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Satchu's Rich Wrap-Up
 
 
Friday 16th of August 2019
 
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Macro Thoughts

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The specialist is monitoring data on his mission console when a voice breaks in
Africa


The specialist is monitoring data on his mission console when a voice
breaks in, “a voice that carried with it a strange and unspecifiable
poignancy”.
He checks in with his flight-dynamics and conceptual- paradigm
officers at Colorado Command:
“We have a deviate, Tomahawk.”
“We copy. There’s a voice.”
“We have gross oscillation here.”
“There’s some interference. I have gone redundant but I’m not sure
it’s helping.”
“We are clearing an outframe to locate source.”
“Thank you, Colorado.”
“It is probably just selective noise. You are negative red on the
step-function quad.”
“It was a voice,” I told them.
“We have just received an affirm on selective noise... We will
correct, Tomahawk. In the meantime, advise you to stay redundant.”
The voice, in contrast to Colorado’s metallic pidgin, is a melange of
repartee, laughter, and song, with a “quality of purest, sweetest
sadness”.
“Somehow we are picking up signals from radio programmes of 40, 50, 60
years ago.”

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I perceive the world as a playground Ghalib
Africa


I perceive the world as a playground
Where dawn and dusk appear in eternal rounds
In His Universal form is a plaything the throne of Solomon
The miracles of the Messiah seem so ordinary in my eyes
Without name I cannot comprehend any form
Illusionary but is the identity of all objects
My anguish envelopes the entire desert
Silently flows the river in front of my floods
Ask not what separation has done to me
Just see your poise when I come in front of you
Truly you say that I am egotistical and proud
It is the reflection, O friend, in your limited mirror
To appreciate the style and charm of conversation
Just bring in the goblet and wine
Hatred manifests due to my envious mind
Thus I say, don't take his name in front of me
Faith stops me while temptations attract
Inspite of Kaaba behind and church ahead
I am the Lover, yet notorious is my charm
Thus Laila calls names to Majnu in front of me
'Dies' not one though the union is a delight
In premonition of the separation night
Alas, this be it, the bloody separation wave
I know not what else is in store ahead of me
Though the hands don't move, the eyes are alive
Wine and goblet, let them stay in front of me
Says 'Ghalib'
Conscience is companion and trusted friend
Don't pass any judgments in front of me.

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@campari Sells 'Most Expensive Home on Earth' at 43% Discount @luxury
Africa


Davide Campari-Milano SpA reached a preliminary agreement to sell the
historic Villa Les Cedres on the French Riviera for 200 million euros
($221 million) to an unspecified buyer for private use.
The villa was among the assets that the Italian distiller acquired
with its 2016 purchase of Grand Marnier Group.
The transaction is expected to close at the end of October, though
there are conditions, including the departure from the house of one
member of the family that controlled Grand Marnier, Campari said in a
statement.
The price is below the 350 million euros at which the villa was listed
through the real estate agent Savills. The company didn’t identify the
buyer.
The family, called Marnier-Lapostolle, has owned Villa les Cedres in
the French coastal town of Saint-Jean-Cap-Ferrat since the 1920s.
Before that, the property was owned by King Leopold II of Belgium.
Surrounded by a 14-hectare (34.6-acre) botanical garden, the villa is
on a peninsula that juts into the Mediterranean between Nice and
Monaco.
The town has long been home to the rich and famous, with homeowners
over the years including Microsoft Corp. co-founder Paul Allen,
composer Andrew Lloyd Webber and the Ferrero family of Nutella fame.

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"In light of the assurances we have received, there are no longer any reasonable grounds for the continued legal detention of the Grace 1 in order to ensure compliance with the EU Sanctions Regulation," Picardo said.
Law & Politics


It was not immediately clear when the Grace 1 would sail as the United
States made a late request to seize the vessel.
“That is a matter for our independent Mutual Legal Assistance
authorities, who will make an objective, legal determination of that
request for separate proceedings,” Picardo said.

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13-MAY-2019 :: Iran is at the Hunter S. Thompson[Ian] edge. "There is no honest way to explain it because the only people who really know where it is are the ones who have gone over
Law & Politics


What we know is this: Iran is at the Hunter S. Thompson[Ian] edge.
“There is no honest way to explain it because the only people who
really know where it is are the ones who have gone over''
if the US thinks that Tehran will just roll over, which appears to be
the case, then they are exhibiting the same deluded ideas that they
exhibited a day before the peacock Throne got plucked. Iran is a
geopolitical bleeding edge.

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The US economy doesn't appear as strong as Trump said. Chinese society has full confidence to fight a prolonged battle with the US. @HuXijin_GT
Law & Politics


Trade war and Hong Kong riots have hit US' positive image in China.
Chinese society is more united politically and can afford a long-term
fight.

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Traders Have Been Gripped by Once-in-a-Generation Dash to Safety @markets
International Trade


Treasuries, gold and the Japanese yen are clocking “the largest number
of outsized rallies” combined since at least 1990, according to Bank
of America Corp. The latest milestone in the haven frenzy arrived this
week, when the yield on 30-year U.S. Treasuries slipped below 2% for
the first time.
“Investors have not been so worried about the future in the past
thirty years,” BofA strategists led by Stefano Pascale wrote in an
Aug. 13 note.
The charge into havens this month has been spurred by flashing
recession indicators, trade-war tit-for-tat and data disappointments
-- all amid thin liquidity. Gold is up about 18% this year, while the
yen is the top performer against the dollar across G-10 currencies.
Bank of America’s metric measures the combined number of extreme moves
among a basket of traditional havens over rolling nine-month periods.
With the U.S. long-bond future ripping more than 5% above the 50-day
moving average, Justin Walters of Bespoke Investment Group LLC notes
that historically “more often than not, bonds reverse lower” from
here.

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05-AUG-2019 :: As I watched the Pound fall like a stone, I could not help wondering if this Sterling moment is precisely like it was in 1992, a no brainer.
International Trade


‘Boris isn’t bluffing. Every action, every appointment, every word
sin- ce he entered Number 10 signals the same thing: Britain is
leaving the EU on October 31’ said the Telegraph’s Daniel J Hannan.

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By 1530 GMT, the pound was 0.5% higher at $1.2136, having briefly touched a high of $1.2150. However it remains not far from the 31-month low of $1.2015 it reached on Monday.
International Trade


Analysts said $1.20 was acting as a floor for the pound but the level
could be tested if worries of a no-deal Brexit build up again.
Investors barely hold any sterling options with strikes below $1.20,
according to Refinitiv data, an indication that there would be few
buyers for sterling if it falls below this level.

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03-JUN-2019 :: Bond Yields in "Tilt" Mode
International Trade


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.

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Currency Markets at a Glance WSJ
World Currencies


Euro 1.1103
Dollar Index 98.164
Japan Yen 106.15
Swiss Franc 0.9784
Pound 1.2121
Aussie 0.6788
India Rupee 71.208
South Korea Won 1210.75
Brazil Real 3.9917
Egypt Pound 16.5766
South Africa Rand 15.2046

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Deutsche Bank CoCo bonds 6% CoCo Bond Yield has risen to 13.5% CoCos are the first bank bonds to take losses in a crisis @Schuldensuehner
World Currencies


Holders of Deutsche Bank CoCo bonds are becoming increasingly nervous.
Deutsche 6% CoCo Bond Yield has risen to 13.5% despite a global hunt
for yields by desperate investors. CoCos are the first bank bonds to
take losses in a crisis.

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In a 175-page report, Markopolos accused GE of hiding $38.1 billion in potential losses and asserted that the company's cash situation was far worse than it had disclosed. @Reuters
International Trade


“GE’s true debt to equity ratio is 17:1, not 3:1, which will undermine
its credit status,” Markopolos said.
The report says GE is insolvent and asserts that its industrial
businesses have a working capital deficit of $20 billion.
The report echoes the assertions of some of Wall Street’s more
skeptical analysts, who have long raised alarms about GE’s low cash
flow, frequent accounting charges and writedowns and what they
describe as opaque financial reports.
The report adds that “GE’s $38 billion in accounting fraud amounts to
over 40% of GE’s market capitalization, making it far more serious
than either the Enron or WorldCom accounting frauds.”
In a statement GE said: “We remain focused on running our business
every day and ... will not be distracted by this type of meritless,
misguided and self-serving speculation.”
GE said it “stands behind its financials” and operates to the
“highest-level of integrity” in its financial reporting.

Commodities

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A 14.83-carat pink gem The Spirit of the Rose found and cut by Alrosa PJSC is expected to fetch one of the highest prices ever for a diamond when the Russian company puts it up for sale later this year.
Commodities


The oval stone, named The Spirit of the Rose, has been certified by
the Gemological Institute of America as fancy vivid purple-pink with
excellent clarity, excellent polish and very good symmetry, said
Alrosa spokeswoman Evgeniya Kozenko. The sale is planned for November,
she said.
He estimates the potential price at between $60 million to $65 million.
Sotheby’s set the record for any gem ever sold at an auction in 2017,
with its $71 million sale of the 59.6-carat Pink Star to Hong
Kong-based jewelry retailer Chow Tai Fook Jewellery Group The stone
was mined by De Beers, and dethroned the Oppenheimer Blue, which
fetched $58 million in an earlier sale at Christie’s.

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The "Zeitgeist" of a time is its defining spirit or its mood. Capturing the "zeitgeist" of the Now is not an easy thing because we are living in a dizzyingly fluid moment.
Commodities


Gladwell stated: "Ideas and products and messages and behaviors spread
like viruses do".
My Point is that the Millenials discovered the virtues of Avocado, the
behaviour spread like a 'virus' and Boom prices sky-rocketed.
The Avocado Price surge is an example of the new c21st Millennial
Economy but there are many other examples.

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17-JUN-2019 :: So lets start with the enigmatic and mercurial Fugitive and Bitcoin evangelist John McAfee, who always seems to pop up in my Feed like an acid Trip whenever Bitcoin is doing its Parabola imitation
Commodities


So lets start with the enigmatic and mercurial Fugitive and Bitcoin
evangelist John McAfee, who always seems to pop up in my Feed like an
acid Trip whenever Bitcoin is doing its Parabola imitation.
''But it is a curve each of them feels, unmistakably. It is the
parabola. They must have guessed, once or twice -guessed and refused
to believe -that everything, always, collectively, had been moving
toward that purified shape latent in the sky, that shape of no
surprise, no second chance, no return.’’

Bitcoin is trading at Fresh Highs of $9,270.00 and aside from Beyond
Meat and Zoom has posted the best returns in 2019 and is in triple
digit % gain territory. Paul Virilio captured the essence of our c21st
Zeitgeist with this quote

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Zimbabwe's police said it believes that opposition protests planned on Friday will turn violent and warned that the nation's security services will intervene if they do. @business
Africa


Zimbabwe’s police said it believes that opposition protests planned on
Friday will turn violent and warned that the nation’s security
services will intervene if they do.
The main opposition Movement for Democratic Change said Wednesday it
will proceed with a demonstration in the capital, Harare, and four
other cities because of the dire economic situation.
The southern African nation is grappling with shortages of cash, fuel
and electricity, as well as one of the world’s highest inflation
rates.
Opposition activists have been mobilizing residents to join the
protests and sacks with catapults have been found, the police said in
a statement Thursday. All vehicles without registration numbers will
be impounded, it said.

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29-JUL-2019 :: Zimbabwe is a Laboratory Experiment with Inflation last clocking 176%.
Africa


There is a straw and camels back moment but predicting that moment is
always a Fools Errand.

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It Looks Like Rand Swings Will Get Worse Before They Get Better @markets
Africa


The rand is back as the world’s most volatile major currency, and
options pricing suggests it’s not going to lose that status any time
soon.
A gauge of expected swings over the next six months, based on prices
of options to buy and sell the rand, has jumped 175 basis points since
the beginning of August to 16.1% on Thursday.
Historical volatility climbed 61 basis points to 13.8%, the highest
among 16 major developed-nation and emerging-market currencies tracked
by Bloomberg.
That took the spread of implied over realized volatility to the most
in almost a year, as traders hedge against currency fluctuations amid
the escalating trade war and concern about South Africa’s fiscal
outlook.
The premium of options to sell the rand over those to buy it, known as
the 25 Delta risk reversal, widened 23 basis points to 338.
Options traders are positioning for wider price swings in the rand
South Africa’s currency has depreciated 6.5% versus the dollar in
August, the worst performance among emerging-market currencies after
Argentina’s peso.
This week alone, it has whipsawed between daily gains of as much as
1.1% and losses of 1.9%.
It strengthened 0.8% to 15.2882 per dollar by 2:17 p.m. in Johannesburg

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The official rate of 306.90 is supported by the central bank but the traded rate of 364 is widely quoted by foreign investors and exporters. Reuters
Africa


In a further sign of pressure on the currency, President Muhammadu
Buhari told the central bank on Tuesday to stop providing funding for
food imports, his spokesman said.
The naira was quoted at 364 on Thursday on thin liquidity, traders
said, a level where it has traded this week. It eased to 364 per
dollar on Friday, from a quote of 363.50 as falling oil prices
tightened liquidity on the currency market.
A dollar shortage was initially caused by a slowdown of foreign
inflows after local debt market yields declined.
Nigeria operates a multiple exchange rate regime that it has used to
manage pressure on the currency.
The official rate of 306.90 is supported by the central bank but the
traded rate of 364 is widely quoted by foreign investors and
exporters.

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Strategic investments pay off for Kenya's largest brewer @AfricanBizMag @thomashcollins1
Africa


For almost 100 years, drinking a beer in the East African region has
routinely meant picking up a cold Tusker lager – the flagship product
of Nairobi-based East African Breweries Limited (EABL).
The beer was named in honour of George Hurst, the co-founder of EABL’s
predecessor company, Kenya Breweries Ltd (KBL), who was killed by an
elephant soon after the establishment of the firm in 1922.
In 1935, KBL acquired Tanganyika Breweries and the companies merged to
become EABL the following year. At the turn of this century, Diageo,
the world’s largest beverage company, acquired a majority stake in the
firm.
Since then it has introduced a suite of local products to the market
as well as leveraging UK-based Diageo’s global brands such as Johnnie
Walker and Guinness.
As the second biggest company in the market after telecommunications
firm Safaricom, EABL contributes approximately 1% of Kenya’s GDP and
its products have retained a reputation as some of Kenya’s favourite
brands.
Growth in key products such as Senator Keg, a lower end lager, pushed
EABL’s net earnings up by 33% in the half-year to end-December 2018.
Andrew Cowan, group CEO, who joined in 2016 after leading Diageo’s UK
office for five years, says that somewhat risky investments in key
assets during a period of weak economic growth are beginning to pay
off and have contributed to the gains.
“The critical thing we did when the business was soft in 2018, was to
bite the bullet on some investment decisions we wanted to make,” he
says.
“So when many capex-intense businesses across Kenya and even East
Africa were tightening the belt on investment, we stuck with two of
our big strategic investments.
“We invested $10m in a spirits expansion factory down here in Nairobi
and then the poster child of our big $150m investment is our Kisumu
brewery.
“While that felt difficult at the time, because the state of the
business didn’t warrant the investment, when the economy bounced we
really benefited.”
When complete, the Kisumu brewery, which is already producing Senator
Keg beer, will create jobs for more than 100,000 people across the
supply chain, says the company.
The investment in low-end, low-margin beer, together with investment
in high-end, high-margin spirits, reflects EABL’s will to dominate its
home markets and to stay relevant to a wide range of consumers.
Cowan believes that EABL’s positioning as a “household name” gives the
company a responsibility to work towards more than just profit but to
provide safe and cheap alternatives to illicit alcohol which currently
dominates East African markets.
In 2018, a report by the International Alliance for Responsible
Drinking found that up to 60% of alcohol in Kenya is illicit and
dangerous, more than double previous estimates by the World Health
Organisation.
“The way we’ve built out our portfolio is to have every type of drink
available to every type of consumer whatever their spending power,”
Cowan says.
“We accept that this means we will have a wide variety of margin
mixes; we will go after lower margin businesses not because it’s
necessarily the textbook Harvard Business School margin expansion
solution but because we have a 97-year-old duty to provide our
customers with those types of products and we work closely with the
government on that.”
EABL pumps some $500m into the Kenyan treasury each year – around 5%
of the annual budget – so the government certainly takes a keen
interest in its homegrown brewer and the partnership is used to mould
the beverages market to one of safety and profitability.
The Kenyan government has reduced excise duties on Senator Keg, which
allows the low margin beer to remain commercially viable and to
compete with dangerous home brews.
Yet the policy framework doesn’t always fit so snugly with commercial
objectives. Kenya’s latest budget contained tax hikes on gambling and
alcohol, including a 15% increase on spirits, which increases the
price for consumers. The government is working to plug its budget
deficit, and the hike is the second in two years, which frustrates
Cowan.
“Raise taxes; but raise them in a way which understands the elasticity
of our categories,” he says. “The sweet spot is every other year. The
only other company which is contributing more to the treasury is
Safaricom so don’t kill the goose who is laying the golden egg.”
The increase on spirits will likely dampen growth in one of EABL’s
fastest growing segments: high-end spirits.
According to EABL in-house research, brandy has dominated the region
as the brown spirit of choice. Yet the brewer believes Scotch whisky –
in particular Diageo’s global Johnnie Walker brand – is a much more
sophisticated beverage and under Cowan’s guidance the company has
invested heavily on advertising to ensure that high-end liquor appeals
to the region’s growing middle class.
“To the millennials who are looking at the world through their phone
Johnnie Walker is way more aspirational than any other brown spirit in
East Africa,” says Cowan.
“We’ve really laid down some heavy advertising and promotion on
Johnnie Walker and the half-year results have been really strong at
37% growth in Kenya.”
With some of the least developed commercial beer markets in the world,
the habit of drinking brand-related alcoholic beverages in East Africa
is still relatively new.
This grants any brewer the power to not only serve the market but to
shape it, too.
Cowan describes this process as being “provocative” and highlights a
number of EABL’s key provocations which have steered taste buds away
from basic lager towards ale and even cider.
“This market was either amber or black and nothing in between and
actually this means you have loads of white space to play with. Tusker
Ale has been our second provocation of Kenyan consumers – the first
was Kenyan cider,” he says, pointing out that cider didn’t previously
exist in the market but now occupies a substantial niche.
This open space is also expected to grab the attention of East
Africa’s younger consumers, who are rapidly outweighing their older
peers in terms of the nation’s average age.
One million new drinkers come online each year across the region
according to Cowan, and EABL is positioning its innovative products to
influence a segment that has yet to form its drinking habits.
The diverse offering is also intended to preempt and protect against
the inevitable arrival of the microbreweries that have shaken up
European and North American markets in recent years.
The so-called “beer revolution” – the push towards smaller brewers who
treat their beer more like wine with a wide range of tastes and
colours – is already being felt in Kenya.
Kenya’s large expat population has seen a number of new brews
introduced into the market including Bateleur and 254, with a range of
ales now on sale across the capital.
Cowan believes the competition, or “conversation”, as he calls it, is
useful for keeping EABL products at the forefront of innovation. The
real threat, he contends, is the consumers’ wallet – the choice behind
where to spend any disposable income.
“Coca-Cola referred to it as share of throat, we refer to it as share
of wallet,” he says. “Consumers in Kenya have discretionary money to
spend. It’s about where they spend that money. Rather than rival
companies, our two biggest competitors are mobile phone data and
gambling.”
The narrative of Kenya’s growing middle class, which has done so much
to attract a broad range of companies from insurance brokers to
fintech startups, works to inform EABL’s strategy as the brewer aims
to capitalise on the market’s liquidity.
The region’s consistently high growth rates, estimated at around 6% by
the African Development Bank in its economic outlook for 2019, help to
make EABL one of Diageo’s most successful subsidiaries.
Cowan believes that Africa has “the highest potential beer market in
the world” and applauds his local region for creating the right
environment for business to flourish.
“The economy will grow at 6% while childbirth is at 3%,” he says.
“When you have the economy growing twice as fast as the population it
is very encouraging. Then you also have mass urbanisation. This points
to a very positive outlook and what individual nations need is a
government like the Kenyan government with a progressive attitude
towards seizing that opportunity. While they are doing that we hope
they will have a beer at the same time.”

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EABL share price data here
Africa


Par Value:                  2/-
Closing Price:           203.75
Total Shares Issued:          790774356.00
Market Capitalization:        161,120,275,035
EPS:             11.23
PE:                 18.143

EABL FY 2019 results through 30th June 2019 vs. 30th June 2018
FY Revenue 82.543b vs. 73.457b +12.369%
FY Total costs [20.302b] vs. [20.663b] -1.747%
FY PBT 17.815b vs. 11.742b +51.720%
FY PAT 11.515b vs. 7.256b +58.696%
Basic EPS 11.23 vs. 7.19 +56.189%
Cash and cash equivalents at the end of year 12.469b vs. 3.187b +291.246%
Total dividend per share 8.50 vs. 7.50 +13.333%
The Board of Directors of East African Breweries Limited is pleased to
announce its full year results for the year ended 30th June 2019.
EABLs net revenue for the period rose by 12% to Kshs 82.5 billion
driven by strong underlying performance on the back of a stable
operating environment in the region. Profit before tax grew to Kshs
17.8 billion attributable to increased revenues and continued cost
efficiencies across the organization.
Key Highlights:
Groups volumes grew by 11% driven by strong performance across all
categories and markets.
Innovations contributed Kshs 20.3 billion to stand at 24% of the net
revenues across our markets mainly driven by brands such as Serengeti
Lite, Tusker Cider, Chrome Vodka, Captain Morgan Gold and Uganda
Waragi Pineapple.
a muscular rebound plain and simple. Headline Revenue Growth +12.369%
sums it up in a nutshell.

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by Aly Khan Satchu (www.rich.co.ke)
 
 
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August 2019
 
 
 
 
 
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