Good afternoon, folks. We’re only two days into the work week, but it's heating up to be a big week in the finance world with the world’s business press very much focussed on a global stock selloff spreading across the globe.
THE BIG STORY TODAY
Non-oil private sector activity was at its second highest level since August 2021, despite dipping in July, S&P Global’s Egypt Purchasing Managers’ Index (PMI) (pdf) report for last month showed. Egypt’s non-oil activity held near the growth threshold at the start of 3Q 2024, with companies seeing only marginal declines in output and new orders, resulting in businesses capping their purchasing rates, according to the report.
We were hoping that this would be the month that we would finally be in the green: July’s reading dipped slightly to 49.7 in July, down from a three-year peak of 49.9 in June — marking the 44th straight month that the country’s non-oil private sector has been in contraction. News last month that the index showed us only 0.1 point away from the 50.0 mark that separates growth from contraction, had given some hope that July would show the private sector finally entering growth territory.
THE BIG STORY ABROAD
Japan’s benchmark Nikkei index took its biggest tumble since October 1987 today as fears of a US recession following disappointing US jobs numbers rattled Asian and European markets. The selloff saw the Nikkei plunge 12.4%, while over in the states, Nasdaq futures seem ready for their biggest opening drop in four years.
Analysts are pointing to low US jobs growth as the reason behind the global stock selloff: Markets have been pricing in a larger-than-expected 50 bps Fed rate cut since Friday’s anemic US jobs growth data showed nonfarm payrolls increasing by only 114k in July, down from 179k in June. Some of the year’s hottest stocks have taken a beating as investors rush into safe-haven assets like US Treasury bonds, with 10-year yields briefly hitting their lowest levels since mid-2023.
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A USD 40 mn ethane pipeline: A consortium of state-owned companies plans to construct a USD 40 mn pipeline to transport imported liquified ethane gas derived from US shale gas from Alexandria's Dekheila Port to Sidi Kerir Petrochemicals and the Egyptian Ethylene and Derivatives Company.
AfDB mulls funding our 1.1 GW wind farm: The African Development Bank (AfDB) is considering financing the 1.1 GW wind farm in the Gulf of Suez being carried out by Saudi Arabia’s ACWA Power and Hassan Allam Holding.
Qardy banks on fresh pre-seed funding to boost MSME financing: Digital lending marketplace Qardy has closed a USD seven-figure pre-seed investment round to boost its services in Egypt and fast-track its planned expansion into Saudi Arabia.
☀️ TOMORROW’S WEATHER- Mercury is peaking at a high 38°C before simmering to a moderate low of 26°C by night, according to our favorite app. Sahel and Alexandria are seeing cooler weather, with a high of 33-34°C and a low of 25°C.
Will AI ever pony up on ROI? Investors aren’t so sure anymore. Two weeks ago, Jim Covello, head of equity research at Goldman Sachs, predicted that the AI bubble was about to burst. Just days ago, Wall Street started wondering when AI was going to become profitable — if ever.
In the year and a half since OpenAI kickstarted the modern gold rush, Silicon Valley has poured tens of bns of USD into the technology — at the expense of 84.4k workers just this year. The chatbots, which are still struggling to differentiate between fact and fiction, are quickly being used as substitutes for research analysts, coders, and customer service agents, and just as quickly losing consumer good faith after attempts by Big Tech to substitute human creativity and malicious user manipulation of others’ pictures to generate non-consensual intimate imagery. All while chatbots still “have no clear path to monetization.”
Disappointing earnings and outlooks from tech giants that have gone all-in on AI spending have helped send Silicon Valley stock into a tailspin. Amazon shares were down 8.7% at the end of trading last week and Intel stock took a double digit dive after announcing a scramble to mitigate big AI spending by cutting USD 10 bn in costs and tens of thousands of jobs. Coupled with dispiriting job data recently published by the US Bureau of Labor statistics and a surprisingly bleak manufacturing index that caused concern of an approaching US recession, the S&P 500, Nasdaq, and Russell 2k all stumbled significantly at the end of last week and seem set to continue the decline as US markets open today.
Some investors expected — and maybe hoped — that the tech giants would soften their gung-ho attitude and rein in AI spending. These AI-forward companies are being asked when the tech is expected to “create greater value over time versus just cutting costs.” Investors want to know whether AI monetization will ever match its capital expenditure requirements and whether all AI has generated was “too much spend, too little benefit.”
Instead of comforting or convincing numbers, Google, Microsoft, and Meta had opted to double down on their AI expenditure, announcing plans to pour additional bns into the field, hedging all their bets on an AI-powered future. In addition to the additional greenbacks, tech leaders have asked for time. And a lot of it. “[Fifteen] years and beyond,” estimated Microsoft CFO Amy Hood. Meta CFO Susan Li was more vague, predicting returns “over a longer period of time,” making it out to be the cost of early market entry.
The cash cow is dead. Silicon Valley had long been a reliable source of profit growth on a quarterly basis, making it a hotspot — and safe bet — for investors. DA Davidson analyst Gil Luria explained that returns on a 10-15 year timeline has changed the goalposts, making funding AI “a venture investment, [not] a public company investment.” Current applications of the technology are nowhere near justifying the expenditure requirements, said Luria, corroborated by Covello, who believes “the technology isn’t designed to solve the complex problems that would justify the costs.”
CNN has used Tesla’s lofty AI goals as a cautionary tale. The auto manufacturer has marketed AI-powered “full self-driving” Autopilot technology as a core feature of their vehicles since 2015, pledging full capability in the near future for the past nine years. But it has never graduated beyond driver-assist technology, a far cry from CEO Elon Musk’s claims, and one consistently flagging safety concerns, having been at the center of 956 crashes and 29 deaths in the past four years.
How long will investors hold out? Luria doesn’t see them lasting beyond early next year before they pressure the tech giants to pull back on infrastructure investments and expenditures until revenue growth signals optimistic long-term projections.
A minority of experts are less fatalistic, and are calling for investor grace. Claudia Sahm, an economist that developed the typically reliable Sahm Rule recession indicator, isn’t alarmed by the perceived red flags, noting that household income, consumer spending, and business investment are holding up. Recent spending movements born by social media and consumer sentiment clouding purchasing of AI-powered products may see the tides turn against Sahm’s favor.
Understand your pantry. Renowned chef René Redzepi narrates, “We are what we eat. This is the oldest and truest recipe I know of.” This sets the stage for Omnivore, a docuseries that delves into the origins of the humble ingredients forming the basis of meals around the world, a visually stunning and informative exploration that celebrates everyday ingredients.
What to expect: The first episode explores the chili pepper's journey, which begins in the Amazonian rainforest. Redzepi explains how the spiciness of the pepper was an evolutionary development that deterred animal consumption, with the exception of birds who lack the receptors to detect spiciness. By eating the seeds, the birds were able to spread them far and wide (through less savory methods).
The episode covers the history of the Scoville scale, and visits various global locales that hold the pepper dear. In Serbia, we see a family’s multigenerational effort to grow and process paprika peppers. Avery Island, Louisiana, showcases the Tabasco pepper's legacy, while Bangkok introduces us to the potent Prik Kee Noo pepper. Back in Copenhagen, Redzepi challenges his Noma staff with a ghost pepper derivative, leading to teary, sniffly reactions.
WHERE TO WATCH - You can watch the docuseries on Apple TV+ or watch the trailer (runtime:1:09).
Related
?Welcome to Day 10 of the 2024 Paris Olympics.
Tonight, all eyes will be on Lyon Stadium, where the Pharaohs will be going head to head against France in the semifinals of the men’s football tournament at 10:00 pm. After having reached the men’s soccer quarterfinals a total of 11 times, this is the first time in 60 years that the Pharaohs have made it to the semis.
Our homegrown handball team has advanced to the men’s quarter finals after defeating Argentina with a difference of seven goals yesterday. They are set to play against Spain on Wednesday at 10:30 am.
The medal table at the Paris Olympics at time of publication:
China (21 gold, 17 silver, 13 bronze — 51 total)
USA (19 gold, 27 silver, 26 bronze — 72 total)
France (12 gold, 14 silver, 26 bronze — 44 total)
TODAY
DON’T MISS-
Football: Morocco vs. Spain in the men's semifinals (7:00 pm).
Athletics: Men’s pole vault final (8:00 pm), women’s discus throw (9:30 pm), women’s 5k m race (10:10 pm), women’s 800m race (10:45 pm).
3x3 Basketball: Women’s final (11:00 pm), men’s final (11:30 pm).
TEAM EGYPT:
Table tennis: Egypt vs. China (4:00 pm).
Wrestling: Moamen Rabie vs. China’s Cao Liguo in the men’s 60kg Greco-Roman wrestling (4:00 pm), Mohamed Abdellatif vs. Turkey’s Muhammet Bakir in the men’s 130kg Greco-Roman wrestling (4:00 pm).
Basketball: France vs. Canada in the quarter finals (7:00 pm), Brazil vs. USA in the same round (10:30 pm).
Athletics: Women’s hammer throw final (8:57 pm), men’s long jump (9:15 pm), men’s 1.5k m run (9:50 pm), women’s 3k m steeplechase (10:14 pm), women’s 200m run (10:40 pm).
TEAM EGYPT:
Diving: Mohamed Farouk in the men’s 3m stepladder preliminary (11:00 am).
Athletics: Ehab Abdelrahman and Mostafa Abdelkhaliq in the men’s javelin throw qualifiers (11:20 am), Israa Oweis in the women’s high jump qualifiers (12:15 pm).
Wrestling: Mohamed Gabr in the men’s Greco-Roman 97kg, Mahmoud Abdelrahman in the men’s Greco-Roman 77kg, and Nada Madani in the women’s freestyle wrestling (12:30 pm).
Highlights from yesterday: Noah Lyles was named the world’s fastest man after a close race where he and Jamaican Kishane Thompson finished the men’s 100m dash in 9.79 seconds. Algeria’s Kaylia Nemour became the first Arab and African gymnast to secure an Olympic gold medal after competing on the uneven bars. Tennis legend Novak Djokovic finally clinched a long-awaited gold medal after defeating Spain’s Carlos Alcaraz. America’s 40-year reign over men’s swimming has come to an end after China’s Pan Zhanle finished first in the 4x100m medley relay. South Korea has officially claimed all five gold medals in archery after the men’s individuals yesterday.
Find authentic home-cooked African dishes at Okuku: For those who struggle to choose between eating healthily and hearty — this Afro-inspired eatery is where you can find guilt-free eats that will satisfy your foodie heart.
The joint is famous for its flame-grilled chicken. The peri peri marinated chicken was the winner in our eyes, being a juicy grilled chicken marinated in a blend of African spices that weren’t overly familiar — different and flavorful in every bite.
Want something completely new? Try the chakalaka, a traditional South African vegetable relish. It’s a hearty and spicy mix of beans, tomatoes, and peppers that pairs wonderfully with any main dish you pick. You can’t go wrong. Want to indulge in a less healthy side dish? The peri mayo fries are a must-try. The golden crispy fries come with a drizzle of Okaku’s signature peri mayo sauce.
They’re available online: You can find them on Talabat in Maadi, Nasr City, and New Cairo.
Related
? OUT AND ABOUT- (all times CLT)
Another tribute night from CJC is dedicated to The Beatles.Glass Onion and WSH will be making their debut at CJC performing their homage to the iconic British band on Thursday, 8 August at 10pm. Find the details here.
Shababco is going to the coast this summer for their first bazaar at D-bay on Friday, 9 August. This one-day event is dedicated to showcasing the creative and entrepreneurial spirit of young local brand owners. Enjoy live performances throughout the day from both well-known and up-and-coming local artists. Tickets are out now.
Ahmed Khairy is taking the stage at The Boom Room’s open mic night tomorrow. Get your tickets here.
NEW ALAMEIN FESTIVAL-
Amr Diab will be taking the New Alamein Festival stage on Friday, 9 August at 10pm. Get your tickets here.
Wael Kfoury returns to Egypt with a concert at Porto Golf in the North Coast on Friday, August 9, at 11pm. Get your tickets here.
Karim Abdelaziz and Nelly Karim will be performing in the play El Sindbad at the New Alamein Festival from Thursday, 8 August till Saturday, 10 August. Get your tickets here.
TV host Sherif Madkour and Lebanese actress and singer Diana Haddad will be having a live broadcasting of the show “4 Sherif Street” at the New Alamein Festival on Saturday, 10 August. The show will start at 10pm, get your tickets here.
The iconic Cairokee will be performing at the festival on Friday, 23 August. Find your tickets to the band’s show here.
HAPPENING LATER-
Prepare for the sixth edition of The Marakez Pyramids Half Marathon. Pick your race of choice and start training, because the marathon will take place on Saturday, 14 December. Note: The price to register is going to keep increasing. So sign up now through this link for the lowest price guarantee.
!_StoryHed_! Can we keep hope in a world riddled with greed? !_StoryTags_! Under the lamplight
? UNDER THE LAMPLIGHT-
The short stories in You Glow in the Dark paint a haunting reality. Based in Latin America, but that’s all we know. It’s hard to decipher when the stories are set, and how much of them is fiction versus reality, but Liliana Colanzi incorporates elements of horror, humor, history, and fantasy in stories that follow a world plagued with greed, but maintain optimistic undertones.
Colanzi’s writing is hard to describe, but her talent is undeniable. She mixes together different worlds seamlessly, creating detailed settings and backgrounds that blend reality and dystopia together in a unique way. Although the stories can get dark, her writing and humor keep them bright and exciting.
Bite-sized reads. If you don’t have time to dedicate to a full novel, these short stories are a great option without compromising on quality and plot. The opening story, La Cueva, is the most popular, and is a great start to an all-around good read.
The EGX30 fell 2.3% at today’s close on turnover of EGP 4.1 bn (14.4% above the 90-day average). Foreign investors were net buyers. The index is up 11.8% YTD.
In the green: Oriental Weavers (+1.3%), Telecom Egypt (+1.3%), and ADIB (+1.0%).
In the red: Elsewedy Electric (-6.4%), Eastern Company (-5.8%), and Amoc (-5.8%).
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