With global stock markets still hovering around record highs, even the most casual observer would have to agree this seems a little odd with the arrival of the unpredictable Donald Trump in the White House and the disruptive Brexit decision to take the UK out of Europe.
However, seasoned market professionals have seen this sort of thing before. Markets are always on a high in terms of investor confidence and prices before they take a tumble. Remember how stocks held up well before the global financial crisis and then ended up in a bloodbath?
Of course nobody gets this right all the time. Hedge fund veteran billionaire George Soros is said to have lost US$1 billion in bearish bets against a Trump presidency. So far Wall Street has decided that a pro-business, tax-cutting Republican administration is good news for profits and share prices.
But the cracks are beginning to appear in the shaky edifice. The new president's first days of rapid-fire erratic and unexpected announcements shocked many people.
He even met the British prime minister Theresa May as his first encounter with a foreign leader, aligning his administration with the equally upsetting Brexit to take the UK out of the EU, the world's largest free trade zone. Mr Trump also ripped up his own North American Free Trade Agreement in his first week of office and proposed a 20 per cent tax on Mexican imports to pay for a new wall to keep illegal immigrants out.
Is such uncertainty now the "new normal" for investors? I think that is probably about the only thing we can be certain about at the moment.
What we crucially don't know, and may not for several years, is how global trade will be disrupted by the renewed "special relationship" between the US and UK.
What we do know is that global trade has been slowing down for the past 18 months, and that this trend looks likely to accelerate as unpredictable and uncertain policy changes emerge this year. We also know that the US dollar has fallen in recent weeks. Is this the start of a weak dollar policy by the new administration, perhaps another alignment with the UK that has followed a weak pound policy since the Brexit referendum last June?
If you follow the technical charts, then the dollar put in a double-top around ?1.05. A weaker currency is surely the other side of a trade war to put America first, and far more effective than tariffs that invite instant retribution. Can the new administration force a weaker dollar by executive order against the wishes of the Federal Reserve? Well who can really say no to president Trump?
For the Gulf states this would not be so bad. Oil prices would go up as the dollar weakens, while the weaker dollar makes tourism more competitive in the Gulf unless travel bans become so universal that global travel is affected significantly.
What we also do not know at the moment is how far the reflationary Trump promises of spending on infrastructure like airports, tunnels and bridges, will prove to be.
At first glance talk, of a $1 trillion programme over the next 10 years sounds impressive, but try to see this in the context of the roughly $1.5tn China spent last year alone. This is not enough to reflate the US economy, and absent taxes will have to be paid for by printing money.
So what should the cautious investor do? Be careful. Even doing nothing is unwise if the US dollar is going to fall and your savings are in a dollar-pegged currency like the dirham.
Perhaps it is time to look at the euro or the pound as alternatives, although the Brexit makes the pound a risky bet. Or maybe it will be another great year for gold, last year's best performing currency, which was beaten only by its fellow monetary metal silver.
With interest rates already in or close to negative territory in many parts of the world, this is surely a time for the yellow metal as a safe haven, and yet it has not been immune from volatility recently either.
My hunch is that Mr Trump will prove inflationary and drag the rest of the world with him. That might well mean a return to the investment conditions of the 1970s when stocks and bonds were beaten by cash, and gold, oil and silver reigned supreme.
Peter Cooper has been a financial writer in the Gulf for two decades.
pf@thenational.ae
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Europe’s rearming plan
- Suspend strict budget rules to allow member countries to step up defence spending
- Create new "instrument" providing €150 billion of loans to member countries for defence investment
- Use the existing EU budget to direct more funds towards defence-related investment
- Engage the bloc's European Investment Bank to drop limits on lending to defence firms
- Create a savings and investments union to help companies access capital
A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
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.
How to report a beggar
Abu Dhabi – Call 999 or 8002626 (Aman Service)
Dubai – Call 800243
Sharjah – Call 065632222
Ras Al Khaimah - Call 072053372
Ajman – Call 067401616
Umm Al Quwain – Call 999
Fujairah - Call 092051100 or 092224411
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Company profile
Name: Infinite8
Based: Dubai
Launch year: 2017
Number of employees: 90
Sector: Online gaming industry
Funding: $1.2m from a UAE angel investor
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
Tips on buying property during a pandemic
Islay Robinson, group chief executive of mortgage broker Enness Global, offers his advice on buying property in today's market.
While many have been quick to call a market collapse, this simply isn’t what we’re seeing on the ground. Many pockets of the global property market, including London and the UAE, continue to be compelling locations to invest in real estate.
While an air of uncertainty remains, the outlook is far better than anyone could have predicted. However, it is still important to consider the wider threat posed by Covid-19 when buying bricks and mortar.
Anything with outside space, gardens and private entrances is a must and these property features will see your investment keep its value should the pandemic drag on. In contrast, flats and particularly high-rise developments are falling in popularity and investors should avoid them at all costs.
Attractive investment property can be hard to find amid strong demand and heightened buyer activity. When you do find one, be prepared to move hard and fast to secure it. If you have your finances in order, this shouldn’t be an issue.
Lenders continue to lend and rates remain at an all-time low, so utilise this. There is no point in tying up cash when you can keep this liquidity to maximise other opportunities.
Keep your head and, as always when investing, take the long-term view. External factors such as coronavirus or Brexit will present challenges in the short-term, but the long-term outlook remains strong.
Finally, keep an eye on your currency. Whenever currency fluctuations favour foreign buyers, you can bet that demand will increase, as they act to secure what is essentially a discounted property.
The specs
Engine: 2.0-litre 4-cylinder turbo
Power: 258hp from 5,000-6,500rpm
Torque: 400Nm from 1,550-4,000rpm
Transmission: Eight-speed auto
Fuel consumption: 6.1L/100km
Price: from Dh362,500
On sale: now
Cryopreservation: A timeline
- Keyhole surgery under general anaesthetic
- Ovarian tissue surgically removed
- Tissue processed in a high-tech facility
- Tissue re-implanted at a time of the patient’s choosing
- Full hormone production regained within 4-6 months
Killing of Qassem Suleimani
The specs
Engine: four-litre V6 and 3.5-litre V6 twin-turbo
Transmission: six-speed and 10-speed
Power: 271 and 409 horsepower
Torque: 385 and 650Nm
Price: from Dh229,900 to Dh355,000
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Credits
Produced by: Colour Yellow Productions and Eros Now
Director: Mudassar Aziz
Cast: Sonakshi Sinha, Jimmy Sheirgill, Jassi Gill, Piyush Mishra, Diana Penty, Aparshakti Khurrana
Star rating: 2.5/5
What is dialysis?
Dialysis is a way of cleaning your blood when your kidneys fail and can no longer do the job.
It gets rid of your body's wastes, extra salt and water, and helps to control your blood pressure. The main cause of kidney failure is diabetes and hypertension.
There are two kinds of dialysis — haemodialysis and peritoneal.
In haemodialysis, blood is pumped out of your body to an artificial kidney machine that filter your blood and returns it to your body by tubes.
In peritoneal dialysis, the inside lining of your own belly acts as a natural filter. Wastes are taken out by means of a cleansing fluid which is washed in and out of your belly in cycles.
It isn’t an option for everyone but if eligible, can be done at home by the patient or caregiver. This, as opposed to home haemodialysis, is covered by insurance in the UAE.
Things Heard & Seen
Directed by: Shari Springer Berman, Robert Pulcini
Starring: Amanda Seyfried, James Norton
2/5