US markets are poised to enter another volatile week of trading, with the Federal Reserve set to make its interest rate decision and reveal updated economic projections as President Donald Trump's tariffs continue to cloud the future of the world's largest economy.
Last week's remarkable row between Mr Trump and trading partners featured a dizzying set of tariff implementations, retaliations, threats and reversals that thrust markets into further turmoil.
“Right now, nothing seems to matter except what's going on in [Washington] DC and the confusing set of tariff news that seems to be released almost several times a day,” said Peter Andersen, founder of Andersen Capital Management.
The Dow Jones is down almost 3 per cent this year. The Nasdaq entered correction after falling more than 10 per cent from its recent record high. The S&P 500 briefly slid into correction territory on Thursday. In another sign of market volatility, the price of gold climbed above $3,000 for the first time on Friday.
“I think, investors don't have a grounding and they don't know what the endgame is,” Mr Andersen said. "I think, most investors are punch-drunk."
Policy uncertainty has seeped into the economic outlook. And with the Fed likely to hold rates steady on Wednesday, the economic impact of tariffs will face further scrutiny.
“The key question at this [Fed] meeting is how policymakers will balance the continuing unease about the frustratingly slow pace of disinflation progress with mounting concerns over the growth outlook, the usual uncertainties about the outlook compounded by a highly unusual degree of policy uncertainty,” Derek Tang, economist at the LH Meyer firm, said in a note to clients.
Fed officials have already signalled they are firmly in wait-and-see mode, meaning they are set to hold their target range for interest rates steady for a second straight time at 4.25 per cent to 4.50 per cent.
“We do not need to be in a hurry and are well positioned to wait for greater clarity,” Fed Chairman Jerome Powell said in his final public remarks before the central bank's quiet period.
With a pause likely, focus will instead turn towards Mr Powell's press conference and the Fed's economic projections. The Fed updates its forecasts on GDP, interest rates, inflation and unemployment every three months.
“The sheer amount of uncertainty around trade policy and fiscal policy is just suffocating for the economy, and there's no end in sight, so the Fed is going to likely factor that into their forecasts,” said Ryan Sweet, chief US economist at Oxford Economics.
Currently, Fed officials are trying to assess if the inflationary effects will be a one-time bump that they can look through. “My baseline view is that any imposition of tariffs will only modestly increase prices and in a non-persistent manner,” Fed Governor Christopher Waller said last month.
In separate remarks, New York Fed Governor John Williams anticipated that tariffs will have some inflationary effect this year.
Meanwhile, Mr Powell has asserted the economy remains in a “good place” despite the elevated uncertainty surrounding it. But as markets remain jittery over the effects of Mr Trump’s tariff approach, traders will look towards the even-keeled Fed Chairman to offer guidance on the economic outlook.
“He's got to pull this off where he signals that we're keeping an eye on the economy,” Mr Sweet said. "Things are holding up so far, but at the same time, saying that we're not going to ignore the inflation risk. He’s going to have to pull this one out of his hat and kind of get this one perfect, or you're going to see markets respond.”
More on animal trafficking
UAE currency: the story behind the money in your pockets
5 of the most-popular Airbnb locations in Dubai
Bobby Grudziecki, chief operating officer of Frank Porter, identifies the five most popular areas in Dubai for those looking to make the most out of their properties and the rates owners can secure:
• Dubai Marina
The Marina and Jumeirah Beach Residence are popular locations, says Mr Grudziecki, due to their closeness to the beach, restaurants and hotels.
Frank Porter’s average Airbnb rent:
One bedroom: Dh482 to Dh739
Two bedroom: Dh627 to Dh960
Three bedroom: Dh721 to Dh1,104
• Downtown
Within walking distance of the Dubai Mall, Burj Khalifa and the famous fountains, this location combines business and leisure. “Sure it’s for tourists,” says Mr Grudziecki. “Though Downtown [still caters to business people] because it’s close to Dubai International Financial Centre."
Frank Porter’s average Airbnb rent:
One bedroom: Dh497 to Dh772
Two bedroom: Dh646 to Dh1,003
Three bedroom: Dh743 to Dh1,154
• City Walk
The rising star of the Dubai property market, this area is lined with pristine sidewalks, boutiques and cafes and close to the new entertainment venue Coca Cola Arena. “Downtown and Marina are pretty much the same prices,” Mr Grudziecki says, “but City Walk is higher.”
Frank Porter’s average Airbnb rent:
One bedroom: Dh524 to Dh809
Two bedroom: Dh682 to Dh1,052
Three bedroom: Dh784 to Dh1,210
• Jumeirah Lake Towers
Dubai Marina’s little brother JLT resides on the other side of Sheikh Zayed road but is still close enough to beachside outlets and attractions. The big selling point for Airbnb renters, however, is that “it’s cheaper than Dubai Marina”, Mr Grudziecki says.
Frank Porter’s average Airbnb rent:
One bedroom: Dh422 to Dh629
Two bedroom: Dh549 to Dh818
Three bedroom: Dh631 to Dh941
• Palm Jumeirah
Palm Jumeirah's proximity to luxury resorts is attractive, especially for big families, says Mr Grudziecki, as Airbnb renters can secure competitive rates on one of the world’s most famous tourist destinations.
Frank Porter’s average Airbnb rent:
One bedroom: Dh503 to Dh770
Two bedroom: Dh654 to Dh1,002
Three bedroom: Dh752 to Dh1,152
It Was Just an Accident
Director: Jafar Panahi
Stars: Vahid Mobasseri, Mariam Afshari, Ebrahim Azizi, Hadis Pakbaten, Majid Panahi, Mohamad Ali Elyasmehr
Rating: 4/5
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.”
More on Quran memorisation:
Abu Dhabi GP schedule
Friday: First practice - 1pm; Second practice - 5pm
Saturday: Final practice - 2pm; Qualifying - 5pm
Sunday: Etihad Airways Abu Dhabi Grand Prix (55 laps) - 5.10pm
The specs
- Engine: 3.9-litre twin-turbo V8
- Power: 640hp
- Torque: 760nm
- On sale: 2026
- Price: Not announced yet
Tips from the expert
Dobromir Radichkov, chief data officer at dubizzle and Bayut, offers a few tips for UAE residents looking to earn some cash from pre-loved items.
- Sellers should focus on providing high-quality used goods at attractive prices to buyers.
- It’s important to use clear and appealing photos, with catchy titles and detailed descriptions to capture the attention of prospective buyers.
- Try to advertise a realistic price to attract buyers looking for good deals, especially in the current environment where consumers are significantly more price-sensitive.
- Be creative and look around your home for valuable items that you no longer need but might be useful to others.
