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Bond Yields in ''tilt'' mode - Forever blowing Bubbles
This macro gale force level move has pulled US 10-Yr Treasuries to a
20-month low of 2.15% [Last November it was at 3.24%]. Rate markets in
the US have now priced in close to 85bp cumulatively of easing by the
end of 2020. (via JPM). The US Curve has inverted and typically curve
inversions are harbingers of recession. Markets and prices exhibit
patterns of correlation and essentially my perspective is that it is
the correlation that has exerted a ''Pull'' Effect on US Yields and
that therefore the ''recessionary'' Signalling of the Yield Curve
should be discounted.
What we also know is that you don't stand in front of a Runaway
Freight Train. The Question we need to ask ourselves is how much
further this move may run? My sense is that the G7 Bond Markets are
now in nose-bleed territory. Whilst I accept that its a 20/80 [US
Consumer absorbs 20%, China will have to absorb 80%] of the Tariff
Price increase, nevertheless even 20% of a 100 is inflationary. The US
Rates and Bond Market looks seriously overcooked to me. However, what
we also know is that Markets can stay irrational longer than anyone
can stay solvent. Therefore, I would be tentatively selling 85bp of
cumulative US easing through 2020 as per JPM.
ABN AMRO on the ECB: @Adamlinton1
- An announcement of APP-II is likely by the end of the year
- Purchases to start in Jan 2020 (or earlier)
- Assume 9 months at EUR 70bn a month
- Rising chance that there could be a rate cut in addition to the 2nd
round of QE
Exports generated by international tourism reached USD 1.7 trillion in 2018, a 4% increase in real terms over the previous year, a new report from (@UNWTO) shows @whthome
Exports generated by international tourism reached USD 1.7 trillion in
2018, a 4% increase in real terms over the previous year, a new report
from the World Tourism Organization (UNWTO) shows. For the seventh
year in a row, tourism exports grew faster than merchandise exports
(+3%), reflecting solid demand for international travel in a generally
robust economic environment.
Strong growth in outbound travel from many source markets around the
world fuelled revenues from international tourism to reach a total USD
1.7 trillion. This accounts for 29% of global service exports and 7%
of overall exports of goods and services. These figures consolidate
international tourism among the top five economic sectors in the
world, behind chemical manufacturing and the fuel industry but ahead
of the food and automotive industries.
“Rather than growing in volume we need to grow in value. We are
pleased to see that both emerging and advanced economies around the
world are benefiting from rising tourism income,” said UNWTO
Secretary-General, Zurab Pololikashvili. “Revenues from international
tourism translate into jobs, entrepreneurship and a better situation
for people and local economies, while reducing trade deficits in many
countries” he added.
William Wordsworth, who wrote of the French Revolution: "Bliss was it in that dawn to be alive/But to be young was very heaven!" @FinancialTimes @davidpilling
Law & Politics
OH! pleasant exercise of hope and joy! For mighty were the auxiliars
which then stood Upon our side, we who were strong in love! Bliss was
it in that dawn to be alive, But to be young was very heaven!--Oh!
times, In which the meagre, stale, forbidding ways Of custom, law, and
statute, took at once The attraction of a country in romance! When
Reason seemed the most to assert her rights, When most intent on
making of herself 10 A prime Enchantress--to assist the work, Which
then was going forward in her name! Not favoured spots alone, but the
whole earth, The beauty wore of promise, that which sets (As at some
moment might not be unfelt Among the bowers of paradise itself) The
budding rose above the rose full blown. What temper at the prospect
did not wake To happiness unthought of? The inert Were roused, and
lively natures rapt away! 20 They who had fed their childhood upon
dreams, The playfellows of fancy, who had made All powers of
swiftness, subtilty, and strength Their ministers,--who in lordly wise
had stirred Among the grandest objects of the sense, And dealt with
whatsoever they found there As if they had within some lurking right
To wield it;--they, too, who, of gentle mood, Had watched all gentle
motions, and to these Had fitted their own thoughts, schemers more
mild, 30 And in the region of their peaceful selves;-- Now was it that
both found, the meek and lofty Did both find, helpers to their heart's
desire, And stuff at hand, plastic as they could wish; Were called
upon to exercise their skill, Not in Utopia, subterranean fields, Or
some secreted island, Heaven knows where! But in the very world, which
is the world Of all of us,--the place where in the end We find our
happiness, or not at all! 40 1805.
London-listed rare earth producers surge on Pentagon comments.@FT
The Pentagon has held talks with both companies following threats by
Beijing to cut off supply to the country, Reuters reported, citing a
material engineer at the Defense Logistics Agency speaking at a
conference in Chicago.
Rainbow Rare Earths, which is developing a project in Burundi, said it
could neither confirm nor deny the news. Mkango, which wants to build
a mine and processing plant in Malawi, did not immediately respond to
a request to comment. Rainbow Rare Earths last traded up 38 per cent
at 7.69p, while Mkango was up 42 per cent at 10.375p. Rare earths are
a group of 17 niche minerals that are used in electronics, electric
cars, and some military equipment such as night vision goggles and
Sub Saharan Africa
Towing an Iceberg: One Captain's Plan to Bring Drinking Water to 4 Million People @BW
Sloane still hasn’t taken that bath at home, and he isn’t optimistic
about Cape Town’s future. “We’ll never get back to the days where
water is flowing all over the Cape,” he says, pointing out that the
city’s population has grown almost 40% in the last 20 years. “If the
taps run dry, the first day people will be standing in lines at
watering points throughout the city. The second day, if you don’t get
your water, well, people are killed for that.”
Making use of his unusual skill set, he plans to harness and tow an
enormous Antarctic iceberg to South Africa and convert it into
municipal water. “To make it economically feasible, the iceberg will
have to be big,” Sloane says. Ideally, it would measure about 1,000
meters (3,281 feet) long, 500 meters wide, and 250 meters deep, and
weigh 125 million tons. “That would supply about 20% of Cape Town’s
water needs for a year.”
For now, Sloane is focused entirely on his continent, where cities and
towns across several nations are running dry. “I promise you, the
water situation in some parts of Africa is getting worse all the time.
It’s certainly not getting better,” he says. “Twenty or 30 years from
now, I think towing icebergs will be a regular thing.”
Counter-revolution in Khartoum Sudan's generals turn their guns against protesters @TheEconomist
WHERE JUST weeks ago the scent of freedom was in the air there is now
the smell of smoke and cordite. The sounds of jubilant song have given
way to those of automatic gunfire and the screams of the dying. In the
early hours of June 3rd Sudan’s armed forces moved against
pro-democracy protesters who had been holding a sit-in since April
outside the army’s headquarters in Khartoum, the capital of Sudan.
They shot and killed at least 35 civilians. All that remains of the
carnival of democracy that had sprouted there are burnt tents and
It was the worst violence since demonstrations toppled Sudan’s brutal
dictator, Omar al-Bashir, in early April.
The Sudanese Professionals Association (SPA), which has spearheaded
the uprising since it began last December, called it a “bloody
massacre” and announced a campaign of “total civil disobedience” to
topple the junta that took power in Mr Bashir’s place.
Trouble had been brewing for some weeks amid a fraught stand-off
between protesters and the generals over who would control the
country’s transition to democracy.
Negotiators for both sides had agreed on some issues, such as the
establishment of a civilian-led parliament and cabinet, and a
three-year transition before elections.
Such was the optimism that on May 15th leaders of the protest movement
announced that they would have a deal signed with the generals within
But this was premature because they had not reached agreement on the
most contentious issue of all: who would be in charge of the sovereign
council, the highest decision-making body that would oversee the move
On May 16th, less than 24 hours after the supposed breakthrough, the
TMC’s leader, Abdel Fattah al-Burhan, halted the talks and accused the
protesters of undermining them by blocking roads in the capital.
He claimed “armed infiltrators” had fired on soldiers. The opposition
responded on May 28th by declaring a two-day strike.
Since the attack on June 3rd, trust between the two sides has all but
evaporated. Protesters say that all the country’s previous transitions
were led by the armed forces and that the generals are determined to
control this one, too.
People in the opposition accuse Muhammad Hamdan Dagalo (who is widely
known as Hemedti), the powerful deputy head of the TMC, of foul play.
They say that the paramilitary unit he heads, the Rapid Support Forces
(RSF), carried out the lethal attack against the sit-in, as well as
earlier killings of protesters.
Observers, including some foreign diplomats, think that Mr Dagalo
wants to become president and that he may undermine any transition
that excludes him from power.
But he is not the only one with an incentive to act as a spoiler. Mr
Bashir kept himself in power for 30 years by playing armed factions
against one another and by allowing them to earn illicit incomes.
Many in the TMC may lose out if Sudan moves towards democracy and
establishes the rule of law. Many of them also fear justice for
atrocities committed by government forces and its militias during
Sudan’s long civil wars in Darfur and what is now South Sudan.
“This is a game with huge stakes,” says Harry Verhoeven, the author of
a book on Sudan. “Why would those who have guns give them up
The latest violence means there is even less hope for compromise. On
one side are the generals, who have won the support of powerful
autocratic countries in the region including Egypt, Saudi Arabia and
the United Arab Emirates. Emboldened, they are no longer bothering to
disguise their reluctance to cede power to civilians.
“The negotiations were never serious from the beginning,” says Rashid
Abdi, an independent expert on Sudan based in Nairobi. “The army was
just playing for time.”
On the other side are the demonstrators, who are angry at the betrayal
of their democratic revolution. “This is not going to stop,” says Reem
Abbas, a Sudanese journalist in Khartoum. “The protests are going to
Dreams of freedom are being crushed on the streets of Khartoum @FinancialTimes @davidpilling
This was the week that Darfur came to Khartoum. For the moment at
least, Sudan’s dream of a peaceful revolution is over.
In the early hours of Monday, troops belonging to a paramilitary group
notorious for atrocities in Darfur in the west of Sudan broke up a
two-month sit-in led by students and professionals.
Dozens of people were murdered in cold blood. At the very least, 100
people have been killed, according to the association of Sudanese
doctors. The real death toll is likely to be higher.
The so-called Rapid Support Forces, a paramilitary group that absorbed
members of the notorious Janjaweed horseback militia, went on the sort
of rampage that in Darfur brought charges of genocide from the
International Criminal Court. Video taken by mobile phone showed
soldiers shooting indiscriminately and beating protesters with
truncheons as they fled for their lives.
According to eye witnesses, soldiers raped women and threw the bodies
of some of those killed into the Nile. An image showing militia
parading a pole hung with the underwear of presumed rape victims
circulated on social media, though its authenticity could not be
Khartoum is in lockdown with military trucks on every corner and
people terrified to leave their homes. The internet — the digital
umbilical chord of the civilian uprising — has been cut.
What is happening in Khartoum should be of intense interest to the
world. It appears mostly indifferent. Not only has a massacre taken
place in a capital of 5m people, but the repression of peaceful
protesters also raises a fundamental question. What should people do
when confronted by tyranny? In an age when democracy has few
champions, can a pacific uprising ever topple a regime with guns?
Only a few weeks ago, the streets of Khartoum felt like a dream
conjured up by the poet William Wordsworth, who wrote of the French
Revolution: “Bliss was it in that dawn to be alive/But to be young was
Sudan’s youth had indeed been in heaven. After 30 years of joyless
repression under the dictator Omar al-Bashir, they had taken to the
streets in their tens of thousands. Led by professionals, including
doctors, nurses, teachers and lawyers, their actions had persuaded the
military that the continued rule of Mr Bashir was untenable. On April
11, after months of nationwide protests and five days after a sit-in
began in front of the military headquarters in Khartoum, the soldiers
who had propped up the dictator for three decades moved against him.
Mr Bashir was removed in a bloodless coup and dispatched to jail.
The people of Khartoum poured out, night after night, to celebrate the
toppling of a dictator and to press for an orderly transition to
civilian rule. But though Mr Bashir was gone, the regime of terror he
created was not. The most powerful man in the country is now
Lieutenant General Mohamed Hamdan Dagalo, usually known as Hemeti, the
head of the Rapid Support Forces and nominally the number two in the
Transitional Military Council.
Lt-Gen Hamdan had sought to portray himself as on the side of the
revolution. It was he, he said, who disobeyed Mr Bashir’s orders to
mow down protesters. Partly thanks to his seeming conversion, many in
the opposition convinced themselves that the military council was
genuine in its stated desire to restore democracy.
It was not. Though it held talks ostensibly aimed at establishing a
joint military-civilian council, it negotiated in bad faith. The
military council this week scrapped talks. It will, it says, press on
with an election in nine months. If it does, it will be a Bashir-style
poll, rigged to ensure its own continued supremacy.
Protesters have vowed to continue their struggle. The odds are stacked
against them. The youth of Sudan, and much of Africa, has a faith in
liberal democracy and peaceful protest that has all but evaporated in
much of the world. This is a bad era in which to be a democrat without
The US has lost moral authority as a democratic champion. Besides, it
has long been a bit player in Sudan. The real power brokers are the
United Arab Emirates, Saudi Arabia and Egypt, regimes that have
snuffed out democratic movements in their own countries and with no
appetite to see them flourish in neighbouring states. A UN resolution
to condemn Sudan’s military violence was blocked by China and Russia.
Thirty years after Chinese troops killed hundreds of students in
Tiananmen Square and six years after Egyptian troops shot 800 in
Tahrir Square, Sudanese soldiers have done the same in their own
square in their own capital.
The military is already denying that anything of the sort took place.
The war for amnesia has already begun.
@Magashule_Ace 's open disdain for President @CyrilRamaphosa and his core team has become untenable @TimesLIVE
ANC factions are waging war in public. The economy retracted sharply
in the first quarter. Populists in the ruling party are flirting with
radical economic concepts such as quantitative easing and are
determined to undermine the status of the Reserve Bank. It seems there
is an increase in violent crime and farm attacks. The rand is close to
R15 for a dollar. Eskom, Transnet and SAA are close to collapse. South
Africans' concerns that the country is caught in an unavoidable
downward spiral can't simply be dismissed as paranoia. For many, it
feels as if SA is no more than a crisis or two away from the start of
total collapse. The broad expectation that a good performance by the
ANC in the May elections would lead to a renewal of Ramaphoria,
because the president received his mandate for renewal and economic
growth, has been trampled into the mud of faction politics, writes Max
du Preez in the latest edition of online Afrikaans weekly Vrye
Weekblad.This week, Magashule spooked the markets and made the rand
stumble with his televised declaration that the ANC had decided to
broaden the mandate of the Reserve Bank and told the government to
implement quantitative easing. (He referred to it as "quality easing",
which makes one suspect he does not understand the concept – except
that it sort of means that when the state's money dries up, he can
simply print more.)
Uganda plans to invest $205 million in restoring a railway from the capital Kampala to the Kenyan border
Uganda plans to invest $205 million in restoring a railway from the
capital Kampala to the Kenyan border following delays to securing
funding for a planned high-speed alternative to the route.
The move will boost monthly freight capacity to 120,000 metric tons
from the current 20,000 tons by 2026, Stanley Sendegeya, Uganda
Railways Corp.’s chief financial officer, said in an interview on
“We keep on turning down customers because with the little money from
government, amounting to $2 million annually, we can’t handle much
business,” he said. “Customers turn to using trucks.”
The East African nation has experienced delays to the funding of a
$2.3 billion standard-gauge railway for the Kampala-Malaba route, for
which the Export-Import Bank of China is expected to finance 85% of
the budget. The project, conceived six years ago, will be built
simultaneously with the Kenyan section linking to the Ugandan border,
according to the government.
Zimbabwe Plans Big Corn Imports After Bad Weather Devastates Harvest @markets
Zimbabwe’s government plans to boost corn imports as adverse weather
slashes the southern African nation’s harvest.
The country’s Grain Marketing Board will float an international tender
to import 750,000 tons of the grain, Joseph Gondo, chief director of
Zimbabwe’s agriculture ministry, said by phone from Harare.
Gondo declined to provide a timeframe for the tender, though he said
the paperwork has been completed.
That amount would mark Zimbabwe’s largest corn imports in a season in
three years, according to U.S. Department of Agriculture data. It also
comes amid surging global corn prices as relentless rains roil U.S.
grain plantings, signaling rising costs for importers.
Zimbabwe’s corn crop is expected to plummet 54% this year amid drought
and after Cyclone Idai damaged crops in some provinces, according to
the Agriculture Ministry.
In March, a government official said the nation had seven months of
grain reserves, including corn, and must begin imports to offset a
Unless Mr @MagufuliJP changes course, one day the only elephant left in the Selous may be a white one. @TheEconomist
Like isaiah berlin’s hedgehogs, who knew one big thing, John Magufuli,
Tanzania’s president, sees economic growth through a single prism: the
state, and the state alone, delivers prosperity. Cash has been poured
into Air Tanzania, the loss-making state-owned airline, which has
recently bought half-a-dozen new planes, including a Boeing 787
Dreamliner. Passengers arriving on it will be able to whizz across the
country in high-speed trains, if things go to plan. Some 30
infrastructure projects are in the works. Dodoma, Tanzania’s
capital-in-name-only, is being overhauled. It will have Africa’s
largest stadium. A hydroelectric dam in the south is more modestly
conceived: it will merely be the continent’s joint second-biggest.
Such mega-projects go down well domestically. They foster pride and
are taken as evidence that the president is serious about giving
Tanzania a modern economy by 2025. For a president who won election in
2015 by the smallest margin in Tanzania’s history, they are also
potential vote-winners. Donors and investors are less enthusiastic.
They have nothing against infrastructure-driven development, but it
needs to be well planned, carefully implemented and make financial
sense. They worry that Mr Magufuli’s schemes often fail on all three
counts. Already, several have made faltering starts.
Mr Magufuli’s vision sometimes trumps forethought. When he abolished
state school fees, too few teachers had been trained to meet the surge
in demand. “I have teachers teaching classes of 130 under a tree,”
complains one headmaster.
Similarly, government ministries have been told to move from Dar es
Salaam, Tanzania’s biggest city, to Dodoma. Yet the buildings meant to
house them are under scaffolding and the city’s expansion will not be
complete for another decade. Mere details, scoffs the president (who
has not moved): “Stay under a mango tree.”
Even the president’s own officials are too scared to offer candid
advice. Some Western diplomats say they are asked to break bad news to
the president by aides too timid to do so.
Mr Magufuli faces few checks. “He is allowed to make all the
decisions, from the smallest to the biggest,” says Daniel
El-Noshokaty, the resident director for the Konrad Adenauer Foundation
The International Monetary Fund (imf) reckons the economy will grow by
just 4% in 2019, one percentage point above population growth. Tax
revenues ticked up by 3.1% last year, not nearly enough to fund the
president’s dreams. The imf warned in a recent report (whose release
was blocked by Tanzania) that a big increase in spending on
mega-projects could leave the country struggling to repay its debts.
Far from boosting the economy, Mr Magufuli is shackling it. Private
investment has been scared off by limits on foreign ownership, a ban
on international arbitration to settle contract disputes and a delay
in paying vat refunds. Executives working for multinational firms have
been arrested, and ludicrously high fines imposed on spurious grounds
(Acacia Mining, a British firm, was told to pay $190bn—more than three
years of Tanzania’s gdp—for allegedly undervaluing gold exports).
Tanzanian businessmen have been strong-armed into surrendering assets
to the state. Tour operators and farmers complain of lower profits due
to new taxes and rule changes. Unless Mr Magufuli changes course, one
day the only elephant left in the Selous may be a white one.