Middle East & North Africa
Spotlight On The Shia Crescent…
Highlights The tech sector faces mounting domestic political and geopolitical risks. We fully expected stimulus hiccups but believe they will give way to large new fiscal support, given that COVID-19 is weighing on consumer confidence. Europe’s relative political stability is a good basis for…
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 The EU’s €750 billion fiscal package, along with another round of US stimulus likely exceeding $1 trillion, will support global oil demand. On the supply side, OPEC 2.0’s production discipline likely holds, and US shale output will remain depressed. These fundamentals, along with a…
Highlights The bull market in US-Iran tensions was never resolved, and now a series of suspicious explosions in Iran raises the possibility that tensions will re-escalate. Iran’s interest lies in waiting out Trump so that a Democratic victory in the US election can restore the US-Iran…
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…
High Risks Of An Egyptian Devaluation…
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 If the current low oil price environment is transitory, temporary fiscal tightening can be used to preserve the exchange rate peg. In our view, low oil prices are structural - crude prices will likely average $40 and lower in the coming years. In such a scenario, fiscal tightening…
Highlights The collapse in oil prices supercharges the geopolitical risks stemming from the global pandemic and recession. Low oil prices should discourage petro-states from waging war, but Iran may be an important exception. Russian instability is one of the most important secular…