that is likely to push up gold prices during 2017 will be the negative interest rates across the world, which have created an environment of depressed yields. This means that active money managers are likely to search for alternative investments – gold being a safe bet when anti-establishment votes are raising geopolitical risks not only in the US but also in Germany, France, Belgium and Italy.
Central banks will also add to the positive pressure on gold as they try to diversify their portfolios as a hedge against their own inflationary policies.
By looking at the five-year chart for gold in US dollars we can see resistance currently at $1,320 after falling to $1,210 by December 31. The long-term downtrend was tested and rejected five times in 2016. Also, January is normally a strong month for gold, rising in four out of the past five years.
Long term, our outlook for gold is therefore bullish at $1,325. Short-term resistance at $1,120 looks solid ahead of the next key level, which is $1,130. Support, meanwhile, has been established at $1,195.
But, of course, we now have to see what Mr Trump’s “America First” looks like after being made “Great Again”. We live in interesting times.
Mario Camara is the head of Saxo Bank in Dubai.
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Profile of Foodics
Founders: Ahmad AlZaini and Mosab AlOthmani
Based: Riyadh
Sector: Software
Employees: 150
Amount raised: $8m through seed and Series A - Series B raise ongoing
Funders: Raed Advanced Investment Co, Al-Riyadh Al Walid Investment Co, 500 Falcons, SWM Investment, AlShoaibah SPV, Faith Capital, Technology Investments Co, Savour Holding, Future Resources, Derayah Custody Co.
Cultural fiesta
What: The Al Burda Festival
When: November 14 (from 10am)
Where: Warehouse421, Abu Dhabi
The Al Burda Festival is a celebration of Islamic art and culture, featuring talks, performances and exhibitions. Organised by the Ministry of Culture and Knowledge Development, this one-day event opens with a session on the future of Islamic art. With this in mind, it is followed by a number of workshops and “masterclass” sessions in everything from calligraphy and typography to geometry and the origins of Islamic design. There will also be discussions on subjects including ‘Who is the Audience for Islamic Art?’ and ‘New Markets for Islamic Design.’ A live performance from Kuwaiti guitarist Yousif Yaseen should be one of the highlights of the day.
Test
Director: S Sashikanth
Cast: Nayanthara, Siddharth, Meera Jasmine, R Madhavan
Star rating: 2/5
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How being social media savvy can improve your well being
Next time when procastinating online remember that you can save thousands on paying for a personal trainer and a gym membership simply by watching YouTube videos and keeping up with the latest health tips and trends.
As social media apps are becoming more and more consumed by health experts and nutritionists who are using it to awareness and encourage patients to engage in physical activity.
Elizabeth Watson, a personal trainer from Stay Fit gym in Abu Dhabi suggests that “individuals can use social media as a means of keeping fit, there are a lot of great exercises you can do and train from experts at home just by watching videos on YouTube”.
Norlyn Torrena, a clinical nutritionist from Burjeel Hospital advises her clients to be more technologically active “most of my clients are so engaged with their phones that I advise them to download applications that offer health related services”.
Torrena said that “most people believe that dieting and keeping fit is boring”.
However, by using social media apps keeping fit means that people are “modern and are kept up to date with the latest heath tips and trends”.
“It can be a guide to a healthy lifestyle and exercise if used in the correct way, so I really encourage my clients to download health applications” said Mrs Torrena.
People can also connect with each other and exchange “tips and notes, it’s extremely healthy and fun”.
What are the GCSE grade equivalents?
- Grade 9 = above an A*
- Grade 8 = between grades A* and A
- Grade 7 = grade A
- Grade 6 = just above a grade B
- Grade 5 = between grades B and C
- Grade 4 = grade C
- Grade 3 = between grades D and E
- Grade 2 = between grades E and F
- Grade 1 = between grades F and G
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
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%3Cp%3E%3Cstrong%3ECompany%20name%3A%20%3C%2Fstrong%3EHayvn%3Cbr%3E%3Cstrong%3EStarted%3A%20%3C%2Fstrong%3E2018%3Cbr%3E%3Cstrong%3EFounders%3A%20%3C%2Fstrong%3EChristopher%20Flinos%2C%20Ahmed%20Ismail%3Cbr%3E%3Cstrong%3EBased%3A%20%3C%2Fstrong%3EAbu%20Dhabi%2C%20UAE%3Cbr%3E%3Cstrong%3ESector%3A%20%3C%2Fstrong%3Efinancial%3Cbr%3E%3Cstrong%3EInitial%20investment%3A%20%3C%2Fstrong%3Eundisclosed%3Cbr%3E%3Cstrong%3ESize%3A%3C%2Fstrong%3E%2044%20employees%3Cbr%3E%3Cstrong%3EInvestment%20stage%3A%20%3C%2Fstrong%3Eseries%20B%20in%20the%20second%20half%20of%202023%3Cbr%3E%3Cstrong%3EInvestors%3A%20%3C%2Fstrong%3EHilbert%20Capital%2C%20Red%20Acre%20Ventures%3C%2Fp%3E%0A
Profile
Company: Justmop.com
Date started: December 2015
Founders: Kerem Kuyucu and Cagatay Ozcan
Sector: Technology and home services
Based: Jumeirah Lake Towers, Dubai
Size: 55 employees and 100,000 cleaning requests a month
Funding: The company’s investors include Collective Spark, Faith Capital Holding, Oak Capital, VentureFriends, and 500 Startups.
At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
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
Emirates exiles
Will Wilson is not the first player to have attained high-class representative honours after first learning to play rugby on the playing fields of UAE.
Jonny Macdonald
Abu Dhabi-born and raised, the current Jebel Ali Dragons assistant coach was selected to play for Scotland at the Hong Kong Sevens in 2011.
Jordan Onojaife
Having started rugby by chance when the Jumeirah College team were short of players, he later won the World Under 20 Championship with England.
Devante Onojaife
Followed older brother Jordan into England age-group rugby, as well as the pro game at Northampton Saints, but recently switched allegiance to Scotland.
