Home Thoughts from Dubai : You get the truth, in a way that nobody else gets it.
Tip when visiting/moving to Dubai:
It will not be long before you will be able to get excellent hotel price packages in Dubai. Room availability is starting to exceed declining international demand.
Reflections from the week:
Let me start you this week with two pieces of humour that made me smile. One investment banker was heard to say ‘this credit crunch is worse than divorce. I have lost half my wealth but I still have my wife’ !! And another poor soul was heard to remark ‘the bank returned a cheque to me this morning with the statement ‘insufficient funds’ written across it. Is it THEM or ME ???Now to work. Another hectic week. No not for me, for anybody in the global financial markets. Intra-day swings on the Dow Jones of 1,000 points, the FTSE 100 index losing 12% in two days, Irelands second largest bank opening a session with the only ‘bid’ being a price 99% below its 18 month high. Scary stuff. Then there was Iceland becoming the next Cuba as its loan deal with Russia effectively created a new satellite state. And despite the brilliant and courageous decision by the Irish Government some weeks ago to ‘shore up’ the Irish banking system, a move that led the way for other governments, this elected civil servants lapsed back into ‘dumboland’ with a Budget that was neither brilliant nor worthy of the paper it was written on. A complete lack of brains and inspiration. It will do nothing except cause the ‘bus’ to tip further over the cliff-face.
I fear now for one serious ‘smash’, with lots more casualties. In the middle of all this is a man who has the most respected investment record on the planet, has said that NOW is the best time to invest in equities. He is thinking of moving ALL his cash/bond investments into equities. At last somebody ‘speaking’ a script that does not predict the end of the world. I wish CNBC, probably one of the most negatively biased tv stations, would give the ‘positive thinkers’ some air-space and not deify pallbearer’s like Hugh Hendry – who must have had an upbringing sadly lacking in love.
While there is an evident air of ‘change’ in Dubai, the Emirate remains a great place to live and work. Despite the fermenting fumes of fear and confusion, positive resilience is still very much in evidence. Collapses in the equity markets of India, Iran, Russia and the Middle East have had the greatest short-term impact on the market. But market supportive words from Sheikh Mohammad and enormous liquidity injections from the Central Bank has helped calm hair-shedding nerves. I am not sure this is enough but for those of you who believe the fall in the share price is a more damaging phenomenon, fear not. All the UAE’s 2008 budget arithmetic expected an oil price of $75 – not far from the current price and for most of the year it has been above $130. It is advisable however to look towards Abu Dhabi rather than Dubai – as the safer investment option.
Dubai is however benefitting from the problems in the worlds financial industry. An estimated 17,000 cv’s have arrived in the Region. All looking for some solace (and work) from domestic meltdown’s. The banks and insurance companies now find themselves with a rich orchard of choice. And many of these cv’s are being channelled ‘direct’ – without the need for placement or recruitment agents. Another potential income stream blown away with the desert sands.
Dubai was however ‘brightened’ this week with the arrival of the ‘Irish Tenors’. And of course the enigmatic GP – a perfectly shaped and sculptured human. His words !!! But the Tenors gave a ‘secret showing’ at my Head Office – the Westin Hotel. Thanks to the negotiating skills and school-kid enthusiasm of Erin, these young men entertained a chosen gathering of Irish and ‘others’ for a full hour. Brilliant. All the concerns of the world were forgotten as most of the females in the audience melted into the Tenors magic. One weak-kneed blonde female from Cork (no not you Erin) even confided her desires to me. How stupid was THAT. I mean me keeping a secret has as good a chance as Gordon Brown being given a ‘French kiss’ by Vladimir Putin at the next G7 meeting. So I hope you ‘scored’ Aileen. And thanks Erin for organising. I am not sure how Jumeirah – where the Trio were playing later in the week – feel. They could solve the problem however. Just give you a nice fat employment offer !!!
On the subject of employment, the Dubai courts this week issued the highest penalty ever for a Company that had employed illegal workers. 94 of them. And the fine - AED 6.4 million. Oh, plus 2 months in jail for the owner. Proper order. Maybe the government should now throw some ‘incentives’ to residents to identify/report other companies who gain an unfair competitive advantage through operating illegally. Now there is an idea. I could make a small (side) fortune out of identifying companies operating illegally in the cleaning company space. Some people do not realise that you NEED a proper operating licence to provide this service. You cannot conveniently ‘hide’ it within a property company licence. Nor can you ‘steal’ (or suggest you are a) brands that are not yours !!!
A lets not move away from the subject of theft. The son of Victoria and David Beckham’s housekeepers has been arrested for trying to sell some items stolen from one of the couples UK houses, on eBay. Seems like the guy should really have been brought to an asylum for appraisal. Did he really think that this theft would not be traced. And what sane person would steal Vicious Vicky’s dresses ? Most 10 year olds, the only body size capable of fitting these garments, on the planet do not get enough pocket money to buy these rags.
Also worthy of note this week was Prince Charles turning down a cameo opportunity to appear in Dr Who. Now what was the programme Director thinking. The Prince has NO option but to decline. Why run the risk of being confused with some strange-looking, wrinkled creatures with big ears from another planet who has no idea how human beings live !!!!
One person who did not hesitate to say ‘Nam’ (yes in Arabic) this week was Jane Fonda. This once-gorgeous looking blonde received a Lifetime Achievement Award at the Middle East International Film Festival. I wonder if any of the judges had seen her semi-naked performance in Barbarella. Or was this (performance) pivotal in their final decision.
Another woman in this weeks news was Jordan. You know the girl/woman known for her Dolly Parton ‘assets’ and who feels that clothes are ‘constraining’. Well she now wants to take up horse riding. No funny remarks please. Apparently she is quite accomplished at it. Riding horses. She believes she is so good at IT, that she wants to be on the British Team for the 2012 Olympics. Now while I can imagine her in tight white trousers, a skimpy jacket, a tauntingly erotic top hat and the essential whip, I can’t see her in the British Equestrian Team line up. But I guess she thinks otherwise. But I suppose the Selectors may have a different ‘criteria sheet’ and lets face it, the horse may like her on his/her back !!
I have often spoken about the level of Dubai’s National Debt. Despite its perceived success and wealth it is getting ‘knocked around’ in the current credit drought. While many Government Officials have reiterated that everything is under control and manageable, that is usually a signal for a banker to call for ‘a look at the file’. Watch this space.
Finally did you see that global governments are trying to get us back to fluorescent lighting. You know those ugly ‘sticks’ that were part of 1950 housing. Despite being more expensive than the current ‘conventional’ equivalent, the fluorescent ‘sister’ is enormously more ‘carbon friendly’. And so all of us are going to have another tax imposed on us by the end of 2010. Now for any entrepreneur out there, the opportunity is obvious. Just ‘wrap’ these products more attractively and you are on the way to your fortune and probably some global recognition.
Finally finally Evon and myself had two days on an Islamic Finance course this week. And now I have to sit an exam before Christmas. So you see, despite you all thinking that my life here is like a lifetime in bed with Michelle Pfeifer, I am looking for distractions that prove you all wrong.
Property corner:
Dubai has been unfortunate. If global equity markets had not got involved in an extreme bout of vomiting, then the Dubai property market would have ‘survived’ at least into 2010. There are still growing numbers of people wanting to emigrate to the Emirate – thus putting pressure on current ‘stock levels’.
What I have not been able to factor in is the impact on demand if the property market goes into any prolonged decline. There are so many property agents in the market that will have to ‘look elsewhere’ as they see their incomes dry-up. So much of the Dubai economy depends on ‘these people’s’ excessive expenditure patterns. And there are thousands of THEM.But with all the ‘clouds’ over the past few weeks, some real value is starting to appear. This week I was offered Palm Jebel Ali property at what should turn out to be exceptional, one off, value. Garden Homes and Waterhome’s at just over AED 1,100 per sq ft, even if you have to wait 3 years for delivery, will prove an excellent well timed investment. Why would you bother looking at any of the ‘new launches’. These Jebel Ali properties will insulate you against any market downturn. The properties are supported by virtue of proximity to the airport, on the Abu Dhabi border, there is no execution risk, equivalent properties on Palm Jumeirah will hold their value and are nearly treble the price etc etc.
Pig Corner:
Can you have a ‘Plague of Pigs’. Well the farmyard is certainly very very full. Every day a new sow to eat from the trough – something their owners may have to resort to soon. You cannot believe the queue of overpriced, badly located garbage that needs to be ‘purged’ in the way that the UK Authorities attacked the mad-cow epidemic. And these Pigs are unfortunately infecting the rest of the animals on the farm. Dubai is in danger of losing some of its investment appeal if this ‘oversupply, overpriced disease’ is allowed to infect the better quality property and locations in Dubai. The foreign press can’t wait to tell you about the ‘Dubai Property Disease’.
I have never been so inundated with ‘distressed’ sales. Every day, new deals. And prices, in some cases, being slashed. Dubailand will be the largest abattoir in global property history. A greater surplus of product than the rats that infest our planet. If you are ‘in’ you are now probably too late to escape. Unless you have bought in one of the ‘durable’ locations. The Palms, Marina and other premium locations are still in demand. But even these are going to suffer from the ‘buyers market’.
Fun corner:
Some ‘milder’ jokes this week. Well kinda ……………..
You’re An EXTREME Redneck When…..
1. You let your 14-year-old daughter smoke at the dinner table …… in front of her kids.
2. The ‘Blue Book’ value of your truck goes up and down depending on how much gas is in it.
3. You’ve been married three times and still have the same in-laws.
4. Someone in your family died right after saying, ‘Hey, guys, watch this.’
5. You think Dom Perignon is a Mafia leader.
6. Your wife’s hairdo was once ruined by a ceiling fan.
7. You lit a match in the bathroom and your house exploded right off its wheels.
8. The Halloween pumpkin on your porch has more teeth than your spouse.
9. You have to go outside to get something from the fridge.
10. You think loading the dishwasher means getting your wife drunk.
Now some Aussie humour ………….
Q :How many men does it take to open a beer? Ans : None. It should be opened when she brings it.
Q: Why do women have smaller feet than men? Ans : It’s one of those ‘evolutionary things’ that allows them to stand closer to the kitchen sink.
Q: If your dog is barking at the back door and your wife is yelling at the front door, who do you let in first? Ans : The dog, of course. He’ll shut up once you let him
Q: I married a Miss Right. Ans : I just didn’t know her first name was Always.
Q: Scientists have discovered a food that diminishes a woman’s sex drive by 90%. Ans : It’s called a Wedding Cake.
Q : Why do men die before their wives? Ans : They want to.
Women will never be equal to men until they can walk down the street with a bald head and a beer gut, and still think they are sexy. In the beginning, God created the earth and rested. Then God created Man and rested. Then God created Woman. Since then, neither God nor Man has rested.
Miss Beatrice, The church organist, was in her eighties and had never been married. She was admired for her sweetness and kindness to all. One afternoon the pastor came to call on her and she showed him into her quaint sitting room. She invited him to have a seat while she prepared tea. As he sat facing her old Hammond organ,the young minister noticed a cute glass bowl sitting on top of it. The bowl was filled with water, and in the water floated, of all things, a condom! When she returned with tea and scones, they began to chat. The pastor tried to stifle his curiosity about the bowl of water and its strange floater, but soon it got the better of him and he could no longer resist. ‘Miss Beatrice’, he said, ‘I wonder if you would tell me about this?’ Pointing to the bowl. ‘Oh, yes,’ she replied, isn’t it wonderful? I was walking through the Park a few months ago and I found this little package on the ground. The directions said to place it on the organ, keep it wet and that it would prevent the spread of disease. Do you know I haven’t had the flu all winter.’
I never realised how disliked the French were until I saw some of these quotes from famous people in history.
“They’re protesting a day-after pill in France. The pill isn’t being protested anywhere else because it would mean fewer French people.” —Craig Kilborn
“France has neither winter nor summer nor morals. Apart from these drawbacks it is a fine country. France has usually been governed by prostitutes.” —Mark Twain
“I would rather have a German division in front of me than a French one behind me.” —General George S. Patton
“Going to war without France is like going deer hunting without your accordion.” —Norman Schwartzkopf
“We can stand here like the French, or we can do something about it.” —Marge Simpson
Jacques Chirac: “As far as I’m concerned, war always means failure.”
Rush Limbaugh: “As far as France is concerned, you’re right.”
Regis Philbin: “The only time France wants us to go to war is when the German Army is sitting in Paris sipping coffee.”
P. J. O’Rourke - “The French are a smallish, monkey-looking bunch and not dressed any better, on average, than the citizens of Baltimore. True, you can sit outside in Paris and drink little cups of coffee, but why this is more stylish than sitting inside and drinking large glasses of whisky I don’t know.”
Sen. John McCain “You know, the French remind me a little bit of an aging actress of the 1940s who was still trying to dine out on her looks but doesn’t have the face for it.”
Alan Kent “It is important to remember that the French have always been there when they needed us.”
Argus Hamilton - “They’ve taken their own precautions against al Qaeda. To prepare for an attack, each Frenchman is urged to keep duct tape, a white flag, and a three-day supply of mistresses in the house.”
Rep. Roy Blunt (MO) “Somebody was telling me about the French Army rifle that was being advertised on eBay the other day—the description was, ‘Never shot. Dropped once.’”
John Xereas - “Do you know it only took Germany three days to conquer France in World War II? And that’s because it was raining.”
What did the mayor of Paris say to the German Army as they entered the city in World War II? Table for one hundred thousand, m’sieur?
The AP and UPI reported that the French government announced after the London bombings that it has raised its terror alert level from Run to Hide.
The only two higher levels in France are Surrender and Collaborate.
The rise in the alert level was precipitated by a recent fire which destroyed France’s white flag factory, effectively disabling their military.
The French government announced today that it is imposing a ban on the use of fireworks at Euro Disney. The decision comes the day after a nightly fireworks display at the park, located just 30 miles outside of Paris, caused the soldiers at a nearby French Army garrison to surrender to a group of Czech tourists.
How do you sink the French Navy? Put it in water.
NEW STOCK MARKET TERMS
CEO –Chief Embezzlement Officer.
CFO– Corporate Fraud Officer.
BULL MARKET — A random market movement causing an investor to mistake himself for a financial genius.
BEAR MARKET — A 6 to 18 month period when the kids get no allowance, the wife gets no jewellery, and the husband gets no sex.
VALUE INVESTING — The art of buying low and selling lower.
P/E RATIO — The percentage of investors wetting their pants as the market keeps crashing.
BROKER — What my broker has made me.
STANDARD & POOR — Your life in a nutshell.
STOCK ANALYST — Idiot who just downgraded your stock.
STOCK SPLIT — When your ex-wife and her lawyer split your assets equally between themselves.
FINANCIAL PLANNER — A guy whose phone has been disconnected.
MARKET CORRECTION — The day after you buy stocks.
CASH FLOW– The movement your money makes as it disappears down the toilet.
YAHOO — What you yell after selling it to some poor sucker for $240 per share.
WINDOWS — What you jump out of when you’re the sucker who bought Yahoo @ $240 per share.
INSTITUTIONAL INVESTOR — Past year investor who’s now locked up in a nuthouse.
PROFIT — An archaic word no longer in use. Men strike back!
Currency corner:
Despite the expectation that the Aussie Authorities may reduce interest rates by 2% plus over the next 6 months the Aus $ has been resilient this week. It has had a weak run over recent months led by the growing international belief that many major economies are in or about to go into recession – thus impacting Australia’s enormous raw materials and metal’s sector. I now believe that the currency will weaken out over the next 6 months.
Reduced economic activity, reduced exports and reduced interest rates all point to a weaker currency. The $ strength must confuse many of you. Well the main support at the moment is linked to global panic and uncertainty. Despite the mess the US economy is in, the currency in seen as a ‘safe haven’. The other ‘support’ that exists is that most other major economies in the world are in just as big a mess. I do however expect the currency to weaken over the next few months – against the Euro in particular. Sterling is also a bit confusing. It has remained strong, defying logic. But then currency markets are rarely driven by logic. Ask any currency trader. So expect some weakness ahead.
Equity corner:
How do you deal with the current equity markets ? Answer is you don’t. If you are tempted, and there must be some Irish investors who feel their bourse has lots of ‘once in a lifetime value’, then buy and don’t look at the share price again until Christmas. The current daily volatility is too dangerous for the weak-hearted. Intra-day moves of 700/800 points on the Dow, which happened twice this week already, are not normal and very unhealthy. So avoid any attempt to ‘guess’ daily or weekly moves. There was a point in Ireland this week where the only ‘bid’ for Bank of Ireland was 20 Euro cents.
Thankfully no trades crossed at anything near that but even at Euro 1.60 (nearly 90% from its high) there is a lot of bad news and fear in the price. Nationalisation is not an option in my view. The government cannot afford taking any meaningful stake in any of the Irish banks. Our BP tip last week worked well if you sold on Tuesday evening. But if held to the end of the week, we will have to ‘hold’ them now. The UK FTSE lost 12% in value in just two days. And liquid stocks like BP will get slaughtered in the bloodshed. The declining oil price is, admittedly, contributing to the downside but a recent report assessed the BP price down to $40 oil, and felt fair value was Sterling Pounds 4.60. It is currently below 4 pounds. It also gives an 8% dividend yield. Which is safe. Unless the company believes it is too generous in the current market. A buy and hold till Christmas.