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Wednesday, 5 December 2018

What we’re tracking on 5 December 2018

We had the pleasure of sitting down with Uber CEO Dara Khosrowshahi, who was in Cairo yesterday to launch Uber Bus. He shared with us his views on Egypt as an investment and innovation hub and why the company chose to pilot its bus service here. The company is committed to investing USD 100 mn in Egypt over the next five years, he said. Khosrowshahi also praised the Ride-Hailing Apps Act, which he described as a model for the rest of the world. We have the full interview in this morning’s Speed Round, below.

The EGX30 dropped 2.4% to an 18-month low yesterday, as CIB shares slipped amid concerns over proposed amendments to the tax code that could see banks pay more into state coffers, Reuters reported.

US shares tumbled more than 3% yesterday and Asian shares are down this morning “as sharp declines in long-term U.S. Treasury yields and resurgent trade concerns stoked investor worries about global economic growth,” Reuters reports. The story is getting heavy coverage in the global business press, including the Financial Times and the Wall Street Journal.

What they’re all going to be talking about today: Whether the flattening (or perhaps even inversion) of the yield curve (which the FT nicely calls a “widely followed bond market barometer of economic sentiment”) suggests that US economic growth is slowing — and whether a recession is in the cards. Read: Flattening yield curve stirs US recession fears, which comes as Bloomberg Opinion notes that a section of the yield curve just inverted for the first time in more than a decade.

Wait, what does any of that gibberish mean? First, you have to know that “yield” on a bond is nothing more than the return on investment someone gets from buying it. A 13% yield, for example, means you get 13% return on whatever amount you sunk into the bond. And the yield curve? It’s nothing more than the difference in yields between two bonds of the same quality, but with different maturity dates.

Okay, so…? Well, as the nice people at The Week tell us: “Usually, yields on long-term bonds are higher than yields on short-term bonds. In that case, the difference between the two is positive. But every so often, short-term yields will overtake long-term yields, which produces a negative spread. That’s when the yield curve ‘inverts.’”

So why should I care if it “inverts”? Because in the US at least, every time the yield curve has inverted, a recession has followed. The problem: The recession may have followed, but there’s the inversion of the yield curve does nothing to tell you when, exactly, an economy may start to contract.

I am Tariff Man: From The Donald yesterday, on Tweeter, of course: “….I am a Tariff Man. When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so. It will always be the best way to max out our economic power. We are right now taking in $billions in Tariffs. MAKE AMERICA RICH AGAIN.”

Irish business delegation in town: A 12-company Irish business delegation is in town. Civil Aviation Minister Younes El Masry met with the visitors yesterday to discuss, among other things, the possible launch of charter flights between Cairo and Dublin, Al Mal reports.

Egypt’s first defense expo wraps up today. President Abdel Fattah El Sisi inaugurated EDEX 2018 on Monday. We have more in Diplomacy + Foreign Trade, below.

The IFC has selected several Egyptian startups to join its Africa’s Next Start-Ups initiative, according to a press release. The program, a joint effort with Egypt’s Investment Ministry, selects 100 startups and entrepreneurs from across Africa to join the Africa 2018 Forum in Sharm El Sheikh next week, as well as get access to funding and support from the IFC. Among the Egyptian startups selected were Vezeeta and Avidbeam.

A handful of international headlines worth knowing this morning as we brace for the onslaught of the day:

  • CIA briefing on Khashoggi solidifies senators’ view of Prince Mohammed’s complicity (NYT)
  • US to suspend nuclear treaty with Russia in 60 days. (WSJ)
  • OPEC: Why Trump has Saudi Arabia over a barrel. (FT)

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