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Monday, 30 July 2018

What we’re tracking on 29 July 2018

Bloomberg and the Financial Times think we’re looking at a busy week ahead before the August news slowdown — the Fed meets on interest rates on Wednesday, the Bank of England follows suit on Thursday, and companies ranging from Apple to Caterpillar report their earnings from today through Friday. But it feels as if Egypt is ahead of the global curve for once: It’s an achingly slow news day from where we sit here in Cairo.

(Also here at home, the central bank’s monetary policy committee doesn’t meet to review interest rates until 16 August. Most watchers see rates being left on hold.)

Further down the road: French President Emmanuel Macron will visit Egypt in November or December, the head of the Egyptian-French Business Council tells Amwal Al Ghad. Macron will be accompanied by a business delegation. Separately, a group of French execs are reportedly in talks with the Port of Alexandria over a proposed French industrial zone in Alexandria.

Is Pakistan taking a leaf out of Egypt’s IMF playbook? Pakistan could ask for a USD 12 bn bailout package from the IMF “to resolve the country’s escalating foreign reserves crisis,” the Financial Times reports. Islamabad is no novice when it comes to IMF bailouts — since the late 1980s, the IMF has provided Pakistan with a total of 12 packages, the most recent of which was a USD 5.3 bn loan in 2013. What remains to be seen is how Imran Khan, the cricket star who seems set to become Pakistan’s next prime minister, will manage to balance the ambitious promises he made on the campaign trail and the IMF’s likely demands that public spending be slashed. Analysts “believe a return to the IMF is inevitable, and will come with damaging consequences for short-term economic growth and Mr Khan’s own political reputation.”

This brings us to one of the biggest risks facing investors this year: How will elections play out on the policy front? With some 24 elections happening in emerging markets this year alone, the trajectory of economic policies is in open question. Nothing appears to underscore the risk more than Mexico and Turkey, where voters elected (or re-elected, in Turkey) nationalist candidates, writes senior portfolio manager Sean Newman for the Invesco blog. Yet there is hope in other places, such as Columbia and Chile, where anti-establishment candidates have been defeated.

Meanwhile, Oman is also looking to raise debt — albeit for different purposes than Pakistan. The sultanate plans to raise USD 1.2 bn through a loan or bond, a finance ministry official said, according to Bloomberg. The funding would be funneled into developing infrastructure at the country’s Duqm Special Economic Zone. “The financing would help the government diversify its funding sources, extend its debt maturity profile and reduce costs,” the official says.

It appears that Sweden is where Skynet first took over finance: Sweden’s Nordea Bank became the only big bank in Sweden to cut costs in 2Q2018 as it began implementing the widest replacement of bankers by automatons in the whole sector, writes Bloomberg’s Niklas Magnusson. The bank’s CEO, Casper von Koskull, said Nordea plans to cut 6k jobs and automate functions in everything from asset management to answering calls from retail clients. Koskull believes that industry might shed half of its current human workforce within a decade. The move saw total costs drop 11% y-o-y in 2Q2018 as staff numbers fell 8% to 29,300. Swedish banks have begun to take notice with SEB CEO Johan Torgeby now saying that “whatever can be automated will be automated.”

Also worth a read if you’re relaxing on the beach this morning before the hordes descend — or looking for something to fill the ride back home after work:

We have a hard time getting enough of emerging markets champion Mark Mobius, who had a long chat with the Financial Times on a recent trip to London. The best bit: His explanation of why his ESG-themed fund will look at even coal companies as investment targets.

How will Goldman’s new boss remake the bulge bracket icon? David Solomon, the “disarmingly earnest” amateur DJ who takes over as CEO and chairman of Goldman Sachs in October, has already sent plenty of signals about how he could steer the ship toward serving “far more ordinary consumers and corporations,” CNBC argues.

A winner on headline alone: A fake Picasso, private investigators and fart spray: Inside the nasty divorce of bond bn’aire Bill Gross.

Parents need to be willing to cut off adult children financially if they’re going to shore up their own retirement nesteggs, argues author Maddy Dychtwald in a piece for the the Wall Street Journal.

Finally: Our friends at AmCham have cancelled a luncheon with Finance Minister Mohamed Maait that was scheduled to take place today, citing a high level official commitment by the minister.

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