Dubai's rout is GBP's gain

With Dubai announcing the First Sovereign Default of the current financial crisis, the world has been again gripped by fear psychology with further defaults being priced in probably from the eastern european countries - but in all this the gainer might be as remote as GBP. With Dubai loosing the sheen off its property and real estate , money would again flow to the centre of the world i.e. London. With property flows hitting London, and the development being backed by 2012 London Olympics, going Long GBP/USD makes a good trade

Dubai rattles financial markets

The decision of Dubai World, a government investment company overseeing investments in Dubai to delay payment of most of its debt of about $59 bn , has rattled the financial markets. Credit Default Swaps linked to Gulf investments rose as much as 131 points today, and USD slumped to a 14 year low against the Yen. This is the first sovereign default after Argentina in 2001. The markets have been spooked by this data, and investors are demanding a higher returns from EM economies.

Elsewhere, oil was slightly down, and Gold touched new highs. Dollar was mostly sold across the board and GBP was sold off heavily.

Market update 24.11.09

Oil was hammered on the back of GDP nos. from the US. The QoQ growth came at 2.8% but the previous no. was revised lower from the one reported earlier. US economy's slower expansion has caused concern whether the recovery is strong enough. The weakness in the labour market, high unemployment rates (10%) is keeping Fed reserve Chairman to keep interest rates low to near zero levels, and with lame inflation nos. - there is very little chance that we might see an upward move in interest rates in the near future. With zero interest rates, the carry trade is further fuelling dollar weakness and causing EM economies to rise - stocks are rallying less on fundamentals and more because of lack of alternatives for capital to flow

Parentage

I think the best gift parents can give to their children is to allow them to gamble and take chances and make sure that they feel protected if the bets go off....there is a sense of security in knowing that if sh!t hits the fan, one can still go home to ones parents and have nice food and good night's sleep.