Monday, December 14, 2009
Ho ho ho!
Christmas has come early (OK, not this early) today, courtesy of that well-known proponent of Yuletide cheer....Abu Dhabi! The emirate has lent a cheeky $10 billion to Dubai, which has funnelled the dough to Dubai World, enabling them to redeem the infamous 12/09 Nakheel bond (which was trading in the mid-50's on Friday) at 115.52. Even the 2011's, pictured below, have nearly doubled.
Ho ho ho! Macro Man can only wonder if the Emir of Abu Dhabi was secretly long a bunch of villas here and figured lending 10 yards was a cheaper solution than looking for the bid....
So it's happy days, right? Spoos are flirting with their highs of the year, Eurostoxx are up a percent, and hell, even Japan's Tankan was better than expected. Hmmm....not so fast, my friend. The risk rebound has been selective, to say the least. EUR/USD has barely budged and FX carry is actually lower on the day (AUD/JPY is down 0.75%.)
And while gold has at least tried to rally, poking its head back above $1120/oz, oil couldn't even be bothered to put in the effort; at the time of writing, prompt crude is down 40 cents on the day.
Perhaps this is because of the Abu Dhabi loan; on an exclusive basis, Macro Man can provide a short video of the Emir's conversation with the head of ADNOC over the weekend:
Perhaps Christmas really has come early for those tired of the naive "risk on/risk off" regime. A bit of quality differentiation would be a welcome Christmas present indeed.