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The Latest Daily PodCast can be found here
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Macro Thoughts

GOLD.

Home Thoughts

I have been out and about of late. It was a pleasure to meet Brian
Hirman of the eVentures Africa Fund and we had a very enjoyable Dinner
at the Norfolk. Thanks Brian.

Tatu Restaurant Norfolk Hotel
http://bit.ly/cvxhGa

Sashimi and a Steak if you need to Know.

I got to Johannesburg a week or so before Nelson Mandela was released.
At the door of my hotel a guy offered to clean my shoes. I said no
thanks. I’d spent a lot of time photographing anti-apartheid
demonstrations and felt embarrassed at the thought of a black guy
cleaning my shoes. He said I was taking the bread out of his
children’s mouths, so I let him clean my shoes and we got chatting. He
was called Radebe and it turned out he was a neighbour of Mandela.

President Barack Obama is starting to look like the second coming of
Jimmy Carter. If he’s going to avoid that fate, the president had
better take radical action -- and fast.That means doing more than
offering belated talk about jobs, or waging ineffectual on-again,
off-again bank warfare. What, after all, is the point of bashing Wall
Street only to then blow bonus kisses to JPMorgan Chase & Co. chief
Jamie Dimon and Goldman Sachs Group Inc. head Lloyd Blankfein?Obama
needs to ditch his professorial, community-organizer mien and start
cracking some heads. Unless, that is, he is intent on paving the way
for a Palin presidency in 2013.

Bring congressional Democrats to heel with a Sister Souljah
moment.Such an action is named for former President Bill Clinton’s
putdown of hate speech by a rapper -- and, by extension, the far-left
wing of the Democratic Party. Clinton’s move was designed to appeal to
centrist voters.
For his Sister Souljah moment, Obama needs to pick a particularly
egregious action by his erstwhile allies on Capitol Hill and then use
a veto, or the threat of one, to show congressional Democrats he is in
charge, not them.

Obama can get financial reform if he wants it. He just has to realize
that he’s, well, the president. And presidents don’t haggle with banks
that are alive only thanks to $8.2 trillion in government lending,
spending and support. Nor do they let armies of bank lobbyists tie
them down on Capitol Hill.

And they certainly don’t countenance bank chiefs who fail to show for
White House meetings. Trying that with Nixon would have meant quick
inclusion on the “enemies list”; George W. Bush’s folks would have
issued an immediate invitation to go hunting with Vice President Dick
Cheney.

Obama, on the other hand, talks tough, then worries about upsetting
Wall Street. That’s insane.

Use the Broom

Clean house.

Treasury Secretary Timothy Geithner has to go. So too does White House
economic adviser Lawrence Summers. And while he’s at it, the president
should jettison Chief of Staff Rahm Emanuel.

All are too stuck in the pre-crisis, let’s-not-risk-
curbing-financial-innovation mentality that helped get us into this
mess. They also tie Obama directly to the crisis, negating claims that
it was someone else’s doing.

Obama needs to get tough. If he doesn’t, voters will.

In this capital of India’s Hindi film industry, Friday’s release of
the latest blockbuster by Bollywood’s biggest star, Shah Rukh Khan, is
not shaping up as the usual red carpet and starlets affair. Police
officers, fearing violent protests, are being stationed at theaters,
while nearly 2,000 people have already been arrested as a precaution.

The controversy is a standoff between two men from two very different
corners of this staggering city of 14 million people. One is Mr. Khan,
the leading man of Indian cinema, known as King Khan for his box
office success. The other is Bal Thackeray, the octogenarian supreme
leader of Shiv Sena, the extremist, if fading, political party that
for years has intimidated Bollywood and is now threatening Mr. Khan’s
movie.

The fight over the film and the politics of its star, who angered the
Hindu right over his comments about Pakistanis playing on Indian
cricket teams, is a glimpse of the bitterly parochial politics that
still divide India’s most international city.

“The tipping point has come,” said Mahesh Bhatt, a filmmaker who has
clashed with Shiv Sena in the past. “You have to call the bluff of
these people.”

He added, “Hate is a commodity that has always sold like hot cakes in
certain quarters in India.”

The film has its official premiere in Abu Dhabi and Berlin, so Mr.
Khan is not in Mumbai. But in comments posted Thursday on Twitter, Mr.
Khan said he never wanted his movie to harm his adopted hometown. “I
hope peace prevails & the city is at rest,” he wrote.

Globalisation has been good for gods in the Indian subcontinent. As
the region has remade itself, it has grown more devout, and its
religions are becoming ever more entangled with politics

India now has 2.5 million places of worship, but only 1.5 million
schools and barely 75,000 hospitals. Pilgrimages account for more than
50 per cent of all package tours, the bigger pilgrimage sites now
vying with the Taj Mahal for the most visited sites in the country:
the Balaji Temple in Tirupati had 23 million visitors in 2008, while
over 17 million trekked to the mountain shrine of Vaishno Devi.

Its just an Outstanding Essay.

Euro 1.3667 - 1.3380 Target but prefer to sell on a Bounce Higher.
Pound 1.5689 - The Next Greece so watching things keenly.
$ Index 80.07
Higher Beta Currencies
Aussie 0.8888
Rand 7.64
Real 1.8525

Lack of Fine Print Detail kept the Euro under pressure. It is very
much a Pass the Parcel Thing so even a Clear Cut Guarantee Solution is
no Panacea.

THE world economy has been injected with the biggest Keynesian
cocktail yet seen in peacetime. In the past 18 months governments have
pumped cash into their economies to fight financial seizure and
recession. Central banks have slashed interest rates (see chart 1);
the rich world’s largest ones have supplemented ultra-cheap money with
a special drug, quantitative easing (QE). Finance ministries have cut
taxes and boosted public spending.

All this leaves policymakers with an unenviable task: deciding when
and how to withdraw the drugs. An “exit strategy”, in official jargon,
requires answers to three questions. First, timing: when should fiscal
and monetary tightening begin? Second, tactics: is it more important
to start by cutting budget deficits or by raising interest rates?
Third, technique: how will central banks, with their balance-sheets
bloated by the unusual policies of the past year and a half, go about
tightening monetary conditions? There are no easy answers.

Australia, Israel and Norway increased interest rates late in 2009. A
month ago China raised banks’ reserve requirements and began to clamp
down on lending. India’s central bank followed suit, raising reserve
requirements on January 29th. Fiscal policy is also being tightened.
Brazil (see article), India and Mexico all plan to cut their
underlying deficits this year.

The task is harder in big, rich economies, where growth is more
fragile. Central banks have made a start, mainly by unwinding the
emergency liquidity facilities with which they fought financial panic.
Five of the Federal Reserve’s seven crisis-lending windows were closed
on February 1st. The European Central Bank (ECB) has stopped lending
banks unlimited 12-month funds. The currency swap lines that central
banks set up among themselves have also been shut down. QE—creating
money and using it to buy bonds—is coming to an end, or at least
pausing.

The average ratio of public debt to GDP in big, rich economies has
jumped from below 80% to nearly 100% in two years. The IMF reckons it
will near 120% by 2014.

The logic behind this is derived from a theory called Ricardian
equivalence, which holds that government spending cannot boost demand,
since consumers cut their own expenditure in anticipation of higher
taxes ahead.

The term “exit strategy” may be a misnomer. Weaning the world economy
off fiscal and monetary stimulants will take many years. And like a
former addict, the patient may never be quite the same again.

Conclusions

Greece is a shot across the Bows. What is the difference between
Greece, the United Kingdom and the United States? I would posit very
little. Policy Makers have enjoyed near optimal Conditions. Markets
typically lull everyone into a False sense of Security just before a
major Disjunctive Move. Where do we go in the event of the Market
[which in essence is Anthropomorphic] getting its bit between its
Teeth and running this to its Denouement? We have no Options left. We
are playing a Game of Double or Quits and that Strategy has been
played and replayed ad infinitum. Its running on empty.

The Key is to recognise the existence of a False Belief [That we can
keep administering the Drugs], monitor its progress and act decisively
just before everyone else wakes up [any time now].

Aly-Khan Satchu
www.rich.co.ke

German and French banks’ “enormous” exposure to Portugal, Ireland,
Greece and Spain explains why Europe’s biggest economies are moving to
rescue their southern neighbors, Societe General SA said today in a
report titled “Shotgun Greek Wedding.”

The CHART OF THE DAY shows how much money German, French, Swiss and
U.K. banks have at stake in the so-called PIGS countries. Banks in
Germany and France alone have a combined exposure of $119 billion to
Greece and $909 billion to the four countries, according to data from
the Bank for International Settlements. Overall, European banks have
$253 billion in Greece and $2.1 trillion in the so-called PIGS.

“The exposure is enormous,” said Klaus Baader, co-chief European
economist at Societe Generale in London. “The crisis in Greece isn’t
Greece’s problem alone but a concrete problem for Europe’s whole
banking sector. That explains the interest of finance ministers in
stabilizing the situation.”

Dow up 105.81 Points.

Graff, bidding at the front of the room, gave 2.3 million pounds for
the 1981 Warhol, whose seller had paid $1.6 million for it at
Sotheby’s, New York, in November 2005.

Gold futures finished 1.7% higher on Thursday, receiving a lift as
Europe's plan to help Greece handle its debt crisis didn't apparently
involve any sale of gold.

Conclusions

I have a Supreme Conviction about Gold and believe the Put and Call
Strategy I previously outlined is an excellent Transaction.

Last trade    26.85    Change    +0.92 (+3.43%)
Contract High    29    Contract High Date    2010-02-01
Contract Low    11.9    Contract Low Date    2008-10-24

Conclusions

New High expected This Year.

Conclusions

Remains less than 10% from recent highs and You can sell Puts on Pull Backs.

According to the Rapaport Diamond Index, a respected industry
benchmark, prices of top-quality stones have collapsed by as much as
80% in real, inflation-adjusted terms over the last 30 years. Even if
you set aside the short-lived but massive price bubble back in
1980—around the time of a similar bubble in gold and many other
commodities—the results have still been abysmal. The index looks at
prices for top-quality one-carat stones, those with the best color and
clarity. While every stone varies, in 1978 a typical such stone,
according to the index, cost around $6,100. Today it costs nearly
$11,000.

On the surface, that looks like a gain. But investors are frequently
fooled by the effects of inflation. Taking that into account, the
stone has actually lost about half its value in real purchasing power.

But you're much better off selling diamonds than buying them. The
numbers tell the story. Anyone who invested $1,000 in the Tiffany &
Co. IPO in 1987 and just sat back and left their money alone, merely
reinvesting the dividends, would have about $26,000 today. Someone who
sunk that money into diamonds instead: less than $2,000.

"If no one gets an absolute majority, then there will be a run-off
election in May and I think that's a high likelihood," Carter told
reporters during a trip to south Sudan.

"We don't know yet whether al-Bashir can get a majority in the
beginning round. If not, which I think is likely, there will be a
run-off between him and the second person who gets the most votes,"
Carter added.

Conclusions

Those Folks in Juba really fancy their Candidate Yasir's Chances. I
took off to Bed at Midnight and missed the chance to shoot the Breeze
with him the last time I was up there.

WEARING the wide-brimmed hat favoured by tribal chiefs in his corner
of Nigeria, Goodluck Jonathan this week assumed office as the
country’s acting president. In a televised address to his 150m people,
the erstwhile vice-president said that the “circumstances” that had
led to his promotion were “uncommon, sober and reflective”.Until now,
Africa’s most populous country had been leaderless for almost 80 days,
since President Umaru Yar’Adua abruptly left for medical treatment in
Saudi Arabia. He failed formally to transfer power to Mr Jonathan
before his departure, leaving Nigeria in a state of limbo. The
president’s inner circle and cabinet repeatedly put off filling the
vacuum, knowing that a change at the top could threaten their
privileged positions. Investors and oil people grew querulous.

Mr Jonathan could now be in the top job until elections scheduled for
next year. Although he has been the de facto leader since Mr
Yar’Adua’s departure, he has been largely passive. Some attribute this
silence to spinelessness, others to tactical guile. “If he had
overdone it earlier, people would have said he was power-grabbing,”
says a businessman in Lagos, the commercial capital. “He has been
clever.”

Conclusions

The Finer Points about Constitutional Law are now irrelevant. Yar Adua
has been gone for more than 70 Days and most reports indicate his
complete Incapitation. Yar Adua is not even on the Subs Bench, he is
some ways off the Pitch. This Hail Fellow Political Persona obviously
veils a Politician who can seize the Main Chance and his Good Luck is
also something of value as you have pointed out. He displayed a keen
sense of Political Timing, waiting until the situation became
untenable. He subsequently moved swiftly to dethrone the Justice
Minister [who was apparently a Blocker] and bared his Fangs very
quickly.

Incumbency is a very Big Thing. He might not have pounced but he
allowed the chips to fall into his Lap.

Aly-Khan Satchu
www.rich.co.ke

Nigeria’s central bank will avoid any “shotgun” sale of rescued
lenders and may take the rest of the year to complete deals with
prospective international buyers.

“It is not a shotgun marriage, these things happen as they come,”
Governor Lamido Sanusi said in an interview in the commercial capital,
Lagos. The process may take until the end of the year, Sanusi
said.Sanusi, who replaced Chukwuma Soludo as Central Bank of Nigeria
governor in June, replaced the chief executives of eight lenders in
August and September. He injected at least 620 billion naira ($4.13
billion) into 10 banks after bad loans made to stock speculators
caused toxic assets to soar as much as $10 billion, according to
estimates by New York-based research firm Eurasia Group.

Sanusi said in October the central bank will invite foreign
institutions to take stakes in the 10 lenders and will limit domestic
firms to a 20 percent stake. The central bank also extended a
guarantee on interbank borrowing until the end of this year.

South Africa’s financial companies have led the approach from foreign
buyers. Standard Bank Group Ltd., FirstRand Ltd. and Old Mutual Plc
said in January they were interested in buying stakes in the lenders.

Bank stocks, which led a 34 percent plunge last year in Nigeria’s
All-Share Index, are rebounding this year. Nigeria’s benchmark index
has gained 11 percent in 2010. Lenders comprise at least 40 percent of
the country’s bourse.

The intervention in the country’s banking industry is “restoring
confidence,” Sanusi said. “If banks are stable and making good profit,
their stocks will go up.”

Conclusions

Sanusi is clearly an Accomplished Operator.

Value23,040.12    
Change-90.320     
% Change-0.390

Conclusions

Remains in Bull Mode.

Tullow Oil Plc expects negotiations to bring in partners to develop
Ugandan projects to be completed “swiftly” as Total SA said it was in
“advanced talks” with the U.K. explorer.Tullow is seeking help to
develop oil fields in Uganda’s Lake Albert, which require about $5
billion in investment as well as government approval. Uganda wants to
avoid any one company dominating its oil industry after Tullow
exercised first rights over fields being sold by Heritage Oil Plc,
seeing off a challenge from Eni SpA.

“We are in discussions with the government at the moment and we are
keen to complete the process of partnering swiftly,” Brian Glover,
Tullow’s country manager for Uganda, said by phone today from the
capital city of Kampala.

Oil companies are competing for new reserves in Africa to make up for
dwindling resources and restricted access in other parts of the world.
Total and China National Offshore Oil Corp., known as CNOOC, were
named as Tullow’s “top two bidders” for the Ugandan projects last
month.

Total is in “advanced talks” with Tullow, Chief Executive Officer
Christophe de Margerie told a press conference in Paris today. “It’s
an opportunity for Total to develop in a new part of Africa.”

“One of our strategies is to develop partnerships with national oil
companies, in particular with CNOOC,” he said, Total already works
with the Chinese company on the Akpo field off Nigeria.

Value26,350.60    
Change-8.570     
% Change-0.033

Conclusions

Should Rebound Strongly Today.

Conclusions

A Tad Firmer.

The Zimbabwe Stock Exchange’s Mining Index fell 4.6 percent because
some investors are wary of a new law that could force companies to
transfer 51 percent of their shares to black Zimbabweans, Kingdom
Stock Brokers Ltd. said

The measure declined to 197.47 at the close in the southern African
nation’s capital, Harare, from 207.01 yesterday, e- mailed data from
the exchange show. Shares in Bindura Nickel Corp. and RioZim Ltd.
retreated.

The 75-member ZSE Industrial Index climbed 0.6 percent by the close of
trade yesterday.

Zimbabwe passed its Indigenization and Empowerment Act into law Feb.
5. The law doesn’t offer a clear mechanism for the transferring of
shares to black Zimbabweans, saying only that it must be completed
within five years. The act affects all companies with assets worth
over $500,000.

Value152.93    Change0.940     
% Change0.618

The cut off rate on Kenya's 91-day Treasury bill fell to 6.199
percent at its latest auction from 6.401 percent at the previous sale,
the Central Bank of Kenya said.

The bank accepted bids worth 4.4 billion shillings at the sale on
Thursday. It had offered bills worth 4 billion shillings and the issue
was 22 percent oversubscribed.

Conclusions

Extremely Positive Developments.

“According to our latest financial results, data, including M-pesa,
accounted for about 17 per cent of our revenues. We intend to double
this performance in the next two years,” said Mr Michael Joseph, the
Safaricom CEO, in an interview with Business Daily.

In its half-year results released last November, the firm said it had
made Sh2.5 billion from its emerging data business, a segment which
grew by 90 per cent.

China ordered banks to set aside more deposits as reserves for the
second time in a month to cool the fastest-growing major economy after
loan growth accelerated and property prices surged.

The reserve requirement will increase 50 basis points effective Feb.
25, the People’s Bank of China said on its Web site today. The current
level is 16 percent for big banks and 14 percent for smaller ones.

An initial public offering by Uganda's biggest underwriter National
Insurance Corporation (NIC) has been oversubscribed in a sign of
growing investor interest in the east African country, a broker said
on Friday.The discovery of large crude oil deposits has turned a
spotlight on the region's third-largest economy, where growth is
expected to be 5 percent in fiscal 2009-2010 and then climb to 7
percent the following year.NIC's admission to the nascent Uganda
Securities Exchange (USE) was seen injecting impetus into the bourse
which took a hit from the global financial crisis as foreign investors
took flight and prices slumped.MBEA Brokerage is sponsoring the IPO
and its executive director Andrew Owinyi said preliminary returns from
agents showed share applications had far exceeded the volume on offer.

"We're still collecting and collating applications, but we are already
certain that demand has far exceeded the shares on offer," Owinyi told
Reuters in Kampala.

Top grade African tea prices climbed 7.3 percent to near-record
levels this week at the world’s biggest auction of the leaf in
Mombasa, Kenya, as unfavorable weather damaged crops, a broker said.

Tea sold for as much as $3.09 a kilogram (2.2 pounds) at auctions on
Feb. 8 and 9, compared with $2.88 last week, Africa Tea Brokers Ltd.
said in an e-mailed report today. Average tea prices rose to a record
$3.12 a kilogram last year.

Inclement weather cut tea production in Kenya, the world’s biggest
black-tea exporter, to 314 million kilograms last year, the lowest
since 2006, exacerbating a global shortage. The gap may widen this
year as a rebound in output from Africa, Sri Lanka and India fails to
compensate for even quicker demand growth, McLeod Russel India Ltd.,
the world’s biggest tea- plantation company, said last month.

“The crop continues to decline” in Kenya, ATB said, adding that drier,
warmer and windy weather was experienced in some tea-growing areas.
The average price for top grades has traded a third higher so far this
year than in the same period a year ago, it said.

Of the 9.08 million kilograms offered at the sale this week, 97
percent was sold. At the next auction, 7.96 million kilograms will be
sold and 7.14 million kilograms the week after, according to ATB’s
report.

"We still have a long way to go for the simple reason that the number
of charters coming to Mombasa is not what we had in 2007 before the
post election violence," Mohammed Hersi, regional manager for the
Sarova chain of hotels, told Reuters in an interview.

Whereas the resort city received up to 38 charters weekly in 2007,
only about 25 are landing there now and some of the passengers are
actually headed for the Tanzanian archipelago of Zanzibar.

And not all the tourists disembarking in Mombasa take up rooms, a good
number of them are staying at private villas, in people's homes or
with friends.

Hotels at the Kenyan coast have a capacity of 30,000 beds and it would
take 62 charter flights to fill them, Hersi said.

The NSE20 closed 15.43 points better at 3606.46.
The NASI was up 0.23 points at 79.06.
Market cap was 920.679b versus 918.00b
Equity Turnover was 129.543m versus 123.903m.

The Market looks poised to run up higher next week.

Tea Prices rocketed up this week up 7.3% on the week and are set to
rise by the same quantum this Year as last. The Tea Company shares are
completely disconnected.

Sasini Tea closed at 8.00 on 35,200 shares.
Kakuzi traded 4,000 shares unchanged at 37.00.
Rea traded 5,400 all at 12.70.

SAFARICOM

shares volume     3,129,000
avg price     5.35 CLOSING PRICE 5.35
high price     5.40
low price     5.35
last price     5.35

Conclusions

Safaricom closed unchanged at 5.35 and again the Volumes were well
below the moving average. Demand outweighs Supply and the price points
higher now. Safaricom traded 3rd at the Bourse.

TPSerena rose 1.55% and closed at 49.00 on 52,500 shares. 50.00 is the
near term objective and resistance level.

Access Kenya dipped 1.14% to close at 21.75 and traded a 21.50-22.00
range and traded 240,600 shares.

CMC Holdings rose 5 cents to close at 11.40 and traded 127,000 shares.

Kenya Airways closed at 49.25 and traded a 49.00-50.50 range and just
15,600 shares.

Nation shaved off a shilling to close at 124.00 on 1,300 shares.
Standard traded a 1,000 shares all lower at 35.00.

ScanGroup rose 25 cents to close at 26.75 and traded 15,400 shares.

CARGEN did not trade.

KCB eased 1.15% to close at 21.50 and traded 371,100 shares with an
apparent overhang of 1m shares which pressured the market.
COOP Bank firmed 0.52% to close at 9.70 and traded 537,700 shares.
Equity Bank firmed 0.315% to close at 16.05 and traded 221,400 shares.
Barclays Bank bounced 1.02% to close at 49.50 and traded 55,800 shares.
Stanchart rallied 1.17% to close at 173.00 and traded 11,300 shares.
The Demand versus Supply Equation is in disequilibrium with little for
sale.

DTB firmed 2.84% to close at 72.50 and traded a session high of 75.00
with 57,100 shares traded.
CFC StanBic retreated 3.348% to close at 43.25 and traded 7,000 shares.
HFCK reversed course to close lower at 17.45 and traded 30,300 shares.
NBK eased 1.32% to close at 37.25 and traded 5,000 shares.
NIC improved 0.72% to close at 35.00 and traded 49,900 shares.

Kenya Re closed 0.38% better at 13.10 and traded 142,600 shares.
Jubilee was unchanged at 138.00 on 600 shares.
PanAfric did not trade.

Centum was down 1.52% to close at 12.90 and traded 38,500 shares.

EABL was the most active Counter and closed 0.65% firmer at 154.00 and
traded a 152.00-155.00 range with 156,200 shares worth 24.204m
changing hands. The Diageo results where Harp Nigeria and Tusker Kenya
were singled out as Outperformers in the Diageo Stable will continue
to keep a firm Bid under the shares.

KENGEN traded 2nd at the Bourse. KENGEN closed 0.72% firmer at 13.95
and traded a 13.80-14.05 range and a noteworthy 1.211m shares worth
16.942m.
KPLC closed 0.66% better at 152.00 and traded a 1,000 shares.
Cables was unchanged at 23.50 and traded 8,800 shares.

BAT rose 1.0626% to close at  188.00 and traded a 186.00-190.00 range
and 59,400 shares worth 11.224m which ranked it  4th. BAT has a
running Yield which is over 9.00% and that is very attractive in the
current Environment where Short term Rates are collapsing Lower.

Mumias Sugar rose 0.49% to close at 10.30 and traded 952,300 shares.
Sugar prices will trade new Multi Year Highs this Year again and this
is a very supportive Back Drop.

Bamburi closed 1.24% better at 163.00 and traded 800 shares.
ARM rose 2.856% to close at 108.00 and traded 8,000 shares.
Portland did not trade.

KENOLKOBIL eased back 2.26% to close at 65.00 and traded 27,700 shares.
Total closed 0.83% better at 30.50.

Carbacid closed at 100.00.
BOC Gases did not trade.
Crown Berger traded 1,100 shares at 25.00 -3.85%.
Eveready was unchanged at 3.70.
Sameer was unchanged at 6.40.
Unga traded 600 shares at 9.10.