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Wednesday, 26 June 2019

What we’re tracking on 26 June 2019

It’s a big news day with word that the Finance Ministry hopes to hit an agreement with the IMF on a non-loan program by October — and that our friends at CIRA have acquired British Columbia Canadian International School here in Cairo in what could be a harbinger of more M&A in one of the economy’s hottest sectors. We have chapter and verse on both stories in this morning’s Speed Round, below.

Meanwhile, all eyes are on Bahrain, where Arab leaders have gathered with Trump administration officials to discuss the “economic development” of Palestine for a second and final day. The bottom line so far: Not a lot of news, but a lot of posturing (much of it half-hearted). The story is all over Reuters, Bloomberg, the Financial Times and the New York Times if you like. We’re with the FT on this one: Keep your expectations low.

Also coming up:

  • Democrats looking to challenge The Donald have their first debates today and tomorrow. The nationally televised events will see 10 candidates appear each night. This evening’s big names include Elizabeth Warren, Cory Booker Beto O’Rourke. Vox has a primer worth checking out.
  • The G-20 summit takes place this weekend in Osaka, Japan, running 28-29 June. Among the expected highlights: Donald Trump and Xi Jinping are due to have a chat. Check the gathering’s website here.
  • Our friends at AmCham will be hosting Electricity Minister Mohamed Shaker at their monthly luncheon on Tuesday, 2 July. You can register for the event here.

Oh, and we’re sliding into a long weekend, as Sunday is off in observance of 30 June. Banks and the stock exchange will be closed.

The Pharaohs face off against DR Congo tonight in their second group game of Afcon 2019. Egypt narrowly beat Zimbabwe 1-0 last Friday and currently sit second in the table behind Uganda on goal difference. The game is being broadcast on Time Sport and Bein Sports, and kick-off is at 10pm at the Cairo International Stadium. Check the standings here, or visit the Afcon website here.

We’ve apparently got some Black Mirror-esque crowd monitoring system in place at the stadium. Authorities are said to have deployed an advanced security system developed in Amreeka that can follow spectators’ movements using their mandatory fan IDs, Masrawy reports. The system is meant to help security officials spot would-be troublemakers and to close off all exits within seconds.

Powell remains ambivalent about the prospects of a July rate cut: US Federal Reserve Chairman Jay Powell has admitted that stalling economic growth is increasing the likelihood of a rate cut in the coming months, but said that Fed officials haven’t decided whether to make the move at the next FOMC meeting in July. In a speech at the Council of Foreign Relations yesterday, Powell warned that “the picture has changed” over the past two months due to “greater uncertainty” over trade and “renewed concerns” about global growth.

But that doesn’t mean the Fed will act: Powell cautioned against any knee-jerk policy responses to current conditions, throwing expectations of a July rate cut into doubt. “We are mindful that monetary policy should not overreact to any individual data point or short-term swing in sentiment,” he said.

Media reaction has been bipolar: If you’re expecting any journalistic consensus about what Powell’s speech actually meant, you’re going to be disappointed. The FT claims that his statements “reinforce market expectations of an imminent rate cut.” But MarketWatch is saying precisely the opposite, claiming that he “dampened market hopes” that easing was back on the agenda.

Wall Street evidently preferred MarketWatch’s interpretation of events: The S&P500, Dow Jones and Nasdaq all slumped following Powell’s comments, the WSJ says.

Treat EM equities with caution, Barclays suggests: Emerging-market currencies and fixed-income funds may be doing well off the back of anticipated Fed easing, but the same cannot be said for the equity markets. Emmanuel Cau, head of European equity strategy at Barclays, tells Bloomberg that trade tensions and the weakening Chinese economy are currently “constraining” EM equities — and advises investors to treat the asset class with caution (watch, runtime: 2:25).

A conversation we should be having: When is a company simply … too damn big? We’re not going to argue there should be a cap on a company’s organic growth (unless, like a certain social media player, said company starts to seriously misbehave), but AbbVie’s USD 63 bn acquisition of Allergan (maker of everything from eyecare products to Botox) has us wondering whether megamergers like this are really in the interest of the body politic. And yes, we include the wider business community in the body politic. Further reading on that notion, which isn’t just the purview of the (apparently now defunct) Socialist Worker:

(No, this story is not sponsored content from the ECA…)

US tech giants will lose out in Africa if The Donald’s push to isolate China continues writes former Ecobank head of research Edward George in an opinion piece for the Financial Times. While US companies hold back, Chinese companies stand ready to consolidate their foothold across the continent: Tech giants including Baidu, Alibaba and Tencent have for years provided cost-effective and accessible technology in Africa, making them much better positioned than Google, Facebook and WhatsApp to serve Africa’s consumers. The Trump administration, George says, underestimates at its own peril the strength of both China’s infrastructure and its influence in Africa.

In miscellany this morning:

  • Airbnb for the 1%: Airbnb has entered the luxury travel market space after launching a new website dedicated to super high-end listings, CNBC reports. You can now rent castles, islands and entire villages through the broker.
  • Learn about the private companies operating >2k satellites currently orbiting our planet in this beautiful visual piece from the Wall Street Journal.
  • Don’t tell me when I’m going to die: In Egypt, MDs are notorious for not giving patients full facts about diagnoses and prognoses. In the US of A, it’s the opposite.

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