I have been reading Michael Wolff's new book, Fire and Fury: Inside the Trump White House, the No 1 best-seller across the world, which has worked the US president up into a paroxysm of rage and recrimination. He may hate it, but for the rest of us it is very, very scary.
We’ve all seen the headlines and maybe even read some of the extracts, suggesting that the leader of the free world is mentally unstable, has the attention span of a gnat, doesn’t read and doesn’t listen, and makes up policy on the hoof – which he then changes on a whim. The elaborately-painted picture – based, according to Wolff, on more than 200 interviews with White House staffers – is one of chaos, incompetence and of a country which is effectively rudderless, run by a man who is perilously close either to insanity or dementia, or maybe both.
Yet, economically and financially, the United States has had a great year – and it’s still going. The economy is growing at nearly 4 per cent, a figure it hasn’t reached since president Reagan’s day. The Dow Jones Industrial Average last week broke through the 25,000 mark, the Nasdaq Composite crossed the 7,000 mark last month, and share prices have been hitting new peaks almost weekly.
The latest jobs figures, published last Friday, marked the 87th straight month of employers adding to their payrolls, causing Mr Trump to tweet triumphantly: “This is all about the Make America Great Again agenda. Jobs, Jobs, Jobs. Six trillion dollars in value created!”
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And he has a point: unemployment is now down to 4.1 per cent, a 17-year low, with 2.1 million new jobs created in the past year (on top of 2.2 million in 2016, Barack Obama’s last year in power), and, after a long period of slipping sideways, wages were up 2.5 per cent since Mr Trump took over.
Good news, for once, is not hard to find. Across the globe, economies are responding to the US growth figures with China, Japan, India and the EU all recording strong growth. The worldwide stock market boom has continued into 2018 with the Fang stocks (Facebook, Amazon, Netflix and Google parent Alphabet) up by more than 5 per cent in the first week of January.
The US tech giants and their Chinese counterparts, Tencent and Alibaba, are still leading the way, with, according to analysts, scope for further fast earnings growth. Emerging market equities returned an extraordinary 37.75 per cent in dollar terms in 2017, handsomely topping even Wall Street.
How can this be? According to Wolff, Mr Trump doesn’t really have an economic policy other than to cut taxes, bring back jobs and make America great again – none of which is bad in itself. But there is no detail to it, no thought-out strategy based on economic think tanks and endless grinding of data – just broad, visceral brushstrokes painted from instinct without thinking through the consequences. Yet, does it matter?
Reading Wolff’s book, one wonders how the US economy functions at all under this White House, yet it does so remarkably effectively right now. The vast majority of American investors won’t read Wolff’s book, and don’t care anyway. They are much more interested in Mr Trump’s view (shared by his Republican cheerleaders) that a surge in business investment and wage rises, prompted by last year’s landmark tax reforms, will boost US GDP growth well above 4 per cent this year, and maybe even get to 5 per cent.
Stock market sages and commentators have been warning of a market blow-up since Mr Trump was elected president in November 2016. But it hasn’t happened yet. What’s more, most investors, including the big fund managers, don’t expect it any time soon. Just how positive they are is shown by surveys of sentiment which record the highest number of bulls, and the lowest number of bears, since the start of 1987.
"Shareholders are cheering on corporate capex, as they bet on a synchronised global economic boom," said The Wall Street Journal's columnist James Macintosh yesterday. "There are few fears of financial excess."
There are plenty of doubters of course, and forecasts of an imminent crash mount every time the Dow hits a new peak. Most analysts agree that stocks are not in a bubble. But, as Macintosh points out: “there are increasing signs of euphoria and it is plausible that a true blowout end to the bull market could be on the way soon.”
Yet even Macintosh reckons there is still a lot more money to be made by riding along with it. Anyone who jumped off the Trump locomotive this time last year, when the same gloomy predictions were being made by the same people, has missed out on a rise of more than 20 per cent.
The trick will be getting out; not necessarily at the top – that’s virtually impossible – but at a higher level than you got in. Investors in the Dot-com boom in 1996 had made huge gains by the summer of 2000, but were back to where they started in 2002. In equivalent terms, we may be somewhere around 1998-89. There’s still money to be made, it seems. But investors should be ready to jump.
Ivan Fallon is a former business editor of The Sunday Times
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What is graphene?
Graphene is extracted from graphite and is made up of pure carbon.
It is 200 times more resistant than steel and five times lighter than aluminum.
It conducts electricity better than any other material at room temperature.
It is thought that graphene could boost the useful life of batteries by 10 per cent.
Graphene can also detect cancer cells in the early stages of the disease.
The material was first discovered when Andre Geim and Konstantin Novoselov were 'playing' with graphite at the University of Manchester in 2004.
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Dubai Bling season three
Cast: Loujain Adada, Zeina Khoury, Farhana Bodi, Ebraheem Al Samadi, Mona Kattan, and couples Safa & Fahad Siddiqui and DJ Bliss & Danya Mohammed
Rating: 1/5
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
The more serious side of specialty coffee
While the taste of beans and freshness of roast is paramount to the specialty coffee scene, so is sustainability and workers’ rights.
The bulk of genuine specialty coffee companies aim to improve on these elements in every stage of production via direct relationships with farmers. For instance, Mokha 1450 on Al Wasl Road strives to work predominantly with women-owned and -operated coffee organisations, including female farmers in the Sabree mountains of Yemen.
Because, as the boutique’s owner, Garfield Kerr, points out: “women represent over 90 per cent of the coffee value chain, but are woefully underrepresented in less than 10 per cent of ownership and management throughout the global coffee industry.”
One of the UAE’s largest suppliers of green (meaning not-yet-roasted) beans, Raw Coffee, is a founding member of the Partnership of Gender Equity, which aims to empower female coffee farmers and harvesters.
Also, globally, many companies have found the perfect way to recycle old coffee grounds: they create the perfect fertile soil in which to grow mushrooms.
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Other workplace saving schemes
- The UAE government announced a retirement savings plan for private and free zone sector employees in 2023.
- Dubai’s savings retirement scheme for foreign employees working in the emirate’s government and public sector came into effect in 2022.
- National Bonds unveiled a Golden Pension Scheme in 2022 to help private-sector foreign employees with their financial planning.
- In April 2021, Hayah Insurance unveiled a workplace savings plan to help UAE employees save for their retirement.
- Lunate, an Abu Dhabi-based investment manager, has launched a fund that will allow UAE private companies to offer employees investment returns on end-of-service benefits.
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How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
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The biog
First Job: Abu Dhabi Department of Petroleum in 1974
Current role: Chairperson of Al Maskari Holding since 2008
Career high: Regularly cited on Forbes list of 100 most powerful Arab Businesswomen
Achievement: Helped establish Al Maskari Medical Centre in 1969 in Abu Dhabi’s Western Region
Future plan: Will now concentrate on her charitable work
THREE
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MATCH INFO
What: Brazil v South Korea
When: Tonight, 5.30pm
Where: Mohamed bin Zayed Stadium, Abu Dhabi
Tickets: www.ticketmaster.ae
How to avoid crypto fraud
- Use unique usernames and passwords while enabling multi-factor authentication.
- Use an offline private key, a physical device that requires manual activation, whenever you access your wallet.
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Gulf Men's League final
Dubai Hurricanes 24-12 Abu Dhabi Harlequins
The Word for Woman is Wilderness
Abi Andrews, Serpent’s Tail
Emergency
Director: Kangana Ranaut
Stars: Kangana Ranaut, Anupam Kher, Shreyas Talpade, Milind Soman, Mahima Chaudhry
Rating: 2/5
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
Tightening the screw on rogue recruiters
The UAE overhauled the procedure to recruit housemaids and domestic workers with a law in 2017 to protect low-income labour from being exploited.
Only recruitment companies authorised by the government are permitted as part of Tadbeer, a network of labour ministry-regulated centres.
A contract must be drawn up for domestic workers, the wages and job offer clearly stating the nature of work.
The contract stating the wages, work entailed and accommodation must be sent to the employee in their home country before they depart for the UAE.
The contract will be signed by the employer and employee when the domestic worker arrives in the UAE.
Only recruitment agencies registered with the ministry can undertake recruitment and employment applications for domestic workers.
Penalties for illegal recruitment in the UAE include fines of up to Dh100,000 and imprisonment
But agents not authorised by the government sidestep the law by illegally getting women into the country on visit visas.
Guide to intelligent investing
Investing success often hinges on discipline and perspective. As markets fluctuate, remember these guiding principles:
- Stay invested: Time in the market, not timing the market, is critical to long-term gains.
- Rational thinking: Breathe and avoid emotional decision-making; let logic and planning guide your actions.
- Strategic patience: Understand why you’re investing and allow time for your strategies to unfold.
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