What we’re tracking on 06 January 2019
We here at Enterprise would like to wish all our readers a very merry Christmas as the Coptic Orthodox Church celebrates Christmas tomorrow. As it is also a national holiday, we will not be running an issue on Monday, and will return on Tuesday, 8 January.
Sadly, we cannot report that year’s festivities would go off without an incident as an attempted bombing at a church in Nasr City led to one policeman being killed. We have the story chapter and verse in the Speed Round below.
Also, as we are still working on improving our dispatch software, we apologize for delays in receiving today’s issue.
US Secretary of State Mike Pompeo is set to visit Egypt sometime this week as part of a Middle East tour that will begin in Amman on Tuesday, 8 January and wrap on 15 January. Cairo will be Pompeo’s second stop during the tour, where he will discuss with officials regional issues and economic and counterterrorism cooperation, according to a US State Department press release. The one-week tour will also take him to Bahrain, the UAE, Qatar, Saudi Arabia, Oman, and Kuwait.
PSA- Expect relatively colder weather in the capital over the next few days, with temperatures set to reach highs of 15-17ºC and lows of 8-10ºC, according to the Egyptian Meteorological Authority.
Fed further hints at a pause of monetary tightening to the carolling bells of EM investors everywhere: Emerging market assets rallied on Friday on news that the US Federal Reserve may consider pausing its tightening cycle and ahead of a US-China meeting next week, Bloomberg reports. Fed Chairman (and one of The Donald’s pain in the rear dejeur) Jerome Powell said the Fed would take a “patient” approach to monetary policy tightening after “US data seem to be on track to sustain good momentum into the new year.”
Bank of America, Citigroup and BlackRock seem to be finally leaning towards giving EM stocks the thumbs up, Bloomberg noted. A New York-based Standard Chartered strategist also expected EM currencies to regain strength as early as in the first quarter of this new year.
The investment climate in 2019 still pervades most business-focused publications. With so much regulation, further projected tumult in international markets, not to mention Brexit, it is perhaps not surprising that the Financial Times is predicting headaches for fund managers in the year to come. Besides Brexit, the salmon-colored paper sees the upcoming “senior managers and certification regime” — a system introduced by the UK’s Financial Conduct Authority — as being a significant regulatory regime shift for fund managers post Mifid II. “Under the regime, high-ranking individuals will have to sign off public reports which examine whether a fund gives value for money. Executives will be personally on the hook should a product disappoint.” Pay for fund managers is also an issue drawing concern as the head count in the industry increases. Green investing and environmental concerns are also being cited by Bloomberg as something to draw significant interest this year, while free pressures, cyber security and a potential selloff is also having managers seat.
On the latter point, a significant drying up of liquidity in big chunks of the credit market is drawing concern from some top level managers including Eoin Murray, head of investment at Hermes Investment Management. He warns that this could lead to a proliferation of gating, whereby managers block investors taking money out of funds to prevent their collapse. Deloitte is also warning of a rise in valuations causing further market volatility, in its 2019 Investment Management Outlook report (pdf).
Got the chomps to beat the top stock picks by the FT? Well the paper appears to not shy away from a challenge with its annual contest to see if readers can pick the five performing stocks that will beat the market in 2019. This year (the first where readers are invited to participate) contestants can take either a long or short position — betting that the shares will either rise, or fall. “The portfolios are equally weighted and have no base currency (meaning foreign exchange movements have no effect on the end result) and dividends do not contribute to the returns.”
One stock looking pretty shaky these days is surprisingly Apple. The Wall Street darling is suffering after CEO Tim Cook issued a 1,400 word warning to investors earlier this month that its sales revenues for the quarter will fall short of targets. But unlike Apple in the glory days of Steve Jobs, many have questioned if the company still has the innovation bug to overcome some of the challenges it is facing, including issues with suppliers as a result of the Trump administration’s trade war. Eyes now turn to the CES tech trade show in Las Vegas, where Apple usually dominates, to see if the company can wow consumers with some new innovative products, according to Bloomberg.
The Golden Globes get underway late this evening and will continue into the wee hours of tomorrow morning. The “boozy, informal dinner” is expected to be less of a political spectacle than the last two editions, in which hosts heavily referenced US President Donald Trump’s election and the #MeToo campaign against [redacted] harassment, Reuters says.