Dubai Default: Let's Get Ready to Crumble

Dubai's Man-made Island "Sculpture"


Dubai’s sovereign debt is the disaster du jour, Europe already took a 3% hit yesterday while we were ODing on tryptophan and cranberry relish.  We’re looking at a down 200+ open on the Dow as of this post (8am).

I’m still getting acquainted with the story, so I’ll post some headlines from the media below and comment later on today:

From Bloomberg:

Dubai World, the government investment company burdened by $59 billion of liabilities, sought this week to delay repayment on much of its debt.  Stocks fell around the world for a second day, commodities dropped the most since July, Treasuries rose and credit default swaps surged as Dubai’s attempt to delay debt repayments unnerved investors.

European banks like HSBC are most exposed, from the Wall Street Journal:

U.K. banks look the most exposed to Dubai debt worries says Credit Sights, and HSBC and Standard Chartered are estimated to hold half the U.K. total.  “Both HSBC and Standard Chartered had previously expressed concerns about weakness in United Arab Emirate economies and property markets, and both reported higher loan loss impairments in the region in 1H ‘09.”

The most interesting twist I’m seeing thus far is that investors are reacting by fleeing gold and reaching for US Dollars.  Bet ya didn’t see that one coming!  From Reuters:

Gold prices tumbled nearly 5 percent to a one-week low below $1,140 an ounce on Friday as investors fearing debt default in Dubai sought safety in dollars and cash.  “It’s mainly driven by this news out of Dubai (which) has had a large impact on risk appetite and resulted in a sharply stronger dollar,” said Daniel Major, a metals analyst at RBS Global Banking & Markets.

Never a dull moment.  Tune in later for more on the Dubai story as I get my arms around it.


Commodities Drop, Emerging Markets Fall  (Bloomberg)

UK Banks Look Most Exposed  (WSJ)

Gold Tumbls as Dubai Triggers Stampede to Dollars  (Reuters)

Tags: , , , , ,

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here:

Please see disclosures here.

What's been said:

Discussions found on the web
  1. quality engineering solutions commented on Nov 11

    … [Trackback]

    […] Find More here on that Topic: […]

  2. tangerine bank account log in commented on Nov 29

    … [Trackback]

    […] Information on that Topic: […]

  3. buy arimidex online commented on Jan 18

    … [Trackback]

    […] Information to that Topic: […]