An area logistically more dangerous to cross than Antarctica, given that helicopters cannot operate over significant distances because of thin air at up to 61 degrees to rescue the adventurer, it is as wild, desolate, beautiful and inhospitable.
My travelling companions include a father-son duo managing $5 billion for clients, including governments, a world-renowned heart surgeon, and a former private banker who once led a Baluchi regiment defending against Yemen in this eastern corner of Oman in the 1980s.
Traversing the Empty Quarter this past week was a digital detox and a shelter for me and my travelling companions. As we enjoyed views of stunning stars, sunsets and sunrises, global markets suffered the most violent shaking in decades. The enforced solitude was for the best, as short-term traders would have been wrong-footed many times — even intraday — as markets gyrated to policies tweeted, cancelled and reinstated without end. The week ended after we emerged with Trump declaring victory with leaders of more than 75 countries “kissing my a**” but retreating to 10% tariffs for all for 90 days, except for 145% tariffs on China with 125% retaliatory.
Nothing is worse in the market than long-term investors trying to rapidly adjust to short-term extreme noise and whiplashed forced-selling, even with gold dropping below US$3,000 ($3,959) or short covering at the top with bank shares such as Barclays gapping up 30% on opening. Short-term traders were unwilling to cut as the market surged, only to see them gap down on the next open. Only exchanges — such as the Singapore Exchange as Chew On This highlighted in Issue 1184 — are seeing record business should they be able to manage the clearing risk of market participants with extreme volatility without loss.
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As a trader who loved volatility in the past, I would have missed several golden opportunities. However, as I now have an older investor’s mindset, preferring calm to exciting storms, I was happy to take a pause, let the theatrics and hysterics play out, and see if adjustments will be needed in time as I return to safe haven Singapore.
Desert storm
Donald Trump’s turnaround purportedly avoided an almost Liz Truss moment for now. His reversal came not a moment too soon as a selloff in 10- and 30-year US Treasuries amid rumours of coordinated sales from Japan to Canada. Apparently, the Chinese have not sold off yet and maintain a credible threat. After all, even JD Vance acknowledged that they were borrowing money from “Chinese peasants” to buy goods from them. Whose fault is it anyway?
A 1% rise in long bond yields will cost America, the most indebted nation in the world, a US$36 billion extra in interest. The precipitous fall in stocks was met by a spectacular rebound in US markets following the announcement of a 90-day pause, which was originally first denied. As policy is made on the fly, so have accusations of insider trading by Trump and his inner circle been lodged for investigation in Congress.
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Also, US markets sunk lower despite Trump declaring a “beautiful day” when the stock market rebounded. Effectively, a 10% fall requires more than a 10% recovery to get back to par, even if Maga believers who were hanging tough and likening the fall in stock markets to a cleansing and equally believe this was Trump’s strategy all along.
It sure is a “beautiful strategy” as continued walkbacks with exemptions on phones and computers, perhaps after Apple CEO Tim Cook had a word over the weekend, or the realisation that US consumers, already fuming about the rising price of eggs, could not live without their gadgets.
A few data points tell us where it is heading for those still hopeful of the American market dream. The University of Michigan’s Consumer Sentiment has dropped to the second-lowest level since 1991’s Gulf War, a shocking fall from 80 points to 50 points from a year ago under Biden and more than 30% from December. Expectations for the economy have shrunk to the lowest level since 1980 at the end of the second oil crisis. Worries about unemployment have hit the highest since 2009 after the Global Financial Crisis.
During times of market turbulence, the US dollar, the world’s reserve currency, tends to be strong with the flight to safety. Notwithstanding the (temporary) US stock rebound, weakness in US debt and the dollar imply the beginnings of capital flight. Will peasant enemies and other friends stick around and lend to the school bully?
If the choice of travel is anything to go by, the answer is probably not, with Canadians and Europeans staying away. Brand America appears to be weakening alongside Tesla. As small businesses suffer import costs and uncertainty, services such as tourism and hospitality may take the next hit, while Doge’s massive cuts on professional services spend by the US government has already led to layoffs in that sector.
Add on deliberately targeted Chinese export bans of critical minerals for defence and clean tech, such as dysprosium, terbium and tungsten that make electric cars or enable F-35s, or limiting Hollywood films and American farmers on top of 125% tariffs and declaring that there is no point responding to 145% from America as no one will buy US goods at those prices, it seems likely that more exemptions will be coming out from the White House in the next 90 days after “wins and deals” are declared.
One observer pointed out that the 25% tariffs on steel and autos may or may not bring manufacturing back to America. But it will have handed over the rest of the world to Chinese car manufacturers as Japanese and Koreans slowly figure out if it is worth onshoring in America. The damage done reputationally, if not on the economy per se, may be irreparable to the US.
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Trading places
A single road cuts through the Empty Quarter for anyone brave enough to journey from Oman, where we entered, to Saudi Arabia, where vast oil deposits sit in the Ghawar field amid a platform of Paleozoic sedimentary rock. Desertification made caravan trails carrying valuable frankincense virtually impossible until 300 AD. Satellite images still show the old camel trails.
Climate change, which the present US administration denies, shifted trade routes, which resulted in lost cities like Ubar, whose caravan oasis ruins we saw linked to Al Ula in Saudi Arabia, where my companions have gone on to (by air via Shajar and Riyadh) from Salalah in Oman. Al Ula is less known but more remarkable than Petra in Jordan. Not in this generation, perhaps, but the loss of US National Park reserves — now earmarked by Trump for logging after park rangers were Doge-d — will have consequences beyond biodiversity.
Salalah’s Land of Frankincense (one of the gifts the three Magi presented to baby Jesus in Bethlehem) covers four Unesco World Heritage Sites, including Ubar and Wadi Dawkah — the Frankincense Valley. Sumhuram or Khor Rori (rumoured to be the legendary Queen of Sheba’s summer palace) facilitated coastal trade from India and Indonesia in the East to Alexandria through the Red Sea and Europe, or Zanzibar in Africa before Al Baleed Port took over during medieval times — perhaps a consequence of tariffs. It hosted many famous travellers, including Ibn Battuta, Marco Polo and Zheng He, before the 16th to 17th century coastal invasions by the Portuguese, Turks and Malmuks.
The control and protection of these trade routes were important as the British overcame the Portuguese naval supremacy, which triumphed first over the Arabs and Indians, and the rise of steam engines and other modern technologies eroded the knowledge of wind and astronomy per se. The Straits of Hormuz between North Oman and Iran and the entrance to the Red Sea from the South of the Arabian Peninsula with Houthis on the Yemeni side and Somali pirates in the south of the Gulf of Eden, make Oman very strategic to the west with both British and American security interests.
A nation that prides itself on being a friend to all in the region and globally, Oman bears many similarities to Singapore. With 3.5 million Omanis and 2 million foreigners, it is almost similar to Singapore’s population mix save that it has a coastline of more than 3,000 km and natural resources, including oil, jointly developed with the UK until 1988. It even implemented tree planting in the 1980s in Muscat, its capital, to lower the temperature, albeit from a far higher base. It also requires cars to be cleaned before entering the capital. It, too, had a strong, beloved founding leader, Qaboos bin Said Al Said, much like our Lee Kuan Yew, who modernised the country.
Massive infrastructure spending is pouring in for data centres, blue ocean industries and solar energy, among other projects, presenting many opportunities.
Sembcorp Salalah Power, part of Sembcorp Industries , features among the 110 stocks listed on the Muscat Exchange; Singapore Technologies Engineering had previously built some ships for Oman’s navy. Asian hospitality brands like Minor International’s Anantara or GHM’s Chedi and Alila, initially founded in Indonesia, run premium resorts from beaches to mountains.
Both countries rely on a rules-based world order that is supportive of trade. A belief that the post-World War Two consensus shaped by the US to reduce instability by fostering mutual economic growth through trade and multilateral institutions was the raison d’être of existence.
That US interests have changed now should concern everyone. As the lost cities from shifting trade routes or the economic relevance of goods produced or services rendered have shown, we are all vulnerable in this new paradigm and need more friends and friendly markets.
If some of our chats among Omani people encountered these 10 days are anything to go by, based on local perceptions of the US and China, Chew On This calls on buying China on dips and selling the US may appear validated, too, in this quarter of the world. Solitude in the Empty Quarter may be good for the soul and mind for a couple of days, but there is no life in the shifting sands alone.
Chew Sutat retired from the Singapore Exchange after 14 years as a member of its executive management team. During his watch, the exchange transformed from an Asian gateway into a global multi-asset exchange. He was awarded FOW’s Lifetime Achievement Award. He serves as chairman of the Community Chest Singapore
