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Thursday, 14 February 2019

What we’re tracking on 14 February 2019

It is interest rate day, and the consensus is clear: Expect rates to be left on hold. The central bank’s monetary policy committee meets today to decide on interest rates. Nine of 11 economists we polled on Monday believe that the Central Bank of Egypt will leave rates on hold. Fitch Solutions thinks the same, saying it sees scope for the bank kick off a rate-cutting cycle in 2H2019 as price pressures cool. “That said, the pace of easing will likely be gradual amid more challenging external conditions and persistent risks of capital flight.” Economists polled by Reuters yesterday held the same view.

(Speaking of interest rates: El Erian sees the Fed, too, leaving rates on hold — possibly for the rest of the year. The US Federal Reserve will not raise interest rates this year and may even cut them in 2020, Bloomberg columnist and Allianz chief economic adviser Mohamed El Erian told Bloomberg (watch, runtime: 4:56). “Even though the US economy will continue to do well, the Fed is likely to stay on hold for this year, and the balance of risk is towards a cut for next year,” he said. Why the dramatic policy reversal? The Fed’s hand may be forced by a deteriorating European economy and ineffectual stimulus measures in China, rather than a recession in the US, El Erian said.)

The House of Representatives will vote “in principle” on a motion to amend the constitution today, House Speaker Ali Abdel Aal said. The House began a guided debate yesterday on whether to approve the amendments in principle and, if so, why, Ahram Online suggested. If approved in a roll-call vote (which requires each MP to vote publicly, one-by-one), the amendments will be referred to the Constitutional and Legislative Affairs Committee and then put to a final vote at the House’s general assembly. Abdel Aal suggested the committee may not be allowed to add additional amendments to the package. We have coverage of international reaction to the proposed amendments in this morning’s Egypt in the News section, below.

Two stories dominate the global business press this morning:

  • A former Apple lawyer has been charged with insider trading. Prosecutors allege the former head of Apple’s disclosure committee bought and sold shares ahead of six quarterly earnings announcements. (WSJ | FT | Reuters | NYT)
  • A former US intelligence officer has been indicted after giving secrets to Iran. The woman, Monica Witt, has allegedly defected to Tehran. (NYT | CNBC | WSJ | FT)

It is not a good news day for Saudi Arabia in the global business press (and we’re not even getting into Saudi being sucked into the orbit of the Jeff Bezos-National Enquirer saga):

KSA has made a proposed European Union blacklist of countries seen as being lax on terrorist financing, according to Bloomberg. New measures, if passed by national governments and the EU parliament, would force European banks to do increased due diligence when serving clients from any of the 23 blacklisted countries. All 23 are seen as being soft on money laundering and terrorist financing.

There are mixed opinions about what lies in store for the Saudi IPO market: Bloomberg is out with a piece lamenting the demise of Saudi IPO-focused funds. The funds “didn’t fly because the expected IPOs didn’t happen,” chief economist at the Gulf Research Center John Sfakianakis said, adding that this is unlikely to change “at least over the immediate horizon.” Providing the contrarian opinion, Citi’s head of investment banking in ME, Africa and Portugal, Miguel Azevedo, told Bloomberg this week that Saudi is “top of the list” of MENA countries that will see strong IPO growth this year (watch, runtime: 2:37). “There’s quite a lot happening there. Not necessarily only in the oil sector, but in chemicals, retail, logistics, healthcare. So I think that it’s going to be a main market,” he said.

Finally, two US Senators have introduced a resolution that seek to prohibit Saudi Arabia from developing nuclear weapons, as Energy Secretary Rick Perry holds hush-hush talks about sharing the technology, reports Reuters. It is unclear how much support the non-binding bipartisan resolution will pick up in the Senate.

After hitting bone, Deutsche Bank is reversing course on cost-cutting and once again looking to grow in the Middle East. That’s the takeaway from Bloomberg’s sit-down with Deutsche’s Middle East and Africa CEO, Jamal Al Kishi. The German lender, which has previously helped Egypt tap global debt markets, has hired new staff as it chases “significant financing and M&A and corporate-finance” transaction and hopes “this year will be a better one in terms of both revenue and profitability,” Al Kishi says.

And in miscellany heading into the weekend:

  • No US government shutdown? The Donald seems to be edging toward an agreement that will avoid a shutdown of the US government tomorrow, Reuters reports.
  • On the hypocrisy of consultancies: Consultancies will charge you plenty to tell you how to close the gender gap in your company, but don’t expect them to follow their own advice, the Financial Times argues.
  • US Middle East conference not an epic fail, Pompeo insists: The US Middle East conference (ostensibly a means for the US to build international support for its regime change efforts in Iran) got underway in Warsaw yesterday. US Secretary of State Mike Pompeo has been forced onto the defensive after key European nations announced they would only be sending low-level diplomats — and in EU foreign policy chief Federica Mogherini’s case, snubbing it entirely, the Washington Post reports.

PSA- Dwellers of the capital city can expect to see dust, wind and a daytime high of 16°C today, according to the national weather service, Egypt Today reports. The ‘unstable’ weather could start as late as this afternoon, our favorite weather app suggests, and there is a chance of showers tomorrow afternoon. Look for mostly sunny skies on Saturday.

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