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Macro Thoughts

Chapter 5 Page 53 Trading Guiding Principles from my Book Anyone Can
be Rich Aly-Khan Satchu

In Past Events we can see what will happen in the Future.

You also need the Intellectual Independence not to be swept along with
the Crowd. [Far From the Madding Crowd Thomas Hardy was one of my
favourite Books but the more seminal Trading Books is The Madness of
Crowds]. The Key to making Money is to recognise the existence of a
False Belief, monitor its progress and act decisively just before
everyone else wakes up.

Well It is a Wake Up Moment now and it always starts somewhere on the
Periphery and then infects [Tequila Effect was my first Encounter] the
Centre.

What do I think now?

I think the Centre Cannot Hold.

I think one seeks refuge in the Frontier and Africa. One Buys some
Gold on a Scale in Basis. One sticks with Food. One sells the Pound.
One monitors the Dollar and runs with it but keep an eye on Puts
because when it turns it will turn sharpish.

Home Thoughts

The Little One Hannah woke up in the Middle of the Night and her
Mother was flat out [Our Work Hours have stretched a great deal of
late] and the Two of us trooped down to the Kitchen and we chatted
awhile listening to the Rain, which fell after a long Absence. It was
very intimate except for the Drip Drip of a broken Drain somewhere.
Then she crawled into our Bed [Mrs. Mboya her Nursery School Teacher
has told her that she has to sleep in her own Bed and Mrs. Mboya's
words are taken very seriously and literally by the Little One] and
when she is sleepy, I can hold her very tight. without her
complaining, which I have to admit I enjoy more than anything. I
listened to the Rain for a while longer and recalled last year and the
Brutal Drought and felt completely reinvigorated like the Earth and
the Soil probably did.

While attempting to appease a long list of utterly unappeasable
foes—Iran, North Korea, Hamas, Hezbollah, and even Hugo Chávez—today
the U.S. treats China, perhaps our most crucial economic partner, as
an adversary because it defies us on global warming, dollar
devaluation, and Internet policy.

It started last June in Beijing when U.S. Treasury Secretary Timothy
Geithner lectured Chinese Premier Wen Jiabao, who recoiled like a man
cornered by a crank at a cocktail party. Mr. Geithner was haranguing
the Chinese on two highly questionable themes, neither arguably in the
interests of either country: the need to suppress energy output in the
name of global warming—a subject on which Mr. Geithner has no
expertise—and the need for a Chinese dollar devaluation, on which one
can scarcely imagine that he can persuade Chinese holders of a
trillion dollars of reserves. This week in a meeting with Senate
Democrats, President Obama continued to fret about the dollar being
too strong against the yuan at a time when most of the world's
investors fear that the Chinese will act on his words and crash the
dollar.

Meanwhile, Secretary of State Hillary Clinton and the president's
friends at Google are hectoring China on Internet policy. Although
commanding twice as many Internet users as we do, China originates
fewer viruses and scams than does the U.S. and with Taiwan produces
comparable amounts of Internet gear.

Yes, the Chinese are needlessly aggressive in missile deployments
against Taiwan, but there is absolutely no prospect of a successful
U.S. defense of that country. Sending them $6 billion of new weapons
is a needless provocation against China that does nothing valuable for
the defense of the U.S. or Taiwan. Yes, the Chinese have also spurned
America's quixotic effort to herd the gangs of anti-Semitic,
anti-American oil-dependent felines at the United Nations to undertake
an effective program of economic sanctions against Iran.

A foreign policy of serious people at a time of crisis will recognize
that the current Chinese regime is the best we can expect from that
country. The Chinese revitalization of Asian capitalism remains the
most important positive event in the world in the last 30 years.

The U.S. is as dependent on China for its economic and military health
and economic growth as China is dependent on the U.S. for its key
markets, reserve finance, and global capitalist trading regime.

It is self-destructive folly to sacrifice this core synergy at the
heart of global capitalism in order to gain concessions on global
warming, dollar weakening, or Internet politics.

Conclusions

How many enemies do we need?

Jitters about the U.S. economy and signs that Greece's debt woes are
spreading across Europe roiled markets on Thursday, driving the Dow
Jones Industrial Average briefly below the 10000 mark. U.S. stock
investors, waking up to a turbulent European trading session, were
further unnerved by an unexpected rise in the latest report on initial
claims for jobless benefits. Ahead of a key January employment report
due out Friday, the claims numbers revived on-again, off-again
concerns about the strength of the U.S. economic recovery.The
resulting selloff took the Dow below the psychologically important
10000 level in the final moments of trading. It managed to finish at
10002.18, but nevertheless had a 2.6% decline, led by big drops in
financial stocks. The 268.37-point fall was its biggest one-day loss
since last April.

Commodities, too, took a hit, partly on expectations that the troubles
in the European bond market will create a drag on the global economic
recovery. Crude oil fell nearly 5% and even gold prices—which usually
rise in times of crisis—fell 4.4% in response to a stronger dollar and
as investors pulled back from more volatile investments. U.S. Treasury
prices rose sharply as investors sought out the bonds' relative
safety.

Behind the turmoil are worries that a collection of European countries
including Portugal, Ireland, Greece and Spain, known derisively as
PIGS, won't be able to finance budget deficits that have ballooned to
around 10% of gross domestic product. That has sparked fears that
Europe's decade-old monetary union could unravel.

The cost of insuring against the default of sovereign debt from
Greece, Portugal and Spain soared to new highs, and the euro slid to
an eight-month low against the dollar and lost 3% of its value against
the Japanese yen.

"We've definitely entered the stage where the European debt crisis is
becoming systemic," says Barry Knapp, equity market strategist at
Barclays Capital in New York.

While Greece's bonds persevered Thursday, the cost to insure against a
Greek sovereign default using credit-default swaps hit $429,000
annually to insure $10 million of debt, a new record, according to
data provider CMA DataVision. Similar costs for Portugal and Spain
also leaped.

Conclusions

The Market is no longer tolerating the Rhetoric.

Euro 1.3714 -> That Idea of selling at 1.40 was Perfection
Dollar Index 80.12
Pound 1.5738 -> is skating on very thin Ice
Higher Beta
Rand 7.6505-> 8.00 Target
Real 1.8795 -> see the Bovespa Down Below
Aussie 0.8682

Conclusions

Momentum is with the Dollar and could get to 1.3380 and then 1.2980
but at those sort of Levels You have to turn things around but thats
all some way away.

Note well the Tick through 1.40 momentarily this week.

1-Year Note*    -1/32    0.284
2-Year Note*    5/32    0.807
3-Year Note*    9/32    1.313
5-Year Note*    16/32    2.303
7-Year Note*    19/32    3.070
10-Year Note*    25/32    3.610

Conclusions

Knee Jerk Flight into Bonds.

Fennel flowers in tempura from Ferran Adrià's El Bulli.

For years, so-called molecular gastronomy, an avant-garde culinary
movement best known for its gels and emulsions and its wild chemical
experiments with food, has teased the palates of diners.

Copper for March delivery dropped 3.2 % to $2.88 a pound during
Thursday's session. Copper has lost more than 5% over the last two
days.

Gold Tumbles $49 in a Commodity Retreat.

Conclusions

Time to start nibbling at Gold because once the Narrative beds down,
its Safe Haven Status in a World of Defaults and Fiat Currencies will
come to the fore.

Crude-oil prices slumped nearly 5% Thursday, their biggest single-day
loss in more than six months.

Sugar down 3.48% but back months continue to hold in better.

Movie night and restaurant meals are out for Vinod Kumar. As prices
for sugar, onions, and other staples surge after poor monsoon rains
damaged harvests, Kumar has been forced to cut back to keep food on
the table for his family of four.

“It’s never been so bad in my working life,” the 35-year- old mechanic
says in the Feb. 15 issue of Bloomberg BusinessWeek magazine as he
shops at Bangalore’s Johnson Market, a century- old tangle of food
stalls.

Inflation in India is at a decade high, with consumer prices rising
faster than in any other major economy. Industrial output in January
increased the most in 17 months, pushing up prices for raw materials.
Cotton has jumped up by 13 percent since October, and the benchmark
wholesale price index, up 7.3 percent in December, could hit 10
percent within two months, predicts brokerage CLSA Asia-Pacific
Markets.

India’s central bank governor, Duvvuri Subbarao, is trying to cool
things down.The bank has moved from “managing the crisis to managing
the recovery,” Subbarao told reporters on Jan. 29.

Even with India’s thriving technology industry, it remains beholden to
the vagaries of the monsoon. Less than half of India’s fields have
irrigation, so a drought last summer led to food shortfalls in several
states. Underdeveloped railroads and highways make it tougher to
transport food, leading to shortages and higher prices in many cities.

“You don’t have enough roads, you don’t have enough railroads, you
don’t have enough ports,” says Nikhilesh Bhattacharyya, an economist
with Moody’s Economy.com. “That amplifies any price shock.”

Even as inflation concern escalates, India’s economic outlook is
brightening. The International Monetary Fund last week boosted its
2010 gross domestic product growth projection for India to 7.7 percent
from 6.4 percent in October, compared with a 5.6 percent pace for last
year. Some investors are counting on that trend to continue.

Conclusions

It remains a very Asymettric Economy but Full of Potential.

It isn't easy being rich when you're plucked from your cushy
environment and plopped into a Mumbai slum. That's just part of the
premise of the popular Indian reality show "Big Switch."

"The stench was overwhelming," says Natasha Suri, a 25-year-old model
and former Miss India. "There were goats and pigs, droppings, piles of
stinking rubbish, mosquitoes, flies, unbearable heat, and 20 of us
using the same toilet."

Siddhartha Khanna, heir to a real-estate empire, won the 'Big Switch'
contest by doing such things as cleaning up cow dung with his hands.

Index Value:    63,934.01
Trade Time:    3:15PM ET
Change:    Down 3,174.55 (4.73%)

Conclusions

Got Pounded Yesterday.

China’s marquee tourist-experiences—the Wall, the Square, the Duck; a
circuit known to some as “Walling and Ducking”—are so iconic that
visitors often miss the country’s minor brushstrokes. The country is
in the midst of a museum-building boom, so I was pleased to see
“China: Museums,” a new English-language paperback that burrows into
places you would almost certainly miss—unless you’re the type of
traveller who never leaves a country without setting foot in its
Eunuch Museum or its Tap Water Museum. Authors Miriam Clifford, Cathy
Giangrande, and Antony White have trooped through hundreds of museums
and plucked out the best bits.

The frontier markets, trading at 13.1 times earnings, are not
“stretched” relative to other emerging markets, which trade at more
than 20 times earnings, Howell wrote.

The MSCI Frontier Market Index rose 7 percent last year, while
emerging markets climbed 75 percent. Many frontier markets “remain 50
percent or more below their highs set in 2007 and 2008,” Howell wrote.

Conclusions

I expect serious Frontier Market Outperformance.

Value503.78    
Change1.912     
% Change0.381

Conclusions

I expect serious Absolute Performance regardless of the Narrative Elesewhere.

The Nigerian Stock Exchange’s All Share Index climbed as much as 3.1
percent and closed 1.1 percent higher at 23,846.03 in Lagos, the
highest level since Aug. 14, data from the exchange’s Web site and
Bloomberg show. The increase extends the index’s gain this year to 13
percent. The rally was led by Zenith Bank Plc, Nigeria’s
second-biggest lender by market value, which rose 3.6 percent to
seven-month high of 16.25 naira.

Nigeria’s benchmark index fell 34 percent last year, the second-worst
performer after Ghana’s, following a 46 percent decline in 2008. The
drop was led by banking stocks on concern bad debt in the nation’s
lenders had grown. A surge in losses on loans taken out by investors
to buy stocks, known as margin loans, prompted the central bank to
inject 620 billion naira ($4.1 billion) into its banks to cover bad
debts and boost liquidity following an audit of the industry in August
and September.

“Investors believe things have gotten better for the banks, and that
is why they are taking positions now,” David Adonri, chief executive
officer of Lambeth Trust & Investments Co., a Lagos-based brokerage,
said by phone today.

Conclusions

Fundamentals and Charts were in perfect alignment.

Value23,846.03    
Change250.440     
% Change1.061

Conclusions

25,000 looks the next Objective.

Ethiopia’s economy is expected to grow 10.1 percent in the year to
July 7, from 9.9 percent the previous year, a finance ministry
official said.

“Our economy has been the fastest non-oil and non-mineral economy in
sub-Saharan Africa in the last six years,” Getachew Adem, head of
development planning and research at the Ministry of Finance and
Economic Development, told reporters today. “The financial crisis has
not affected us much, but there was impact indirectly on our
manufacturing sector.”

The financial crisis and power outages did keep growth last year below
the government’s 11.2 percent forecast. The economy should expand by
at least 10 percent through 2015, Getachew said in Addis Ababa, the
capital.

The International Monetary Fund projected economic growth of 7 percent
this year, according to a September report from the Washington-based
lender.

A 14 percent expansion of the service industry led growth last year,
Getachew said. Agriculture increased 6.4 percent while industrial
output grew 9.9 percent.

Foreign currency shortages continue to hurt manufacturers and
importers, he said. The government has rebuilt reserves from about
$800 million November 2008 to $1.9 billion today, he said.

Conclusions

I have an 8.00 Objective.

Value26,318.36    
Change-608.100     
% Change-2.258

Conclusions

High Beta Correlation with the Dow.

Kenya will probably need a second economic stimulus package in its
2010-11 budget to help sustain growth and boost living standards for
the poor, Finance Minister Uhuru Kenyatta said.

“There is good cause for us to continue with this program into next
year,” Kenyatta told reporters in the capital, Nairobi, today.

The country’s first 23 billion-shilling ($304-million) spending
program, enacted during the current fiscal year, will help the economy
to grow at least 3 percent in the year through June, and possibly more
than 3.5 percent, he said.

The government has spent 3.2 billion shillings of the current stimulus
plan on irrigation systems and to construct public health centers and
trading markets, he said. Another 13 billion shillings will be
disbursed by March to build schools. Unspent funds will be carried
over into the next budget for the next fiscal year, he said.

The stimulus program has helped re-distribute wealth to the poor and
create jobs, he said.

Kenya probably has room for a fiscal stimulus next year after devoting
about 1 percent of its gross domestic product to the program in
2009-10, the World Bank country director in Kenya, Johannes Zutt, said
on Feb. 2.

Conclusions

As Far as I am aware, they have not spent the first one.

Kenya Airways Ltd. said cargo volumes rose 9 percent in the three
months between October and December and passenger numbers increased.

Conclusions

The interesting Risk Adjusted Trade would be to short the Pound versus
the Shilling.

Agricultural projects planned for Kenya's Tana River delta could bring
prosperity to the region, but Bill Law wonders if the government is
ignoring the concerns of the people.Things do not start off well with
Maulani Diwayu.

"I didn't know if you were coming and anyway you're late," he tells me abruptly.

We are standing on a junction road, just off highway B8 in eastern Kenya.

I had flown in that morning to the town of Malindi on the shores of
the Indian Ocean, then been driven north and inland to meet up with
Diwayu.

"Let's go," he says brushing aside my attempts at explanation.
"There's a lot you need to see."

"I want to show you hippo village," Diwayu shouts over the engine noise.

Soon enough, we round a bend and there ahead of me are a herd of
hippos, 50 or 60 of them.

They congregate and splash about playfully, gracefully, the sun
playing off their wet backs.

Diwayu shields his eyes as he gazes at the hippos.

"Where will the hippos go, if they dry the wetlands? All the
biodiversity is threatened. We are in distress," he says.

Kenya's capital markets regulator said it took over management of a
brokerage that had failed to meet legal and regulatory obligations, in
the latest setback to efforts to boost investor confidence in the
country's stock exchange.

The Capital Markets Authority (CMA) said it acted against Ngenye
Kariuki Stockbrokers to protect investors' interests and improve their
access to trading activities.

"While efforts have been made to restructure the company, these have
not borne significant fruit," a CMA statement said.

"The statutory management is being undertaken to ... give the company
a chance to revive its business."

A clutch of violations by brokerage firms has caused investor
confidence in the Nairobi Stock Exchange to flag.

Passenger numbers to the Middle East, Far East and Asia rose 3 percent
to 120,577 in the period, while the number of travelers to Europe was
little changed at 97,252, the airline said in an e-mailed statement
today.

Within Africa and excluding Kenya, passenger numbers advanced 9
percent to 421,949, while there was a decline of 5 percent within
Kenya to 133,301 because of a temporary suspension of flights to some
towns, it said.

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