The World Stock Markets Are Crashing & You’re Going Shopping?!

It’s Black Shopping Weekend and world stock markets are crumbling anywhere between 2-5% because Dubai World, the country’s main investing arm can’t pay its $60bn in debt for another 6 months!

Who would have thought that one of the most glitzy countries in the world would have trouble paying their own debt on time?  The fear of systemic contagion is real as investors sell first, and ask questions later.

If Dubai can’t pay their debts, who else can’t?  The US of course, but that’s OK!  Everybody will fund our debt as you observe the US dollar and US treasuries strengthen.  Don’t believe me?  The 10-yr US treasury yield has dipped below 3.25% again.  What inflation?  Cheap money forever!

Investors around the world can mock us, and debase our weak currency all they want!  You shouldn’t care, because all you have to do is watch what investors DO and not what they say.  Investors are rushing in to our arms today crying “We love you America!  Give us shelter!”

So many have disagreed with our “A Weak Dollar Doesn’t Matter Folks!” thesis.  Yet so many are going to shop till they drop for pieces of junk they shouldn’t be buying in the first place!  It’s Black Friday every day at Ross, TJ Max, and Craigslist, so save your stress and relax!  If you go shopping today and check your 401k and stock accounts when you return, you might just have to go back on Monday and return everything!

* CONTEST * Predict where the Dow Jones closes today (11/27) and win a free pat on the back!  I predict 10,288.  I’ll also highlight the winner in my weekly Katana wrap.

Readers, are there any out there who are relaxing at home in their pajamas being entertained by the media coverage of shopping frenzy?  Why don’t people just shop on-line instead, given similar deals?  If you make $20/hr from work, but stand in line for 5 hours to save $100 on a laptop, doesn’t the bring you back to even?

Dale Siegel is offering a second “The New Rules of Mortgage” book as a giveaway.  Why not just comment and give yourself a chance to win?  What’s cheaper than FREE?

Keigu,

Financial Samurai - “Slicing Through Money’s Mysteries”

Twitter @FinancialSamura and sign up for our RSS feed.

Sam started Financial Samurai in 2009 during the depths of the financial crisis as a way to make sense of chaos. After 13 years working on Wall Street, Sam decided to retire in 2012 to utilize everything he learned in business school to focus on online entrepreneurship.

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Comments

  1. Millionaire Acts says

    How’s the Black Friday there in US? Still a lot of shoppers despite the current recession? I’ve seen some pictures of Macy’s Thanksgiving Parade yesterday and it was extravagant! Definitely lots of kids enjoyed watching it.

  2. admin says

    @Millionaire Acts
    Sure looks like MANIA according to the TV. I’m still in my sweats, just chilling at home. Maybe do some yoga before going to play golf.

    Actually, just updated the post, and am doing a contest on where people think the Dow Jones will close today. Whatcha think?

  3. Larry L, New York says

    Dow 10350. Move along, nothing to see here in the long run (at least with Dubai directly affecting us) This is more fear in the market than anything else. I find it interesting that things like this rattle the market (which is not local to the USA) but yet poor numbers coming from our economy the stock market goes up… Go figure.

  4. Jon says

    I’m with you- let’s buy the stuff online instead. Hopefully no-one gets trampled today, though I hear Wal Mart had special training sessions to avoid it this time around. I think Dubai will just end up being a blip on the radar in the scheme of things, but it’s just a guess.

  5. Jon says

    Hehe, it was intentional my friend, as the only kind of prediction I’m good at goes “There is a 70% chance that it is already raining” :D. If I had to guess, I’d say we close slightly negative or close to even, say DOW 10400.

  6. Michael says

    FS – I’m predicting 10300 flat. Excellent post, very timely. And I’m staying home today; you can get great deals throughout the christmas season, no need to rush out today!

  7. dale robyn siegel says

    Did anybody ever hear of the word “re-gift”? Perhaps, that is not such as bad thing, anymore. So, on Black Friday, stay home, clean out your closets and think of who would love that plaid bathrobe you got last year for a gift. If it was too small to fit around your waist last year and again this year, give it up. (Rule # 1 of re-gifting: make sure the tags are still on the item!)

  8. admin says

    @dale robyn siegel
    Haha, nice one Dale. I couldn’t agree more. Well, maybe we should leave the tag on if it’s really really expensive and we want to impress the receiver and our names aren’t on them yeah??

    Then again, if that were the case, maybe best to sell the thing on Ebay!

  9. Credit Card Chaser says

    Great title! Also, equally great point about many people not bothering to calculate how much their time is worth. In college when my time was worth around $10/hr (lol) I used to stand in line on Black Friday to buy electronics every year but now its not worth it so I just shop online for the most part.

    PS I think it was an issue of either Fortune or maybe Forbes that had some absolutely amazing pictures of half finished buildings in Dubai that you should check out. It was a huge full page spread of like 10-15 pictures if I am not mistaken

  10. Charlie says

    I’ve never shopped black friday in the malls or shopping areas. Fighting with crowds and waiting in line forever is not my idea of a good time. If I do buy anything it’ll be online to get free shipping or something. Just not that into shopping yet this season.

  11. Tina Fortune says

    Great post! I went to work and I no longer allow others to spend my money. Just because there is a 50% off sale or a price I can’t resist, I am NOT running to the store. I set a budget for the entire year including the Holidays and instead I purchase what my kiddies want from the list. As a single mom of 3, I’m determined to live financially free which means watching how we spend our money. The Dow? No idea…

  12. Don@moneyreasons.com says

    Black Friday is okay, I guess, I just don’t want to wait in the lines. Hmmm, it’s a good thing the H1N1 virus isn’t as deadly as it could have been. Black Friday is kind of like a big old petri dish for it…

    As for Dubai, I always wondered what would happen if a recession (or actually a normal slow down” would hit. Afterall, it’s not like you can cut back the expenses on the indoor ski dome that they have. What an amazing place, too bad I’ll never be able to afford to go there. I’m betting they get their extension on their debt (after all, the shipping companies are all getting theirs)… By next Friday, we’ll still be above 10,000 (I hope).

  13. admin says

    @Don – Good guess regarding Dubai World getting an extension. They probably will, otherwise the markets will panic further.

    @Tin – Nice job going to work today! Good on you for being so disciplined on spending money, including holidays!

    @charlie – Yeah, all about online shopping in PJ’s! It’s cold outside, I know! Was just playing golf all day! :)

    @CC Chaser – $10/hr? That’s BIG TIME! When I was in college, I only made $6/hr. I guess you’re younger than me? Will check out the Forbes/Fortune article. Thnx!

    @JoeTax & Joe – What are the chances that the two Joes are the most bullish predictors? Might be an interesting correlation that Joe’s are more optimistic!?

    Thanks everyone else for participating. I totally forgot the market closed early! Doh.

  14. Minority Fortune says

    Looks like Dubai has joined us in the real estate bubble burst. Let’s make room for them! The US will be affected in some ways if they default on this debt. Dubai World holds investments in several US commercial properties, like Barneys New York. Many institutional investment firms like Goldman Sachs also hold money in Dubai. So, maybe the US should consider sitting next to Dubai’s ruler with puppy dog eyes as they plead for Abu Dhabi to help bail them out.

    Whilst retailers are enticing consumers to spend, it may not have much effect. With over a ten percent unemployment rate, there’s no money for many Americans to spend. However, that won’t stop them from cooking up fancy numbers with their botched accounting practices. Ugh, will we ever learn?!

  15. trader says

    This is my first time on your site. I’m an HK equities trader, and I have to say that stupid Dubai news killed me. The Hang Seng Index went down by as much as 1,200 pts last Friday. Ugh. But I don’t think it’s really “BIG” news since Dubai is a relatively small market. Investors, traders, and speculators all over the world are just finding a reason to sell, and the debt issue was a good catalyst.

    I bet this correction will just be shallow in the short-term (Dow 10k?), but deeper next year (8-9k?). China was the leader in this year long bull market, and it went down more than 20% from the top before rallying again. I think the US, the laggard, will do the same. But there’s still the Santa Claus rally to look forward to! Yeah!

  16. Stuart says

    I was really looking for more of a shakeup from this Debai deal. This isn’t just another bank going into bankruptcy protection. I suppose we have to wait for another catalyst to remove the bubbly atmosphere that the market seems to have these days. Interest rates are too low and it is leading to major speculation. Look out Asia.

  17. admin says

    @trader
    Hey there! Good to hear from you HK equities trader! Are you an individual trader, or trader for a big bank?

    Everything I’ve read seems to be that this incident is no big deal and won’t be systemic. All the creditors have to do is work out and arrangement, so Dubai World doesn’t go under, otherwise everybody loses.

    I wonder about the Santa Claus rally too. We didn’t have the usual Sept and Oct correction, so I would think any Santa Claus rally we have will be quite muted. However, it’s important the markets don’t crater into bonus decision time, otherwise that would suck!

  18. admin says

    @Stuart
    I’m pretty impressed the US only went down 1.5% as well considering Asia and Europe went down 3%++. Guess we’re the safe haven, low beta market!

    We’re going to have low interest rates for a very loooong time.

  19. Evan says

    Everyone always discuss the dollar trade off ($20/hour to save $100) – but doesn’t that assume that the person (1) has an hourly job and (2) is allowed to work more hours at that hourly job.

    Ignoring those 2 issues – you’d probably have to work 6 or 6.5 hours thanks to taxes! It may be worth it just to be MISERABLE for an hour or two to save the hundred?

  20. David says

    I’ve been hearing about these extravagant Dubai real estate projects for years now and I would be laughing at them if oil hadn’t taken such a big hit from the Dubai World news. Refiners haven’t been making money for a while and this certainly isn’t going to help. Seven star hotels (seriously), indoor skiing (yes, skiing), and millions of tons of dirt and rock pushed into the ocean to build islands for the ultra rich. I don’t know why this came as such a surprise to the markets, everyone else in the world had their real estate meltdown a couple years ago.
    .-= David´s last blog ..More small business shoestring marketing tips =-.

  21. admin says

    @David
    It’s actually a real estate MELT UP again all throughout Asia, and our Canadian neighbors up north!

    Nice job using the comment luv thing. I love that plug in. I don’t know how to keep it permanently clicked though.

    BTW, just tried commenting but it said “CAPTCHA code not working” or something, but I don’t see a code to input in the first place.

  22. Kevin@OutOfYourRut says

    Keigu–What you’ve written is brilliantly absurd! The sharks are circling the boat, but the passengers are still partying.

    This will sound like semantics, but as true as what you’ve written may be, none of it will matter until it matters, and by then–it’ll be too late.

    In the meantime, we shouldn’t be surprised if the stock market continues rallying despite the Dubai debacle. Momentum seems to trump reality in rallies, and this market is clearly in a rally phase.
    .-= Kevin@OutOfYourRut´s last blog ..What Career Will You Have in “Retirement”? =-.

  23. trader says

    @admin
    I’m a day trader for a brokerage firm here in the Philippines. I actually just started out early this year, and I have to admit, short-term trading has been really tough since I have to deal with the daily market noise. I make more money trading by myself. Haha. But it’s my passion, and it’s a great opportunity for me to learn trading the right way.

    I agree with you. The massive rallies we shouldn’t have had in Sept. and Oct. may kill the Santa Claus rally (profit-taking for the holidays). However, I do believe that if companies beat revenue growth expectations in the coming earnings season, we’ll continue to climb a bit higher. *crosses fingers*
    .-= trader´s last blog ..Blood in the Street =-.

  24. admin says

    @trader
    Gotcha. A very best to you in your day trading activities. I’ve tried day trading many MANY times before, and 8 out of 10 times, I would give it all up in some stupid trade that just crushes my profits.

    The problem with me is that I don’t quit while I’m ahead. I also love going 3:1 leveraged when buying things. Eventually, things go wrong, and I blow myself up. Then, I start cursing the stupidity of the world, but really, it’s just me that’s stupid! :)

    Here’s hoping for a rebound this week, like Europe did on Friday!

  25. David says

    @admin I switched off the captcha code last night and installed IntenseDebate so it should be working now. I can’t get CommentLuv to cooperate with my theme and any other plugins.

    You’re right, I wasn’t thinking about Asia, and Canada never crossed my mind. Speaking of Canada, I just learned Canada was a constitutional monarchy and Queen Elizabeth the Head of State. What’s the point of that? I think the era of monarchies is way over.
    .-= David´s last blog ..More small business shoestring marketing tips =-.

  26. MrsCasanova says

    shopping is good for the economy, more shoppers=more money for business which equals more jobs and more money to be spent!

  27. Avery says

    The situation is quite different here in China,people do not shop that much.So,there is no black Friday market at all.
    .-= Avery´s last blog ..Nokia to Reduce its Smartphones number =-.

  28. Nina Roberts says

    Nice article…!!!I do agree with you that the stock market crash which destroyed the economy like anything have not yet provoked the shopping freaks to put a stop to their craziness.Even if they really don’t need a thing,they will not step back when it comes to buying it just for the sake of it.Your article is thought provoking but black Friday can be hardly expected to turn white the way it’s going.We can try our best though to make amend and disseminate information so that some people at least stop to think and act !!!

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