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Sunday, 23 December 2018

What we’re tracking on 23 December 2018

Good morning, friends, and welcome to interest rate week. Will the Central Bank of Egypt send us into 2019 with a rate cut? Unlikely, we think, but look for verbiage in its statement hinting at when it might begin trimming rates in the new year. High interest rates are delaying investment for many of our readers, our 2018 reader poll found. The central bank’s monetary policy committee meets on Thursday.

Oddly enough, it’s looking to be a bumpy ride on the international front as we wait out the week, because the Santa rally everyone was hoping for just died.

(Soundtrack for the upcoming bit: Don’t Shoot Me Santa, by The Killers.)

US shares had their worst week since the global financial crisis as the NASDAQ moved into bear territory and the Dow Jones recorded its sharpest week of losses since 2008. “The selling had conviction,” CNBC writes in its rundown on the “carnage,” suggesting that 12 bn shares changed hands on US exchanges this past Friday — “the heaviest volume in at least two years.” The rout now threatens the longest-ever bull market, which kicked off in March 2009, the WSJ suggests.

US markets are open tomorrow and closed only for the Christmas holiday on 25 December, suggesting that thin volumes and “lightly populated” trading desks could lead to big price swings, the Journal adds. The mood remains “fragile,” the FT suggests, as traders await clarity on “the US economy and the Fed’s intentions.”

Does it feel just a little as if the world is going to hell in a handbasket? At least in the US of A? Consider:

The Donald wants to fire the Fed chair: US President Donald Trump has apparently mused out loud that he would very much like to fire US Federal Reserve Chair Jay Powell. That has prompted the treasury secretary to run damage control (and advisors to tell Trump the ouster could spark a market rout). Bloomberg broke the news, which has since been confirmed by Reuters.

He is pulling US troops out of Syria… The Donald has unilaterally decided to pull American troops out of Syria — earning himself backlash from traditional Republicans and public kudos from Russian leader Vladimir Putin.

…Prompting the resignation of the “last adult” in the room: The well-regarded US Secretary of Defense and The Donald’s envoy on the fight against the Daeshbags have both resigned in protest of the Syria pullout — and allies are freaking out.

The US government is on partial shutdown as Republicans and Democrats feud over funding for a border wall. As in “some civil servants are at home on unpaid leave and others are working without pay” shut down. The WSJ says government is likely to stay closed well into this week — the FT thinks the shutdown will last at least until Thursday.

But you should still be able to renew your passport. Essential State Department services get multi-year funding, and the passport office says it will be open after a planned 24-25 December closure. Vox has a good list of what’s open and closed if you’re headed stateside.

All of the turmoil has some people talking about a recession: “The message people should take home, especially if there’s a government shutdown, is that longer term, the prospects for equities are not good. There are lots of signs now suggesting that we may be looking at a recession,” one analyst told CNBC in remarks that have splashed all over our twitter.

Once again, Mohamed El-Erian is the voice of sanity. He appeared on CNBC’s Squawk Box with Andrew Ross Sorkin (the most fortunate guy in financial journalism) & Co to warn we must be careful not to talk ourselves into a recession.

Are robots going to kill us all in 2019? An algorithm-driven fire sale in equities and credit is the biggest risk to global markets in the new year, Deutsche Bank suggests in its ranking of 30 risks to markets in 2019. There are some USD 7.4 tn in stocks that would be “subject to forced selling by passive funds during the next downturn,” we have previously noted JPMorgan as suggesting.

Is the Saudi government pumping up the Tadawul? That it does so is “conventional wisdom” in these parts. The WSJ says it has evidence that Riyadh is “quietly propping up its stock market” to “counter selloffs that have followed repeated political crises in recent months.”

RANDOM OBSERVATION of the morning: Egypt is not included in Apple’s 2018 transparency report, which tabulates government requests for its clients’ data around the world. See for yourself.

RANDOM QUESTION OF THE MORNING: Does anyone out there have a line on where to purchase high-quality mugs on which we can print our humble logo? We’re coming up dry. We’d be grateful to hear from anyone with suggestions on

RECOMMENDATION OF THE MORNING for which we receive no financial compensation- Soul Chips & Dips. We despise beets, yet found ourselves eating handfuls of them in chip form — along with sweet potato, potato, carrot and green apple chips at our Christmas / New Year’s / Farewell Old Office party on Thursday night. We are emphatically not potato chip people (our taste runs to chocolate), but these were simply fantastic. Highly recommended: The green apple with sugar and cinnamon with the salted caramel dip. Soul Chips & Dips is on Instagram here.

** Our annual publication holiday is next week. We’re taking the two days before New Year’s off and will be back in your inboxes on Wednesday, 2 January.

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