The exorbitant levels of clients’ margin accounts among US brokers and last year’s astronomical inflows into high-yield bond funds are the direct result of the excess of money and liquidity that politicians decided to inject into the system after the 2008-09 crisis.
The proliferation of these signs of excess pushed the US Federal Reserve a year ago to become more realistic – that is, to communicate its intention to remove its extreme monetary policy.
The Fed has acted on its word by reducing its quantitative easing programme (QE). It will continue this process even if the economy does not take off as expected. The cycle of liquidity of the US dollar has also definitely entered a deceleration phase as risk management becomes critical to the Fed chair, Janet Yellen.
In China, state reflation and subsidies to non-performing economic sectors, as well as the quasi-endemic excesses of cheap credit for many years, have produced perverse effects. Indexes of speculation in property are obvious, along with the explosion of the carry trade of domestic institutions taking advantage of the strength and the low volatility of the yuan.
The People’s Bank of China has finally decided to control and regulate all financing channels – that is, to curb shadow banking. As a result, growth is slowing in parallel with the gradual normalisation of interest rates, which feeds political and social tensions. The bankruptcies, of reasonable size, will multiply and will further be tolerated by China’s leaders. Market forces, and sometimes ruthless capitalistic rules, now infiltrate deep into the country’s economic and financial framework.
The incredible wave of liquidity that large countries have synchronously dumped is beginning to gradually change in nature. Some are reassured by the fact that Japan is now accelerating its QE and that the European Central Bank will shyly follow through in the summer. But the transmission channels of euro and yen flows are very different from those of the dollar. Similarly, a weak dollar (courtesy of QE) normally fuels rising prices of raw materials, while a weak yen mainly creates deflationary pressures in the country or area directly competing for exports.
Granted, liquidity is not homogeneous, and its currency source also spells very different impacts on assets. The most recent large dispersion in performance between sectors and countries such as the US and Japan in the first quarter reflects these mutations. Liquidity injections, meanwhile, will remain tame in the future.
The ECB chief, Mario Draghi, has brilliantly managed to seduce and convince investors of his determination and ability of potential action. His style, his voluntarism and his creativity have done wonders to reduce the cost of credit in the euro area, assuage Berlin and deliver and perform almost nothing in terms of extreme politics. The return of Greece to the markets with its issuance of €3 billion is a case in point.
But the day of reckoning is approaching, with markets continuing to push the euro up. The process of European banks’ stress test and the subsequent recapitalisation that will take place this fall are tying the ECB’s hands for now.
We anticipate a regime change in currencies – that is, upcoming turbulences linked to desynchronised liquidity cycles. European sovereign bonds could also experience profit-taking as soon as the ECB’s QE approaches, especially if the euro were to weaken quickly. It seems like the risks of a policy error are clearly increasing.
Philippe Schindler is the chief investment officer at Blue Lakes Advisors, a Swiss company that advises financial institutions in Europe and the Middle East
Follow us on Twitter @Ind_Insights
Day 3, Abu Dhabi Test: At a glance
Moment of the day Just three balls remained in an exhausting day for Sri Lanka’s bowlers when they were afforded some belated cheer. Nuwan Pradeep, unrewarded in 15 overs to that point, let slip a seemingly innocuous delivery down the legside. Babar Azam feathered it behind, and Niroshan Dickwella dived to make a fine catch.
Stat of the day - 2.56 Shan Masood and Sami Aslam are the 16th opening partnership Pakistan have had in Tests in the past five years. That turnover at the top of the order – a new pair every 2.56 Test matches on average – is by far the fastest rate among the leading Test sides. Masood and Aslam put on 114 in their first alliance in Abu Dhabi.
The verdict Even by the normal standards of Test cricket in the UAE, this has been slow going. Pakistan’s run-rate of 2.38 per over is the lowest they have managed in a Test match in this country. With just 14 wickets having fallen in three days so far, it is difficult to see 26 dropping to bring about a result over the next two.
MATCH INFO
Real Madrid 2
Vinicius Junior (71') Mariano (90 2')
Barcelona 0
Singham Again
Director: Rohit Shetty
Stars: Ajay Devgn, Kareena Kapoor Khan, Ranveer Singh, Akshay Kumar, Tiger Shroff, Deepika Padukone
Rating: 3/5
Graduated from the American University of Sharjah
She is the eldest of three brothers and two sisters
Has helped solve 15 cases of electric shocks
Enjoys travelling, reading and horse riding
'My Son'
Director: Christian Carion
Starring: James McAvoy, Claire Foy, Tom Cullen, Gary Lewis
Rating: 2/5
Joker: Folie a Deux
Starring: Joaquin Phoenix, Lady Gaga, Brendan Gleeson
Director: Todd Phillips
Rating: 2/5
Dolittle
Director: Stephen Gaghan
Stars: Robert Downey Jr, Michael Sheen
One-and-a-half out of five stars
The winners
Fiction
- ‘Amreekiya’ by Lena Mahmoud
- ‘As Good As True’ by Cheryl Reid
The Evelyn Shakir Non-Fiction Award
- ‘Syrian and Lebanese Patricios in Sao Paulo’ by Oswaldo Truzzi; translated by Ramon J Stern
- ‘The Sound of Listening’ by Philip Metres
The George Ellenbogen Poetry Award
- ‘Footnotes in the Order of Disappearance’ by Fady Joudah
Children/Young Adult
- ‘I’ve Loved You Since Forever’ by Hoda Kotb
GROUPS
Group Gustavo Kuerten
Novak Djokovic (x1)
Alexander Zverev (x3)
Marin Cilic (x5)
John Isner (x8)
Group Lleyton Hewitt
Roger Federer (x2)
Kevin Anderson (x4)
Dominic Thiem (x6)
Kei Nishikori (x7)
Greatest of All Time
Starring: Vijay, Sneha, Prashanth, Prabhu Deva, Mohan
Company%20Profile
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US PGA Championship in numbers
1 Joost Luiten produced a memorable hole in one at the par-three fourth in the first round.
2 To date, the only two players to win the PGA Championship after winning the week before are Rory McIlroy (2014 WGC-Bridgestone Invitational) and Tiger Woods (2007, WGC-Bridgestone Invitational). Hideki Matsuyama or Chris Stroud could have made it three.
3 Number of seasons without a major for McIlroy, who finished in a tie for 22nd.
4 Louis Oosthuizen has now finished second in all four of the game's major championships.
5 In the fifth hole of the final round, McIlroy holed his longest putt of the week - from 16ft 8in - for birdie.
6 For the sixth successive year, play was disrupted by bad weather with a delay of one hour and 43 minutes on Friday.
7 Seven under par (64) was the best round of the week, shot by Matsuyama and Francesco Molinari on Day 2.
8 Number of shots taken by Jason Day on the 18th hole in round three after a risky recovery shot backfired.
9 Jon Rahm's age in months the last time Phil Mickelson missed the cut in the US PGA, in 1995.
10 Jimmy Walker's opening round as defending champion was a 10-over-par 81.
11 The par-four 11th coincidentally ranked as the 11th hardest hole overall with a scoring average of 4.192.
12 Paul Casey was a combined 12 under par for his first round in this year's majors.
13 The average world ranking of the last 13 PGA winners before this week was 25. Kevin Kisner began the week ranked 25th.
14 The world ranking of Justin Thomas before his victory.
15 Of the top 15 players after 54 holes, only Oosthuizen had previously won a major.
16 The par-four 16th marks the start of Quail Hollow's so-called "Green Mile" of finishing holes, some of the toughest in golf.
17 The first round scoring average of the last 17 major champions was 67.2. Kisner and Thorbjorn Olesen shot 67 on day one at Quail Hollow.
18 For the first time in 18 majors, the eventual winner was over par after round one (Thomas shot 73).
Company%20Profile
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Company%20profile
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Brief scoreline:
Liverpool 2
Keita 5', Firmino 26'
Porto 0
Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
COMPANY PROFILE
Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding
COMPANY%20PROFILE
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APPLE IPAD MINI (A17 PRO)
Display: 21cm Liquid Retina Display, 2266 x 1488, 326ppi, 500 nits
Chip: Apple A17 Pro, 6-core CPU, 5-core GPU, 16-core Neural Engine
Storage: 128/256/512GB
Main camera: 12MP wide, f/1.8, digital zoom up to 5x, Smart HDR 4
Front camera: 12MP ultra-wide, f/2.4, Smart HDR 4, full-HD @ 25/30/60fps
Biometrics: Touch ID, Face ID
Colours: Blue, purple, space grey, starlight
In the box: iPad mini, USB-C cable, 20W USB-C power adapter
Price: From Dh2,099
COMPANY%20PROFILE
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Results
6.30pm: The Madjani Stakes (PA) Group 3 Dh175,000 (Dirt) 1,900m
Winner: Aatebat Al Khalediah, Fernando Jara (jockey), Ali Rashid Al Raihe (trainer).
7.05pm: Maiden (TB) Dh165,000 (D) 1,400m
Winner: Down On Da Bayou, Royston Ffrench, Salem bin Ghadayer.
7.40pm: Maiden (TB) Dh165,000 (D) 1,600m
Winner: Dubai Avenue, Fernando Jara, Ali Rashid Al Raihe.
8.15pm: Handicap (TB) Dh190,000 (D) 1,200m
Winner: My Catch, Pat Dobbs, Doug Watson.
8.50pm: Dubai Creek Mile (TB) Listed Dh265,000 (D) 1,600m
Winner: Secret Ambition, Tadhg O’Shea, Satish Seemar.
9.25pm: Handicap (TB) Dh190,000 (D) 1,600m
Winner: Golden Goal, Pat Dobbs, Doug Watson.
Don't get fined
The UAE FTA requires following to be kept:
- Records of all supplies and imports of goods and services
- All tax invoices and tax credit notes
- Alternative documents related to receiving goods or services
- All tax invoices and tax credit notes
- Alternative documents issued
- Records of goods and services that have been disposed of or used for matters not related to business
Tree of Hell
Starring: Raed Zeno, Hadi Awada, Dr Mohammad Abdalla
Director: Raed Zeno
Rating: 4/5
Company%20Profile
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COMPANY PROFILE
Name: HyperSpace
Started: 2020
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
Jigra
Starring: Alia Bhatt, Vedang Raina, Manoj Pahwa, Harsh Singh
SPECS
Engine: Two-litre four-cylinder turbo
Power: 235hp
Torque: 350Nm
Transmission: Nine-speed automatic
Price: From Dh167,500 ($45,000)
On sale: Now
The specs
Engine: 1.5-litre 4-cylinder petrol
Power: 154bhp
Torque: 250Nm
Transmission: 7-speed automatic with 8-speed sports option
Price: From Dh79,600
On sale: Now
if you go
The flights
Emirates have direct flights from Dubai to Glasgow from Dh3,115. Alternatively, if you want to see a bit of Edinburgh first, then you can fly there direct with Etihad from Abu Dhabi.
The hotel
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Located in the heart of Mackintosh's Glasgow, the Dakota Deluxe is perhaps the most refined hotel anywhere in the city. Doubles from Dh850
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Events and tours
There are various Mackintosh specific events throughout 2018 – for more details and to see a map of his surviving designs see glasgowmackintosh.com
For walking tours focussing on the Glasgow Style, see the website of the Glasgow School of Art.
More information
For ideas on planning a trip to Scotland, visit www.visitscotland.com
The specs
Engine: 3.0-litre 6-cyl turbo
Power: 374hp at 5,500-6,500rpm
Torque: 500Nm from 1,900-5,000rpm
Transmission: 8-speed auto
Fuel consumption: 8.5L/100km
Price: from Dh285,000
On sale: from January 2022
