Wow, so much has happened in such a short time. Did anyone think that Dubai would run into liquidity problems? Some, probably. But probably not to the degree it occurred. The fact that Abu Dhabi is reluctant to fully bail out the creditors is significant, not the least of which is because it means banks can no longer pump debt into Dubai despite its heavy leverage and assume payments are virtually guaranteed. Anyway, I’ll let someone else flesh out the story with more details because I don’t want this post to drag out too long. One thing I will clarify though, as I’ve expressed before the market’s surged too quickly too far. The rise in the stock market is not commensurate with actual economic recovery, even taking its forward looking nature into account. So is this the surprise that corrects the market? I’ll have to go with no. It’s certainly possible, but I’m thinking it’ll take a lot more than 59B from a sovereign corporation already known to be debt heavy to send the market into tailspin. As a piece of the harbinger, perhaps. But not in itself.
The portfolio will be undergoing quite a few shifts the coming week, and a new (bolder) outlook after the break!
