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Monday, 1 April 2019

What we’re tracking on 1 April 2019.

No April Fools here: It’s the first day of April, starting the clock on 1Q19 earnings season. The resident 11-year-old may go in for pre-noon pranks, but not us. This morning’s edition contains 0% fake news, guaranteed.

The Finance Ministry’s draft 2019-20 state budget is now with the House of Representatives, kicking off the formal budget process. We have highlights of the budget in this morning’s Speed Round, below.

AmCham’s annual ‘Doorknock’ lobbying campaign gets underway this morning in Washington, DC and runs through Friday. Some 35 senior business leaders are set to talk up Egypt in meets with members of Congress, Trump administration officials and others in DC. We’ll have more from the road in the days ahead.

President Abdel Fattah El Sisi and Foreign Minister Sameh Shoukry are in Tunisia for an Arab League summit. Shoukry traveled to Tunisia late last week for preparatory meetings ahead of the summit. Reuters has more.

Keep an eye today on US manufacturing data, the next “checkpoint” for the global doomsdayers, the Financial Times suggests.

There’s no lack of local market data coming up in the next few days:

  • The EGX brokerage league table for Marchshould be out today. EFG Hermes extended its spell at top of the table last month.
  • The Markit / Emirates NBD purchasing managers’ index for March is expected on Thursday. The index, which surveys non-oil business activity in Egypt, fell to a 17-month low in last month’s reading.
  • The CBE’s net foreign reserves position is due out sometime this week. Reserves climbed to USD 44.060 bn at the end of February.
  • Total vehicle sales for March, and performance by brand, should be out within days.
  • Egypt’s monthly inflation figures, from both the central bank and CAPMAS, are expected on 10 April. Annual headline inflation accelerated to 14.4% in February, up from 12.7% the previous month.

Renaissance Capital will hold its annual Egypt Investors Conference in Cape Town on 9-10 April. The event will see senior management from leading Egyptian companies meet one-on-one with South African investors with AUM north of USD 20 bn.

EM bonds, the gift that keeps on giving: Global funds remain bullish on emerging market bonds, which — having returned 5.3% in 1Q2019 — are on track for their best quarter since 2012, Bloomberg writes. Fund managers are confident that EM debt will continue appreciating as the US Federal Reserve u-turns on raising rates and China’s economy stabilizes. It’s good news for Egypt as the Finance Ministry looks to hit the road with an EUR-denominated eurobond offering this month,

Wait, the world may not be ending? The global financial press has for more than a year now been practically salivating at the prospect of (a) an end to the 10-year-long bull market for US equities (b) the US economy falling into recession or, better still, option (c): the end of the bull run somehow tipping the US into recession.

The world is not ending, Exhibit #1: Enter Gywn Davies writing for the FT, who with finesse and rigor that “the great bull run may be over, but that does not mean that a great bear market will inevitably follow.” Instead, he suggests, there’s a perfectly solid model that “predicts that total US equity returns will be about 4-5% per annum in nominal terms in the next three years — much lower than recently, but still positive.”

The world is not ending, Exhibit #2: “As we move into the second half of the year, this narrative of global growth potentially causing problems here in the U.S. is going to shift to a stabilization of global growth and then more of a focus on things like earnings,” argues the co-head of strategy at PNC Financial Services in an interview with CNBC. China and Europe are bottoming out, he argues, and all the gnashing of teeth about the inverted yield curve in the US is overblown.

The one thing to worry about now: FOMO. Investors are piling into stocks this year because of the fear of missing out on the 2019 rebound in equities, the WSJ suggests.

In international news worth knowing this morning:

  • Erdogan hits election setback: The party of Turkey’s Islamist president lost Ankara and appeared ready to do the same in Istanbul despite two months of “relentless campaigning … which he described as a ‘matter of survival’ for Turkey.” (Reuters)
  • Algeria’s Bouteflika is hanging on by his fingertips: Algerian President Abdelaziz Bouteflika has replaced 21 of his government’s 27 ministers in a bid to calm demonstrators calling for his resignation, but some are still speculating he could announce his resignation this week. (BBC | Reuters)
  • Economic growth in the UAE picked up last year, surging to 1.7% against 0.8% in 2017, but still falling short of estimates. (Bloomberg)
  • Zuckerberg’s call for internet regulation raises eyebrows: US lawmakers and industry figures have greeted Mark Zuckerberg’s calls for (presumably pro-Facebook) internet regulation with scepticism. (FT)

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