{"id":548304,"date":"2022-08-03T04:00:11","date_gmt":"2022-08-03T04:00:11","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/2022\/08\/03\/this-morning-we-have-a-big-news-day-ahead-of-us-china-prepares-for-huge-military-drills-in-response-to-pelosi-taiwan-visit\/"},"modified":"2022-08-03T04:00:11","modified_gmt":"2022-08-03T04:00:11","slug":"this-morning-we-have-a-big-news-day-ahead-of-us-china-prepares-for-huge-military-drills-in-response-to-pelosi-taiwan-visit","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/egypt\/2022\/08\/03\/this-morning-we-have-a-big-news-day-ahead-of-us-china-prepares-for-huge-military-drills-in-response-to-pelosi-taiwan-visit\/","title":{"rendered":"THIS MORNING: We have a big news day ahead of us + China prepares for huge military drills in response to Pelosi Taiwan visit"},"content":{"rendered":"

Good morning, wonderful people. <\/strong>We have a particularly packed issue for you on this very beautiful morning \u2014 and the promise of another busy news day to come \u2014 so let\u2019s jump straight in:<\/p>\n

WHAT\u2019S HAPPENING TODAY- <\/strong><\/p>\n

<\/a> Our friends at Chimera should find out today how much of Beltone Financial they have<\/strong> acquired <\/strong>via a mandatory tender offer. Shareholders have until today to subscribe to Chimera Investment\u2019s MTO for the financial services firm. The Abu Dhabi-based outfit has already locked in a 56% stake in Beltone after Orascom Financial last week agreed to sell its shares<\/a>. Chimera is offering to pay EGP 1.485 per share<\/a> for up to 90% of Beltone, valuing it at around EGP 690 mn.<\/p>\n

It\u2019s PMI day: <\/strong>We\u2019ll get an idea of how the private sector fared in July when S&P Global releases its latest purchasing managers\u2019 index (PMI) shortly after we hit \u201csend\u201d on this morning\u2019s issue. The index fell to its lowest level in two years in June<\/a> as surging inflation hit demand and output. We\u2019ll also be getting PMI figures for Saudi Arabia and the UAE at the same time as Egypt\u2019s figures drop. You can find them all here<\/a> once they\u2019re released.<\/p>\n

OPEC+ is meeting today: Will it raise production? <\/strong>The most we\u2019re going to get is a small increase in supply \u2014 and even that may be a long shot, according to what sources have told the business press. Most of the sources that talked to Reuters<\/a> dismissed an output hike as unlikely while delegates speaking to the Wall Street Journal<\/a> say the choice is between freezing production at current levels or a small increase. The meeting comes amid pressure from the US on oil producers to push down on prices which have remained above USD 100 a barrel since Russia invaded Ukraine in February.<\/p>\n

How much more capacity is there?<\/strong> Saudi Arabia appears to have heeded the Biden administration\u2019s demands for more crude, and last month pumped the most since April 2020 after raising output by 180k barrels a day, according to Bloomberg<\/a>. All in all, OPEC added another 270k barrels a day to global supply during the month, with the UAE and Kuwait also raising output to offset shortfalls in other countries such as Nigeria, Iran and Angola.<\/p>\n

It\u2019s the second day of the Egypt- and UN-led <\/strong>regional climate roundtable<\/a><\/strong> in Addis Ababa, <\/strong>Ethiopia:<\/strong> The event \u2014 the first of five regional roundtables being held around the world ahead of COP27 in November \u2014 brings together African climate negotiators and global officials to discuss climate finance for three days in the Ethiopian capital. COP27 President Sameh Shoukry, Mark Carney (UN climate envoy and co-chair of the Glasgow Financial Alliance for Net Zero) and UN Deputy Secretary-General Amina Mohamed are among those in attendance.<\/p>\n

National Dialogue board will talk about the economy:<\/strong> The board of trustees overseeing preparations for the National Dialogue will meet tomorrow to discuss the economic agenda.<\/p>\n

THIS WEEK-<\/strong><\/p>\n

Egypt is set to sign an MoU later this week with a Chinese home appliances <\/strong>manufacturing company to build an industrial zone<\/strong> in Egypt with \u201chuge investments,\u201d according to a cabinet statement<\/a> out yesterday. No further details were disclosed.<\/p>\n

Erdogan + Putin to talk Ukraine grain pact on Friday: <\/strong>Russian President Vladimir Putin will meet his Turkish counterpart, Recep Tayyip Erdogan, on Friday to discuss the agreement the two countries signed with Ukraine to resume grain exports from the war torn country via the Black Sea, Putin\u2019s spokesman, Dmitry Peskov, told reporters, Bloomberg<\/a> reports. The meeting, which will take place in the Black Sea resort city of Sochi, will see the two leaders \u201csynchronize watches on the subject of the effectiveness of this mechanism for exporting grain from Ukrainian ports,\u201d Peskov said.<\/p>\n

SPEAKING OF THE WHEAT PACT- The first vessel to carry grain out of Ukraine since <\/strong>Russia\u2019s invasion has arrived safely in Turkey<\/strong>, Turkey\u2019s Defense Ministry said<\/a> yesterday. The ship, carrying 26k tons of grain, had left the port of Odesa on Monday morning<\/a>. A delegation from the Joint Coordination Centre (JCC) in Istanbul is expected to inspect the ship today, the ministry said<\/a>.<\/p>\n

Another vessel could be heading out of Ukrainian ports today:<\/strong> \u201cWe hope that there will be some more outbound movement tomorrow,\u201d UN spokesman Stephane Dujarric told reporters in New York, according to Reuters<\/a>. About 27 ships are currently loaded at the three Ukrainian ports and ready to go, Dujarric said. Turkey expects one grain ship to leave Ukraine every day as long as the agreement between Ukraine and Russia holds up, a senior official told the newswire<\/a>.<\/p>\n

Remember: Ukrainian exports are still in a \u201ctrial period,\u201d<\/strong> with a limit of three ships a day traversing the new safe-passage corridors established as part of the country\u2019s pact with Russia and Turkey. Officials hope that exports could rise to as much as 3 mn tons a month in the next four to six weeks if all goes well.<\/p>\n

THE BIG STORY ABROAD-<\/strong><\/p>\n

Will Pelosi\u2019s visit to Taipei provoke another Taiwan Straits Crisis?<\/strong> That\u2019s the question being raised across the global media this morning after the US House Speaker flew to the disputed island yesterday in defiance of Beijing, which had threatened to respond militarily to the provocation. Beijing\u2019s initial reaction to her landing was limited to banning imports<\/a> from Taiwanese food brands. But the People\u2019s Liberation Army is now preparing to hold live-fire naval drills in waters surrounding the island, significantly raising tensions between the two countries and increasing the likelihood of a military confrontation. (AP<\/a> | Reuters<\/a> | Politico<\/a> | Bloomberg<\/a> | FT<\/a> | WSJ<\/a> | NYT<\/a> | Washington Post<\/a>)<\/p>\n

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MARKET WATCH-<\/strong><\/p>\n

Fed officials are trying to ward off complacency in the financial markets<\/strong> as the idea that the central bank is about to slow the pace of interest rate hikes takes hold. Bond yields fell and stocks surged last week after Chairman Jerome Powell said that the central bank will likely reduce the size of its rate hikes going forward, a reaction policymakers have tried to reverse this week by making clear that large increases are still on the table for future meetings. The Fed has raised rates by 150 bps since June in what is the most rapid tightening of policy since the 1990s. Officials this week warned the market that the central bank is \u201cnowhere near\u201d done tackling inflation and that it will need to see \u201cvery compelling evidence\u201d that inflation is coming down before reversing course. Bloomberg<\/a> and the Wall Street Journal<\/a> have more.<\/p>\n

Did the markets get the message?<\/strong> The response to the hawkish comments saw the USD surge 1%, yields spike, equities slip and gold futures fall.<\/p>\n

Take all predictions with a pinch of salt:<\/strong> A lot can happen between now and the Fed\u2019s next meeting, which won\u2019t take place until late September. All it takes is a single inflation print to alter the direction of policy (the June meeting is a great case in point).<\/p>\n

CIRCLE YOUR CALENDAR-<\/strong><\/p>\n

We\u2019re on the lookout for a number of key macro figures <\/strong>this week and next:<\/p>\n