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Monday, 21 January 2019

What we’re tracking on 21 January 2019

It’s a pleasantly quiet news morning today with no single story dominating the headlines.

The only lunar eclipse this year is this morning and the so-called “super blood wolf moon” will not be as spectacular in Egypt as in some other countries this time around. A partial eclipse began at 5:33am CLT and the total eclipse is due to start at 6:41am, reaching its maximum in Cairo at 6:51am. Look west, north west, and down toward the horizon. The actual maximum eclipse will take place at 7:12am, but the moon will be below the horizon in the capital city by then.

Miss this one? The next total lunar eclipse won’t take place until 26 May 2021 — but there’s a total solar eclipse coming up on 2 July of this year.

The World Economic Forum gets underway in Davos, Switzerland, tomorrow. The annual meeting of the global chattering class runs 22-25 January to discuss “Globalization 4.0: Shaping global architecture in the age of the fourth industrial revolution.” You can drill down into the agenda here, watch about 100 live sessions here and follow the WEF’s blog (resplendent with thought leadership pieces) here.

The only catch: Plenty of world leaders are giving Davos a pass this year, the global business press reports. The Donald pulled out and Theresa May apparently has other priorities. Emmanuel Macron is staying home, and both China’s Xi Jinping and India’s Narendra Modi are giving it a pass. But Germany’s Angela Merkel is going to be in town to discuss AI, Africa and the future of Europe. You can read t-up pieces this morning in the Financial Times, Reuters and CNBC or check out the Wall Street Journal’s Davos section.

Our friend Ahmed Heikal penned a blog post for the Forum on the upcoming launch of the USD 4.3 bn Egyptian Refining Company. It is today’s Worth Reading, below.

As the trading week begins in the west, it’s worth remembering that emerging market shares have posted their longest rally in a year, Bloomberg and the Financial Times tell us — surely invoking the Evil Eye. “EM funds attracted USD 3.3 bn for the week ending Thursday, according to EPFR Global data, extending the run of inflows for the asset class to 14 weeks,” the salmon-colored paper reports. That brings total inflows over the past three months to USD 27.5 bn.

That comes as US equities have staged a “remarkable turnaround” in the early days of 2019, the New York Times writes, erasing nearly all of last year’s losses and posting their best start to a year since 1987. Still, the Gray Lady warns, anything could happen: China’s economy is slowing. The US is still debating whether it’s heading for recession. Washington and Beijing are still locked in a trade war. Britain is still leaving the EU. You get the picture…

One of those warning signs flashed brightly this morning as China posted its lowest growth figure since 1990 just a few hours ago, CNBC reports. Beijing announced that economic growth came at 6.6% in 2018, on par with expectations in a Reuters poll and down 0.2 percentage points from 2017. The Wall Street Journal also has the story, noting that the slowdown may be gathering steam as the “downturn deepened in the final months of 2017.”

Is the US government shutdown helping the Fed temper its rate hikes? President of the New York Federal Reserve Bank John Williams urged an approach of “prudence, patience, and good judgment” when it comes to raising interest rates, citing predictions that quarterly growth could be cut by 0.5-1 percentage point as a result of the shutdown, the FT reports. The Fed had guided for two quarter-point increases in short-term rates in 2019, but some pundits now think the final rate hike of the current cycle has already taken place.

In miscellany this morning:

Gulf countries may slow down bond issuances in 2019, spooked by the prospect of higher borrowing costs if the US Fed raises interest rates and by prospect of a slowing global economy, among other factors, JPMorgan Chase suggests.

Aoun calls for Arab bank for reconstruction: Lebanese President Michel Aoun has called for the establishment of an Arab bank for reconstruction to spur economic development in the region, Reuters reports. A regional development bank will “help all affected Arab states overcome adversity and contribute to their sustainable economic growth,” he said at the Arab League’s poorly attended (at the leadership level) Arab Economic and Social Development summit, which ended yesterday.

PSA- Banks and the EGX are off on Thursday in observance of Revolution / Police Day and re-open on Sunday, according to a circular from the central bank picked up by the local press. Thursday is also a day off for the public sector. We’ll be sleeping in on Thursday and will return to your inboxes on Sunday before 7am.

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