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Tuesday, 29 January 2019

What we’re tracking on 29 January 2019

The EGP gained ground against the USD yesterday for the first time in … forever? The EGP was changing hands at about 17.66 to the greenback yesterday, up from around 18.00 last Wednesday. The surprise gain has sparked speculation market-wide; we have the rundown on just about every scenario imaginable in this morning’s Speed Round, below.

Egypt and France signed 40 agreements worth a whopping EUR 1.6 bn on French President Emmanuel Macron’s second day in Egypt. His visit ends today. We have more on this, too, in this morning’s Speed Round.

The Fed starts its first meeting of 2019 today, and the expectation is that it will leave interest rates on hold: The US Federal Reserve’s Federal Open Market Committee (FOMC) is set to hold its first policy meeting of 2019 today. The two-day meeting will end tomorrow, and there’s not traditionally a press conference by the Fed chairman after the January meeting. Emerging markets watchers are keeping a close on the meeting: Since the December policy meeting, the word from the Fed has suggested that it may slow the previously expected pace of rate hikes in 2019. The USD slipped on Monday in anticipation of the Fed meeting as well as approaching US-China trade talks, Reuters notes.

It’s also earnings week in the US of A: The FOMC meeting coincides with Apple, Amazon, Microsoft Facebook, Tesla and Qualcomm all reporting earnings this week, which pundits hope will help breathe some life back into equity markets that were roiled in 4Q2018, the Wall Street Journal reports.

Now, speaking of those US-China trade talks:

News that the United States has hit Huawei with “sweeping” criminal charges is the top story in the global business press this morning. Meng Wanzhou, the company’s chief financial officer (and daughter of the company’s founder) also faces charges of stealing American technology and breaking US sanctions against Iran. Meng, who was arrested last month in Canada on the US charges, is due in a Vancouver area court today. The story leads this morning on the Financial Times, Wall Street Journal, the New York Times, CNBC, Reuters and elsewhere.

It’s now anyone’s guess whether the trade talks scheduled for Thursday and Friday will go ahead.The talks were designed to try to reach an agreement that would avoid US tariffs on some USD 200 bn of Chinese goods rising to 25% from 10% in March. Asian shares were trading lower at dispatch time this morning in the wake of the Huawei news.

Western mobile operators are pulling back from Huawei: Vodafone’s group chief executive said last week that the network operator would “pause” further use of Huawei in its core networks amid the ongoing security row, and Australia’s TPG has “cancelled plans to roll out the country’s fourth mobile network” after the government there banned Huawei as a supplier of 5G network technology.

What does Huawei do in Egypt? Plenty. The company sells mobile phones, computers and other consumer electronic goods and provides communications infrastructure to players ranging from telephone companies Telecom Egypt and Etisalat Misr to real estate player TMG, among others. And we’re not alone: A top Huawei official said in 2016 that the company had built more than 70% of the 4G networks in Africa.

The African Cup of Nations will start a week later than planned, Reuters reports, saying the move will give players an additional rest after Ramadan. The tournament will now kick-off on June 21 and the final will be played on July 19.

In miscellany this morning:

  • Saudi Arabia has pledged even deeper oil production cuts in February and says that Russia has promised to “pick up the pace” on cuts of its own,
  • US liberals are up in arms over former Starbucks CEO Howard Schultz’s declaration that he may seek the presidency as an independent, saying his candidacy would actually help The Donald’s re-election chances. An NYT columnist went so far as to call his prospective bid “a reckless idiocy.” (FT | WSJ | NYT)
  • The US football Super Bowl is this coming Sunday. The New England Patriots and Los Angeles Rams will face off in Atlanta.

MORNING READ- Preparing for the D-Day of technological change will be vital. Writing for the FT, John Thornhill summons Eisenhower and the 1944 invasion of France as he argues that “We have no idea how the future will pan out and therefore we can devise no sensible plan. But, given what we already know about the rise of the robots, it would be reckless not to plan for the possibility of extraordinary disruption.” Bonus: Thornhill is a member of the Economic Singularity Club and contributed to a new book of short stories “speculating on what the world might look like in 2045” as we face the possibility of technology-driven mass unemployment.

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