2018 is the year that refused to go quietly into that goodnight. We have a packed issue this morning after what had been, until yesterday, one of the quietest news days of any given year.

The question of the day: How much worse can it get on Wall Street, where shares tanked on Christmas Eve “as investors reacted negatively to US Treasury secretary Steven Mnuchin’s highly unusual effort to reassure investors about Wall Street banks’ liquidity” and as US President Donald Trump held firm on his attacks on the US Federal Reserve and an ongoing shutdown of US government “against the backdrop of a global economic slowdown and an extended world-wide stock plunge.”

How bad a stock plunge? The S&P500 is now in bear territory after its worst-ever Christmas Eve sell-off. Asian shares followed US equities lower in Christmas trading yesterday (the Topix in Tokyo was down 4.9%), as did indexes in Egypt, Saudi and Kuwait.

(For those of you keeping score: The EGX30 is down 15.6% for the year ahead of the opening bell this morning.)

MUST-READ of the morning: The risk today isn’t that America is wishing itself into recession, it’s that it is mismanaging itself there. “Sometime in the last couple of months, predictions of a major economic downturn or recession in 2019 went from being a crank view to the conventional wisdom,” writes the New York Times, arguing that the “gloom and pessimism has gotten ahead of the facts on the ground. … The real risk is not that insurmountable challenges knock the economy off course. It is that poor leadership converts moderate economic shocks into a crisis.”

Case in point: Trump renews attack on Fed as Mnuchin tries to calm markets.

Does it get any crazier than this? “The only problem our economy has is the Fed. They don’t have a feel for the Market, they don’t understand necessary Trade Wars or Strong [USD] or even Democrat Shutdowns over Borders. The Fed is like a powerful golfer who can’t score because he has no touch — he can’t putt!” —The Donald, on Twitter, on Christmas Eve.

Which markets are open today? It’s business as usual in Egypt, while US markets reopen after yesterday’s holiday. The London Stock Exchange is closed today for Boxing Day. (Which, incidentally, is one of only two globally popular shopping-centric holidays that has yet to be adopted by Egyptian retailers, the other being China’s Singles Day. And one of us argues having seen signs of interest in Singles Day this year…)

Is The Donald really the biggest risk to global markets in 2019? We’ve written a couple of times this fall and winter about the risks of an algorithmic sell-off of assets. JPMorgan estimates that as much as USD 7.4 tn in assets “could be subject to forced selling by passive funds during the next downturn.” And Deutsche Bank sees an algo-led selloff as the biggest risk of the new year.

The WSJ has a solid, balanced look at what the deployment of machines in the market could mean in 2019. The kicker: “Behind the broad, swift market slide of 2018 is an underlying new reality: Roughly 85% of all trading is on autopilot—controlled by machines, models, or passive investing formulas, creating an unprecedented trading herd that moves in unison and is blazingly fast. That market has grown up during the long bull run, and hasn’t until now been seriously tested by a prolonged downturn.” Read: Behind the market swoon: The herdlike behavior of computerized trading.

Add to your TBR pile: Quant investors face test of faith in 2019, from the Financial Times. “A year in which quant funds struggled to exploit any of their favourite patterns in markets saw many funds chalk up their biggest losses in years, ranking them among the hedge fund industry’s worst performers.:

In other news this morning

• KSA could get a megabank as the number-one lender National Commercial Bank is reportedly in merger talks with number four Riyad Bank. (Bloomberg)
• Israel is heading for early elections that will see voters go to the polls in April. (Haaretz)
• US holiday retail sales are the strongest in years, early data show. (WSJ)
• World economy to feel “delayed pain” of trade war in 2019. (Bloomberg)
• Slower catchup: Emerging economies will take longer to outpace developed markets. (Reuters)

The antidote to all the year-end drudgery: I’m Muslim, and the Christmas spirit moves me, by Omer Aziz, who deftly covers everything from being a third-culture kid growing up in Canada to why Muslims everywhere should be down with a bit of Christmas cheer. Yes, it’s saccharine. But in a good way.

With a little help from our friends: You enjoy Enterprise without charge each morning thanks to the generosity of Pharos Holding, CIB and SODIC. Two of our three besties have news this morning:

• Pharos Holding has been named International Finance Magazine’s “Best Equity Research Company” for 2018, the firm said in a statement (pdf). “We believe that investing human capital is one of the essential business decisions that reflects on productivity,” said Pharos Group Chairman and CEO Elwy Taymour, praising the company’s research team’s performance.
• SODIC is the proud sponsor of Tawasol’s handicrafts at the L’Artigiano in Fiero artisanal fair in Italy, the company said (pdf). The exhibition in Milan is attended by more than 1.6 mn visitors each year. Proceeds from exhibition sales will be used to fund student expenses at Tawasol’s community school in Istabl Antar.

PSA- Banks are closed next Tuesday in observance of New Year. Normal bank hours resume on Wednesday, 2 January, according to a circular from the central bank.