{"id":595958,"date":"2019-08-15T04:00:51","date_gmt":"2019-08-15T04:00:51","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/2019\/08\/15\/what-were-tracking-on-15-august-2019\/"},"modified":"2019-08-15T04:00:51","modified_gmt":"2019-08-15T04:00:51","slug":"what-were-tracking-on-15-august-2019","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/egypt\/2019\/08\/15\/what-were-tracking-on-15-august-2019\/","title":{"rendered":"What we\u2019re tracking on 15 August 2019"},"content":{"rendered":"

Screenshot this morning\u2019s tldr:<\/b> You are looking at what is perhaps the slowest news day Enterprise has ever encountered. Luckily \u2014 or rather unluckily, depending on which way you look at it \u2014 international events are giving us a lot to talk about.<\/p>\n

We\u2019re exactly one week away from the Central Bank of Egypt\u2019s next Monetary Policy Committee meeting.<\/b> Whether or not the MPC decides to move ahead with a rate cut remains unclear: Last month\u2019s inflation readings could give the central bank some breathing room to cut rates, but macro conditions \u2014 including Argentina\u2019s historic stock market crash earlier this week \u2014 could push the CBE to hold off on resuming its easing cycle until the storm has passed.<\/p>\n

And if yesterday\u2019s anything to go by, the CBE might be wise to hold fire:<\/b> The bond markets sounded the alarm for an oncoming US recession yesterday as poor data out of Germany and China heightened fears of a global slowdown. Global financial markets closed in the red, as the dreaded inverted yield curve in US treasuries reared its ugly head. We cover yesterday\u2019s events in detail in this morning\u2019s Speed Round, below.<\/p>\n

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Concerned about the whole \u2018negative yield\u2019 situation everyone is talking about in the financial press?<\/b> So is Neil Macdonald, writing in Canada\u2019s CBC<\/a>. Macdonald reacts \u2014 as everyone watching the markets rightly should \u2014 with incredulity to the increasing numbers of investors paying to hold sovereign and corporate debt. And he asks an unnerving question to which very few people at the commanding heights of the global economy seem to have an answer: what, exactly, is the plan for when the next global downturn fully unfolds? The world\u2019s systemic central banks have very little room to cut interest rates while remaining in positive territory. And if a move towards widespread negative rates is indeed the plan, just how low can they go before people begin pulling money out of the banking system? \u201cWe are in unknown territory, out past the \"here be monsters\" sign. None of us has any idea how this will turn out, economists included,\u201d he writes ominously.<\/p>\n

Putting negative rates in perspective:<\/b> The FT<\/a> is out with a series of charts illustrating the current state of play with central bank policy rates.<\/p>\n

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Deflation in Abu Dhabi accelerates in July:<\/b> The deflationary trend in Abu Dhabi entered its second month in July after consumer prices fell 1.4% y-o-y, Bloomberg says<\/a>. This is the biggest drop for at least four years, and the sixth in the past seven months. Falling housing, water and electricity prices were primarily responsible. \u201cIn the foreseeable future, it is hard to see the housing sector bottoming out, given current market conditions,\u201d Mohamed Bardastani, senior economist at Oxford Economics, told Bloomberg. \u201cA mismatch in the supply and demand curve and weak employment numbers have weighed down on housing prices, and that is the case in both Dubai and Abu Dhabi.\u201d<\/p>\n

Saudi Arabia will need to push for more substantial production cuts<\/b> at the December Opec+ meeting amid a sustained slump in oil prices, David Sheppard writes in the FT<\/a>. The stakes for the kingdom are high: prices need to exceed USD 60 a barrel if state oil giant Saudi Aramco is to come close to reaching USD 2 tn when its long-awaited IPO takes place. To do this another 1 mn barrels a day \u2014 approximately 1% of the global supply \u2014 will need to be removed from the market. And as 2020 is due to bring both a global oil surplus and a promise from Donald Trump to slash prices as part of his electoral campaign, the window for action is rapidly closing.<\/p>\n

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Silicon Valley VC meets traditional private equity:<\/b> Japan\u2019s SoftBank is preparing to host a meeting between its Vision Fund portfolio companies next month in the hopes of creating an \u201cecosystem\u201d of tech companies, the FT says<\/a>. The strategy \u2014 part Silicon Valley venture capital, part private equity \u2014 aims to increase collaboration between portfolio companies to boost growth and returns. The USD 100 bn Vision Fund, launched back in 2017, is comprised of various tech companies operating across seven different sectors.<\/p>\n

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Surprising to absolutely noone:<\/b> Chinese tech giant Huawei is assisting African governments to spy on political rivals, a Wall Street Journal<\/a> investigation has shown. The technology company, the most prominent in Africa, allegedly hacked into devices owned by political opponents of the Ugandan and Zambian governments, allowing them to intercept encrypted communications and track their movements. \u201cThe big question has been whether Chinese companies are just doing this for the money, or whether they\u2019re pushing a specific kind of surveillance agenda,\u201d digital surveillance expert Steven Feldstein said.<\/p>\n

What are the chances of Huawei surveillance in Egypt?<\/b> Egypt is one of the 13 African governments to purchase surveillance equipment from the company, in addition to hosting a Huawei office. Egypt also joins South Africa as the only two countries to be working with the company to install 5G infrastructure. Little is known about the extent of Chinese surveillance in the country, with the WSJ\u2019s investigation shedding little light on countries outside Uganda and Zambia.<\/p>\n

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China ratchets up rhetoric on Hong Kong protests:<\/b> Protests in Hong Kong have reached \u201cnear terrorism,\u201d the Chinese government said yesterday after demonstrators attacked people they accused of being government sympathizers, Reuters reported<\/a>. The US has warned travelers visiting the city after 10 weeks of violence have led to the country\u2019s worst political crisis since 1997. A Chinese spokeswoman also accused US House Speaker Nancy Pelosi and Senate Majority Leader Mitch McConnell of inciting further unrest, CNBC noted<\/a>.<\/p>\n

In international miscellany:<\/p>\n