Egypt

Highlights Tight fiscal and monetary policies under the auspices of the IMF agreement and a relatively benign balance of payments position will allow authorities to avoid currency devaluation in the next 6-12 months. However, these tight policies are creating a vicious circle of low nominal…

Highlights Authorities will be reluctant to devalue the currency this year to avoid a pass-through of higher global food prices into domestic food prices. Yet, chronically underwhelming economic growth will ultimately force the government to abandon tight fiscal and monetary policies and adopt…

Highlights The epicenter of the new Middle East crisis is the Shia Crescent, which threatens global oil supply. However, the escalation of conflict in the Mediterranean is also relevant to global investors. The crises in Libya and the Eastern Mediterranean are escalating as President Erdogan…

  Highlights In the short run, extreme policy uncertainty is problematic for risk assets. In the long run, gargantuan fiscal and monetary stimulus continues to support cyclical trades. Equity volatility always increases in the lead-up to US presidential elections. Trump has a 35% chance…

Highlights Egypt’s balance of payments have deteriorated materially due to both the crash in oil prices and the global pandemic. The country’s foreign funding requirements in 2020 are high and the currency is under depreciation pressures. Unless domestic interest rates are brought…

Highlights Geopolitical sparks in the Mediterranean point to the revival of realism or realpolitik in places where it has long been dormant. Europe is wary of Russia but will keep buying more of its natural gas. This will be a source of tension with the United States. Turkey is wary of Russia…

Highlights So what? Egyptian assets will benefit from improving fundamentals. Why?   March credit data confirm China’s stimulus, supporting the commodity/EM complex. Oil price risks are also to the upside. In Egypt, investors will welcome constitutional changes that reinforce the…

Global trade is plummeting as commodity prices remain depressed and emerging markets unravel. Even if oil were not plumbing new lows, we would remain bearish on EM economies, where poor governance and low efficiency suggest that more crises will rear their heads. Above all, we are watching China for policy clarity. After seizing 14% of global exports in recent years, it is now exporting surplus goods into an already deflationary world. Protectionism - not a coordinated response among leading countries - is the likely result. In essence, we reiterate our theme that globalization has peaked. Along the way, we call attention to five geopolitical "Black Swans" that <i>no one</i> is talking about.