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Wednesday, 31 January 2018

What we’re tracking on 31 January 2018

Global markets closed in the red again yesterday, with US stocks falling to their lowest levels since May of 2016 “as investors worry that a long winning streak has pushed valuations too far,” the Financial Times reported overnight. The selloff in US equities and a fall in US treasury prices comes ahead of the US Federal Reserve’s Wednesday meeting. Investors are also warily looking ahead to earnings releases expected this week from Apple, Facebook, Amazon and Google, the newspaper suggests. The Wall Street Journal, meanwhile, notes that the selloff in US equities — largely echoed in markets globally, albeit on different drivers — was compounded by worries over rising oil production and an unusual announcement targeting the healthcare sector.

Here at home, the EGX30 closed down 0.4% yesterday on moderate volumes, reversing gains made on Monday.

That healthcare announcement that’s roiling global markets? The global industry is watching very warily after Amazon, Warren Buffett’s Berkshire Hathaway and JPMorgan Chase said yesterday they’re going to ‘disrupt’ the industry in the US. The three companies are partnering to find ways to lower healthcare costs and improve outcomes for their hundreds of thousands of employees by deploying tech and other tools. The not-for-profit venture will focus on delivering “simplified, high-quality and transparent healthcare” for more than 500k employees, they said. The news is all over the front pages of the global business press: Financial Times, Reuters, Bloomberg (news | analysis), Wall Street Journal and New York Times.

Closer to home:

Expect positive central bank reserves announcement: Egypt’s foreign reserves are sufficient to cover eight-months’ worth of imports, CBE Sub-governor Rami Aboul Naga said, according to Reuters. The reserves figure stood at USD 37.02 bn in December, which is roughly equivalent to a 7.8-month import cover, implying at least stability in the reserves figure month-on-month.

CI Capital’s 2018 MENA Investor Conference kicked off yesterday and will run until 1 Feb at the Four Seasons Nile Plaza. The conference brings together more than 200 investors from 75 regional and international organizations with an aggregate AUM of USD 10 tn, according to a statement carried by Al Masry Al Youm. We stopped in for day one and have highlights in this morning’s Speed Round, below.

IMF boss Christine Lagarde thinks Arab nations need to take “urgent action” to promote job growth and address “simmering discontent” among youth. “The private sector needs to step in and step up, and … government action could help [by] … combating corruption, increasing competition, and taking advantage of global trade and new technologies, the Financial Times reports.

The US Secretaries of state and defense wish we could all just get along. The two “called on all sides in the dispute between Qatar” and the Arab Quartet to “work to calm tensions, saying a united Gulf Cooperation Council bolstered regional stability,” Reuters reports. Rex Tillerson and Jim Mattis made their remarks in a joint appearances with the Qatari foreign and defense ministers.

In business news, global M&A activity has been interesting so far this week:

JAB, the folks who own the Keurig coffee pods brand, have snapped up Dr. Pepper, 7Up and Snapple in a USD 18.7 bn takeover that’s getting plenty of attention in the US for the breadth of its ambition to “create a food-and-coffee empire.” See coverage and analysis in Reuters, the New York Times and the Wall Street Journal. JAB already owns Peet’s Coffee and Krispy Kreme.

Blackstone is in “advanced talks” to acquire a controlling 55% stake in the Thomson Reuters’ Financial and Risk business, sources tell Reuters. The unit, which “contributes more than half of Thomson Reuters’ annual revenues,” is valued at around USD 20 bn, they said. The board reportedly met yesterday to review Blackstone’s offer. The F&R business unit “supplies news, data and analytics to banks and investment houses around the world.” Bloomberg Gadly wonders whether the transaction “heralds an era of offbeat megabuyouts,” while the Financial Times notes that Blackstone is now going to be going head-to-head with Bloomberg.

Donald Trump is delivering his “state of the nation” address as we write these words.

In miscellany today:

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