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Thursday, 14 June 2018

What we’re tracking on 14 June 2018

And so it ends. Heading into a four-day Eid weekend, we would like to thank each and every one of you for spending some time with us this past month. We hope that you’re all looking forward to a four day break with family and friends. We’re off on Sunday and Monday (banks and the EGX will be closed) and will be back in your inbox on Tuesday morning.

Enterprise is also taking a day off a week from today. We’re not publishing next Thursday to allow our English and Arabic editorial teams from both the night and day shifts to spend some quality time together and talk about what’s next for Enterprise.

Expect warm weather this weekend in the capital with a high of 41°C tomorrow and Saturday — and cooler weather on the Mediterranean coast. Tomorrow will be hot in Sahel with a high of 37°C, but you can expect sunny skies and temps of 29-30°C Saturday through Monday. Pack sunscreen.

So, when do we eat? For those of us observing, Maghrib is at 6:57 pm CLT today. Eid prayers will be at about 5:18 am CLT tomorrow in Cairo.

The Madbouly Cabinet is expected to be sworn in today, government sources said yesterday, Al Masry Al Youm reports, but we still have no clue who, exactly, is in and who’s out. We’re still seeing the same speculative reports, with the latest from state-owned Al Ahram suggesting that our friends Finance Minister Amr El Garhy and Trade and Industry Minister Tarek Kabil are both leaving government service, as are Local Administration Minister Abu Bakr El Gendy, Health Minister Ahmed Rady, and Agriculture Minister Abdel Moneim El Banna. Some in the local press are also suggesting that the new lineup will see more women ministers.

Fed hikes interest rates by 0.25 bps, hints at two more increases in 2018: The US Federal Reserve’s Federal Open Market Committee decided yesterday to hike key overnight borrowing costs by 0.25 percentage points to a range of 1.75-2%. Noting higher economic growth forecasts, the Fed also hinted at two more potential interest increases this year, foregoing a “pledge to keep rates low enough to stimulate the economy,” Reuters says. “Most people who want to find jobs are finding them. Unemployment and inflation are low…The overall outlook for growth remains favorable,” Fed Chairman Jerome Powell said at a press conference, adding that “steady rate increases would nurture the expansion” as the Fed moves towards its targets for inflation and employment.

Expect weaker EM currencies. Emerging market currencies were falling against the greenback even before the Fed’s announcement, according to the FT. “The probability attached to two more hikes is likely to rise and push the USD higher in tandem,” HSBC Securities USA’s Daragh Maher also tells Reuters. Just last month, the possibility of higher interest rates and a surging USD, coupled with flaring geopolitical tension, helped spark a major sell-off in emerging markets.

Bear market for world’s biggest banks? “More than a dozen of the world’s biggest banks have slipped into a bear market, highlighting risks to the global economy even as equity indices reach new highs and the Federal Reserve prepares to raise interest rates.” Sixteen of the 39 banks deemed “too big to fail” are down more than 20% from their recent peaks in USD terms. (Financial Times)

“Swift turn of fortunes pushes Abraaj to the edge”: That’s the headline atop the latest in the Financial Times on the meltdown of the once high-flying emerging markets private equity group. The piece is a must-read for anyone with an interest in PE, with two key takeaways — one general, and one Abraaj-specific:

General takeaway: Anyone raising funds in (or for) MENA is going to face tougher questioning from folks with capital to allocate. That questioning will be even tougher if you’re a local player trying to raise for PE. Quoth the FT: “A boutique firm executive said: ‘This is impacting us all. Our investors are turning against us and raising new funds is a nightmare.’”

Abraaj-specific takeaway: The problems began when Abraaj moved beyond what it knew best. “The cash crunch emerged after Abraaj’s 2012 acquisition of Aureos Capital launched the Middle Eastern investor on to the global stage. Travel costs took off — including the expense of a private jet until it was sold two years ago — as partners flew between 20 global offices. Management fees have for several years failed to cover costs by mns of USD a year.”

The US could roll out tariffs on as much as USD 50 bn worth of Chinese goods as early as tomorrow, the Wall Street Journal writes. The move “is likely to spark heavy retaliation from Beijing,” the newspaper notes. The Trump administration had suggested back in early April that it was eyeing tariffs on about USD 50 bn worth of Chinese goods. The move is expected even as US Secretary of State Mike Pompeo is due in China today to seek support for The Donald’s talks with North Korea, the Financial Times adds.

Russian President Vladimir Putin is expected to talk ways to boost oil production with Saudi Crown Prince Mohammed bin Salman today when the pair meet in Moscow to watch their respective national teams face off against each other at the World Cup opener, which the FT says could be the tournament’s “worst game ever.” “The world’s largest oil exporters are negotiating how to rework their unprecedented, and successful, [pact] to control oil production as US sanctions on Iran and the collapse of the Venezuelan petroleum industry threaten to send crude skyrocketing,” says Bloomberg. Both countries are working on a plan that could see them collectively pump out an additional 1 mn bbl/d, “although Riyadh prefers a smaller increase.” Analysts are saying that an output increase by the world’s four main oil producers is “inevitable.” The cup, Putin said, is the ultimate networking event for heads of state.


@eaamalyon, on the best-ever use of Google Translate by a journalist: Great stuff: France press officer says only questions in French to avoid Spanish media asking Griezmann about transfers. Spanish journalist uses google translate app to ask question, French press officer loses it….

@netflix does the right thing: Some fans have noticed that Anthony Bourdain: Parts Unknown was scheduled to come off Netflix US on June 16. As of today, we’ve extended our agreement that will keep Parts Unknown on the service for months to come.

@BenjySarlin on what could be one of the defining images of our time: I’m not sure it’s possible to capture an entire era in one image, but Dennis Rodman running a cryptocurrency grift on live TV from the North Korea summit while wearing a MAGA is a serious nominee

Speaking of The Worm, Trump and Kim: Watch the fake movie trailer that The Donald showed the dude from DPRK, casting the two leaders as superheroes about to save the world (watch, runtime: 4:13).

In other miscellany this morning:

The biggest IPO you’ve never heard of is of a European fintech company called Adyen and valued the company at USD 8.3 bn when shares began trading on Euronext Amsterdam yesterday. The company is a payments processor and counts Netflix, Facebook and Spotify among its clients. It also sells POS systems for physical stores. (CNBC)

Erdogan faces a tight fight to keep power as a poll suggests the 2018 general election getting closer with just 10 days left to go. (Bloomberg | Haaretz | Washington Post)

Legendary emerging markets investor Mark Mobius isn’t big on Saudi Arabia as things stand, saying recently, “We are not necessarily bullish on Saudi stocks, simply because the range of offerings is limited and a number of restrictions are still in place. Many difficulties remain for Saudi market entry.” (Bloomberg)

Antarctica is melting three-times as fast as a decade ago. (New York Times)

This whole electric scooter thing? It’s a bubble, folks. (New York Times)

Apple is closing a hardware loophole that has allowed some police forces and intelligence services to hack iPhones. (Reuters)

Toyota will be investing USD 1 bn in South East Asian ride-hailing app Grab, according to CNN. The move is being hailed as the largest investment by an auto company in the ride-hailing apps space.

Yahoo Messenger will be shutting down on 17 July, the company said.

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