Skip to main content

Dubai: looking backwards and forward

There seems to be a mixed reaction to Dubai news across global markets today.

Japanese shares closed higher on hopes that Dubai problems would not spread, while European shares closed lower Monday (likely due to fears over European banks' lending exposure to Dubai), and Dubai's benchmark index closed down 7.3 %.

Here in America, the major averages are still negative on the day, though the Dow and S&P 500 are climbing back towards neutral territory at 2:10 EST. As the NY Times points out, Wall Street is still trying to gauge the likely fallout from Dubai, along with the underlying meaning (if any) of post-Thanksgiving retail shopping figures.

"Wall Street shares fluctuated on Monday as investors gauged the fallout from Dubai’s debt crisis and weighed results from the first weekend of holiday shopping...


...But traders on Monday seemed more focused on the situation in Dubai, where Dubai World, the emirate’s investment arm, said last week that it would not be able to make on-time payments for some of its $59 billion in debt.

That rattled the markets Thursday and Friday, but on Sunday, the central bank in the United Arab Emirates tried to reassure investors by pledging to make extra financing available to all banks in the country, including foreign institutions with local branches.

Uri Landesman, head of global growth at ING, said investors saw danger in the potential ripple effects to other developing economies, even if American banks are not affected."

Judging (correctly) that the Dubai story would continue to be a big concern heading into this week, Gregor Macdonald and friends spent a fair amount of time on this topic in last Sunday's MacroTwits hour on Stocktwits TV. Here are a couple of interesting articles on Dubai that were shared in that macro discussion.

The first is a December 2008 Bloomberg article that I dug up from an old blog post. If you read through this year-old piece on Dubai's bursting real estate bubble, you'll notice many of the key names (Nakheel, Emaar Properties) and themes (a debt fueled building boom) which have figured so prominently in last week's Dubai World debt story.

The second is an article from The Independent shared by Gregor Macdonald called, "The Dark Side of Dubai". As those who kept up with the Dubai story this decade will probably guess, the piece focuses on the reportedly near slave-labor conditions that supported the rise of Dubai and the environmental and social problems which have accompanied it. It's a long piece, but definitely worth a look.

Popular posts from this blog

The Dot-Com Bubble in 1 Chart: InfoSpace

With all the recent talk of a new bubble in the making, thanks in part to the Yellen Fed's continued easy money stance, I thought it'd be instructive to revisit our previous stock market bubble - in one quick chart.

So here's what a real stock market bubble looks like. 

Here's what a bubble *really* looks like. InfoSpace in 1999-2001. $QQQ$BCORpic.twitter.com/xjsMk433H7
— David Shvartsman (@FinanceTrends) February 24, 2015
For those of you who are a little too young to recall it, this is a chart of InfoSpace at the height of the Nasdaq dot-com bubble in 1999-2001. This fallen angel soared to fantastic heights only to plummet back down to earth as the bubble, and InfoSpace's shady business plan, turned to rubble.

As detailed in our post, "Round trip stocks: Momentum booms and busts", InfoSpace rocketed from under $100 a share to over $1,300 a share in less than six months. 

In a pattern common to many parabolic shooting stars, the stock soon peaked and began a…

New! Finance Trends now at FinanceTrendsLetter.com

Update for our readers: Finance Trends has a new URL! 

Please bookmark our new web address at Financetrendsletter.com

Readers sticking with RSS updates should point your feed readers to our new Finance Trends feedburner.  



Thank you to all of our loyal readers who have been with us since the early days. Exciting stuff to come in the weeks ahead!

As a quick reminder, you can subscribe to our free email list to receive the Finance Trends Newsletter. You'll receive email updates about once every 4-8 weeks (about 2-3 times per quarter). 

Stay up to date with our real-time insights and updates on Twitter.

Moneyball: How the Red Sox Win Championships

Welcome, readers. To get the first look at brand new posts (like the following piece) and to receive our exclusive email list updates, please subscribe to the Finance Trends Newsletter.

The Boston Red Sox won their fourth World Series titleof the 21st century this week.

Having won their first Series in 86 years back in 2004, the last decade-plus has marked a very strong return to form for one of baseball's oldest big league clubs. So how did they do it?

Quick background: in late 2002, team owner and hedge fund manager,John W. Henry(with his partners)bought the Boston Red Sox and its historic Fenway Park for a reported sum of $695 million.

Henry and Co. quickly set out to find their ideal General Manager (GM) to help turn around their newly acquired, ailing ship.

This brings us to one of my favorite scenes from the 2011 film, Moneyball, in which John W. Henry (played by Arliss Howard) attempts to woo Oakland A's GM Billy Beane (Brad Pitt) over to Boston with an excellent job off…