{"id":605226,"date":"2018-12-26T04:21:15","date_gmt":"2018-12-26T04:21:15","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/2018\/12\/26\/what-were-tracking-on-26-december-2018\/"},"modified":"2018-12-26T04:21:15","modified_gmt":"2018-12-26T04:21:15","slug":"what-were-tracking-on-26-december-2018","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/egypt\/2018\/12\/26\/what-were-tracking-on-26-december-2018\/","title":{"rendered":"What we\u2019re tracking on 26 December, 2018"},"content":{"rendered":"

2018 is the year that refused to go quietly into that goodnight. <\/b>We have a packed issue this morning after what had been, until yesterday, one of the quietest news days of any given year.<\/p>\n

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<\/a> The question of the day: How much worse can it get on Wall Street<\/b>, where shares tanked on Christmas Eve<\/a> \u201cas investors reacted negatively to US Treasury secretary Steven Mnuchin\u2019s highly unusual effort to reassure investors about Wall Street banks\u2019 liquidity\u201d and as US President Donald Trump held firm<\/a> on his attacks on the US Federal Reserve and an ongoing shutdown of US government \u201cagainst the backdrop of a global economic slowdown and an extended world-wide stock plunge.\u201d<\/p>\n

How bad a stock plunge? <\/b>The S&P500 is now in bear territory after its worst-ever Christmas Eve sell-off<\/a>. Asian shares followed US equities lower in Christmas trading yesterday (the Topix in Tokyo was down 4.9%), as did indexes in Egypt, Saudi and Kuwait.<\/p>\n

(For those of you keeping score: The EGX30 is down 15.6% for the year ahead of the opening bell this morning.)<\/p>\n

MUST-READ of the morning: The risk today isn\u2019t that America is wishing itself into recession, it\u2019s that it is mismanaging itself there. <\/b>\u201cSometime in the last couple of months, predictions of a major economic downturn or recession in 2019 went from being a crank view to the conventional wisdom,\u201d writes the New York Times<\/a>, arguing that the \u201cgloom and pessimism has gotten ahead of the facts on the ground. \u2026 The real risk is not that insurmountable challenges knock the economy off course. It is that poor leadership converts moderate economic shocks into a crisis.\u201d<\/p>\n

Case in point: <\/b>Trump renews attack on Fed as Mnuchin tries to calm markets.<\/a><\/p>\n

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Does it get any crazier than this?<\/b> \u201cThe only problem our economy has is the Fed. They don\u2019t have a feel for the Market, they don\u2019t understand necessary Trade Wars or Strong [USD] or even Democrat Shutdowns over Borders. The Fed is like a powerful golfer who can\u2019t score because he has no touch \u2014 he can\u2019t putt!\u201d \u2014The Donald, on Twitter, on Christmas Eve<\/a>.<\/p>\n

Which markets are open today? <\/b>It\u2019s business as usual in Egypt, while US markets reopen after yesterday\u2019s holiday. The London Stock Exchange is closed today for Boxing Day. (Which, incidentally, is one of only two globally popular shopping-centric holidays that has yet to be adopted by Egyptian retailers<\/b>, the other being China\u2019s Singles Day. And one of us argues having seen signs of interest in Singles Day this year\u2026)<\/p>\n

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Is The Donald really the biggest risk to global markets in 2019? <\/b>We\u2019ve written a couple of times this fall and winter about the risks of an algorithmic sell-off of assets. JPMorgan estimates that as much as USD 7.4 tn in assets \u201ccould be subject to forced selling by passive funds<\/a> during the next downturn.\u201d And Deutsche Bank sees an algo-led selloff as the biggest risk of the new year<\/a>.<\/p>\n

The WSJ has a solid, balanced look at what the deployment of machines in the market could mean in 2019. <\/b>The kicker: \u201cBehind the broad, swift market slide of 2018 is an underlying new reality: Roughly 85% of all trading is on autopilot\u2014controlled by machines<\/b>, models, or passive investing formulas, creating an unprecedented trading herd that moves in unison and is blazingly fast. That market has grown up during the long bull run, and hasn\u2019t until now been seriously tested by a prolonged downturn.\u201d Read: Behind the market swoon: The herdlike behavior of computerized trading<\/a>.<\/p>\n

Add to your TBR pile: <\/b>Quant investors face test of faith in 2019<\/a>, from the Financial Times. \u201cA year in which quant funds struggled to exploit any of their favourite patterns in markets saw many funds chalk up their biggest losses in years, ranking them among the hedge fund industry\u2019s worst performers.:<\/p>\n

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In other news this morning<\/b><\/p>\n