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Satchu's Rich Wrap-Up
Tuesday 15th of October 2013

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Macro Thoughts

Home Thoughts

"At the exact moment any decision seems to be being made, it's usually
long after the real decision was actually made--like light we see
emitted from stars."
-- Richard Ford

"I could hear my heart beating. I could hear everyone's heart. I could
hear the human noise we sat there making, not one of us moving, not
even when the room went dark."
-- Raymond Carver

"That morning she pours Teacher's over my belly and licks it off. That
afternoon she tries to jump out the window."
-- Raymond Carver

Raymond Carver

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"The ground is shaking under our feet and we must keep all our options open." via @khanfarw
Law & Politics

Three major events over the past three months have destabilised the
old order:a military coup against Mohamed Morsi's government in Egypt;
the Russian-American agreement to destroy Syria's chemical weapons;
and a phone call between Obama and the new Iranian president Hassan

But first: what did the old order look like? Before Hosni Mubarak's
regime was overthrown in Egypt, the Middle East was split into two
main axes. The so-called axis of moderation - Egypt, Saudi Arabia,
Jordan, UAE and Kuwait - was aligned with the west, supported the
Palestinian National Authority and encouraged a political settlement
with Israel.

The axis of resistance - Iran, Syria and the political movements of
Hamas and Hezbollah - had a strained relationship with the west and
considered a political settlement with Israel as a surrender. Qatar
and Turkey stood close to this axis, maintaining good relations with
the axis of moderation.

Conflicting axes cannot achieve stability in the region; only
co-operative efforts of all the parties and countries involved can
hope to do that. Today this all seems a distant hope, and the region
may have to experience more turmoil and chaos before this fact is


I remain of the View that Fluidity remains the defining characteristic
of this Time and that Longevity is something no Regime should take for

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Oct. 17 Is Start Rather Than Finish of Debt-Limit Crisis Endgame Bloomberg
International Trade

The Treasury Department expects to exhaust its borrowing authority no
later than Oct. 17, leaving the federal government with no more than
$30 billion on hand. Depending upon daily tax receipts and incoming
bills, the U.S. government could be forced to default on its
obligations at any date thereafter -- to bond holders and millions of
Social Security recipients.

President Barack Obama said yesterday the U.S. now faces "a good
chance of defaulting," a development that would have a "devastating
effect" on the economy. Though that would roil financial markets and
risk triggering a global recession, the full effect will take time to
unfold. Oct. 18's dawn may seem little changed from that of the day

"It's not that you know there's one date where the whole thing is
going to go kaboom," said Shai Akabas, a senior analyst at the
Bipartisan Policy Center. "It's that you have increasing risks,
because we've never encountered this series of events in our modern
history so we really don't know what's going to happen. But it's
fairly safe to say that the further we go without a resolution, the
more the risks increase."

"We can definitely get to a Lehman or S&P downgrade kind of moment if
we don't get things under control," says Brad Bechtel, managing
director at Faros Trading LLC in Stamford, Connecticut. "It won't
happen straight away; it'll be more like a slow train wreck."

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"Equity markets, a barometer of risk sentiment, are taking an optimistic stance that a deal will be agreed to soon," said Imre Speizer
International Trade

"You've created an economic outcome such that the probability of
tapering by the Fed is very low this year," said Geoffrey Kendrick,
the Hong Kong-based head of Asian currency and rates strategy at
Morgan Stanley. A debt-ceiling solution is "probably actually risk


This Stand Off has pushed the Dollar Rally further over the Horizon.

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.3564
Dollar Index 80.28
Japan Yen 98.46
Swiss Franc 0.9104
Pound 1.5995
Aussie 0.9531 Aussie climbed as much as 0.5 percent to 95.39 U.S.
cents, the strongest since June 19
India Rupee 61.49
South Korea Won 1067.34 This is a 9 month High
Brazil Real 2.1812
Egypt Pound 6.8897
South Africa Rand 9.8926

Dollar Index 3 Month Chart INO 80.28

Without an agreement, U.S. borrowing authority lapses on Oct. 17. The
federal government would start missing payments sometime between Oct.
22 and Oct. 31, according to the Congressional Budget Office

Dollar Yen 3 Month Chart INO 98.46

Michelin Chefs Toast Abe as Yen Turns $5,000 Wine Cheap Bloomberg

"Abenomics was a burst of sunshine I never imagined would happen,"
said Okuda, whose restaurant's specialties include broiled eel in a
sauce from the fish's bones, sweet rice wine and coarse sugar. "It's
been great -- foreign customers increased because of the falling yen."

The yen has been the worst performer against the British pound over
the past year among the major currencies tracked by Bloomberg, losing
about 20 percent. The currency also dropped by a similar amount
against the U.S. and Taiwan dollars, and by more than 22 percent
against the euro and Chinese yuan.

Overseas visitors to Japan rose 23 percent to a record 4.95 million in
the first half of 2013, the Japan National Tourism Organization said
in July.

A dish named "meringue glace" is arranged for a photograph at
Quintessence in Tokyo.


Euro versus the Dollar 3 Month Chart 1.3564

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Twitter wrapping up $1 billion IPO revolver
International Trade

Online social networking tool Twitter Inc is finalizing a $1 billion
revolving credit facility ahead of its expected initial public
offering, sources told Thomson Reuters LPC.

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Commodity Markets at a Glance WSJ

Gold 1 Year Chart INO 1272.80 [Prices fell to $1,260.61 on Oct. 11,
the lowest since July 11]


Crude Oil 6 Month Chart INO 102.33

As Long as the @BarackObama and @HassanRouhani Rapprochement is in
play, The Price will continue to aim at 100.00

Sold: some of the rare diamonds offered at the 2013 Argyle pink
diamonds tender. Photograph: Rio Tinto/AAP


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France's Hollande: Central African Republic troubles could spill over

South Africa and France agree that intervention is needed in the
Central African Republic (CAR) to help stabilise the country,
President Jacob Zuma said


"The foreign minister of France gave a report... that the problem [in
the country] is getting worse. Even the question of religion among the
people is beginning to set in," Zuma told reporters at the Union
Buildings in Pretoria.

"We [South Africa] agreed that we need to do something and act
quickly. We have committed... that we are going to be ready to be part
of the solution to help the Central African Republic come back to its

Speaking in French, Hollande said there needed to be more intervention
by African countries in conflicts on their own continent.

President Zuma and President Hollande

The Mo Ibrahim Foundation's independent Prize Committee has decided
not to award this year's 2013 Ibrahim Prize for Achievement in African


The Ibrahim Prize for Achievement in African Leadership is the largest
prize in the world, worth an annual US$5 million over 10 years and
US$200,000 annually for life thereafter.

To win the Prize, Laureates must fulfill the following criteria: be a
democratically elected former African Head of State or Government who
has left office in the previous three years; have served her/his
constitutionally mandated term; and have demonstrated excellence in
office, helping to lift people out of poverty and paving the way for
sustainable and equitable prosperity.
The Prize was established in 2007 by Mo Ibrahim, Founder and Chair of
the Mo Ibrahim Foundation, to celebrate excellence in African
leadership and to provide Laureates with the opportunity to pursue
their commitment to the African continent once they have stepped down
from office.

Previous winners of the Ibrahim Prize include: President Joaquim
Chissano of Mozambique (2007), President Festus Mogae of Botswana
(2008), President Pedro Pires of Cape Verde (2011) and President
Nelson Mandela of South Africa (Honorary).

Salim Ahmed Salim, Former Secretary-General of the Organisation of
African Unity, Former Prime Minister of Tanzania and Chair of the
Prize Committee, said:

"This Prize honours Former Heads of State or Government, who, during
their mandate, have demonstrated excellence in leading their country,
and by doing so, serve as role models for the next generation."

"After careful consideration, the Prize Committee has determined not
to award the 2013 Prize for Excellence in Leadership."
Bono and Mo Ibrahim at the #AfMediaConf #Nairobi 1306 Days ago

94% of people living in Africa live in a country which has shown
overall Governance improvement since 2000


Mo Ibrahim Fdn @Mo_IbrahimFdn


"There's a new generation of African leaders coming forward. This is
giving us hope. I see a lot of good people who just took office" -Mo

Mo: We need to ensure there is no impunity. Africa doesnt have an
African Court of Justice. The ICC can at least fill some role Africa

"There has been improvement... but the issues that are not improving
are the ones that bring about social cohesion and peace" -Mary

"We should not rush into thinking that improvement will happen
instantly. Don't forget it took China 40 years to get where it is now"

"There's no need to burn down the presidential palace when you can win
it legitimately." -Hadeel Ibrahim on the potential for African youth

"The young people of Africa are our developmental army, the people who
are going to transform the futures of our countries." -Hadeel Ibrahim

"Its no coincidence that improvements in African governance came after
'90. The Cold War's end was the most important thing for #Africa" -Mo

"#Rwanda and other post-conflict countries including #Angola and
#SierraLeone are doing well" -#MIF Executive Director Nathalie

"We are calling for Afro-realism. Let us understand that the picture
is complex" -Mo

"The gap is widening over the years" btw the best and worst performing
countries in #Africa. "We hope countries learn from each other." -Mo

"#Health has been the greatest success story of #Africa in the last 10
years" -Mo on the 2013 #IIAG's findings

Safety and Rule of Law is a concern for Africa, according to the 2013
#IIAG. Explore the category results here: http://bit.ly/18JUTbn

The overall situation is good, we are moving forward. But we should
not pat ourselves on the back, there are areas we need to address" -Mo

"Overall, 46 countries out of 52 have improved" -Mo on the 2013 #IIAG results

South Africa All Share Bloomberg +14.70%


Dollar versus Rand 6 Month Chart INO 9.8917


Egypt Pound versus The Dollar 3 Month Chart INO 6.8893


Egypt EGX30 Bloomberg +12.16% [33 Month Highs]


Nigeria All Share Bloomberg +36.00% 2013


Ghana Stock Exchange Composite Index Bloomberg +72.56% 2013 [All Time Highs]


Zimbabwe's benchmark stocks index rose for a 16th day, its longest
winning streak in a year Bloomberg


The 73-member Zimbabwe Industrial Index rose 0.2 percent to 210.23
today, extending gains since Sept. 17 to 12 percent

The gauge slumped to an eight-month low on Sept. 5, falling 24 percent
after reaching its highest level in more than four years on Aug. 1.

Zimbabwe's economy will expand 5 percent in 2013 and 5.7 percent in
2014, according to the IMF.

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North America accounted for nearly half of the remittance inflow in August 2013, while Europe and the rest of the world accounted for 27 per cent and 25 per cent, respectively.
Kenyan Economy

Remittance inflows in August 2013 stood at Sh9.3 billion ($107
million), 5.1 per cent lower than the inflows recorded in July, which
amounted to Sh9.8 billion ($112.8 million). Analysts attribute this to
financial challenges in the US economy, which have led to a shutdown
of many government services.


The new interconnectedness of the c21st.

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Igniting the 'Feel Good' Factor - Effecting Trickledown @UKenyatta #Kenyatakeoff Addis The Star
Kenyan Economy

The recently released Report by Afrobarometer certainly captured
Everyone's attention. The Survey posited an increasing Disconnect
between Africa the Darling of International Investors and perceptions
on the Ground.  Afrobarometer surveyed 34 countries and reported that
a majority (53%) rate the current condition of their national economy
as "fairly" or "very bad", while just 29% offer a positive assessment.
The First Point to note is that Perceptions are in fact everything.

The 'Africa Rising' Narrative is a recent and last decade Phenomenon
and the moment when all the Boats get floated remains some ways away,
I am afraid. The Big Shift in African perceptions  happens when GDP
Expansion rates pop into double digits and stay there for a meaningful
period of time.  And There are very clear instances where that is
going to happen. An extreme example is Mozambique, where analysts put
Mozambique's first LNG exports at around 55 billion cm per year, which
would amount to annual revenues of over $30 billion. I think the
Energy Resource on the Eastern Seaboard of Africa is the last great
Energy Prize in this c21st and still Hydrocarbon Century of ours. The
Issue remains that we are still a number of years away from having
these Revenues flow into the various Treasuries, ours included. And
the Risks of a Mis Step, a smash and Grab, Policy Dysfunction or
capricious decision making remain high and could further delay the
moment of Acceleration. If You look six or seven years out and you
assume that Policy making remains optimal, then I can see a remarkable
Acceleration in this part of the World and from Mozambique all the way
up to Somalia.

Perceptions are about the Now, however and my personal experience
shows that Africa is more invested in the Now than any other

Week-End Events in Addis Ababa indicate higher Levels of Friction
between Kenya and the International Community. Its not possible to
model exactly how this all plays out. I err on the side that Westgate
introduced an important new Dynamic into the entire equation. That
Dynamic being Counter-Terrorism. It propelled the President to the
very Front-line of the Global War on Terror. And therefore,
notwithstanding some very fruity Language in Addis Ababa, once
everyone stops throwing their Toys out of the Pram, there is a Deal
that can be struck that keeps the President on the Front-line and in
situ. Of course that brings its own complexities within the Alliance.
Investors, of course, might be concerned around the downside, if such
a benign scenario does not play out.

As we enter this Period of increased Volatility, I think its important
that the Government encourage the Economy and its Citizens. My dearest
Friend Alexander Michaelis invited me to lunch in London with David
Cameron just before he was elected Prime Minister. Alex is like that,
his Interventions always land you slap bang in the Spot. And I for
one, never underestimated him after our Lunch and think The Prime
Minister will be riding the crest of a Wave when it comes to

The most recent Tweet of Prime Minister  @David_Cameron says;

''I'm glad every small investor will get their #RoyalMail shares -
their investment will help deliver a 1st class service.''

And That Tweet is a powerful signifier for the Government. Hunkering
down is not an Optimal Thing. Can you remember having to hunker down
for close to two years after the 2007 Election?

If I were sitting in President Kenyatta's shoes, I would be insisting
on a State Divestment Program, at steeply discounted Prices, ensuring
the widest absolute Distribution across my Citizens. And I would do it
tomorrow. It makes economic sense, it worked for Mrs. Thatcher [she
won three Elections], its going to work for Prime Minister David
Cameron and it will work for President Kenyatta.

"Uhuru is not an indicted figure who is defying the court like Sudan's
president (Omar) Bashir. He is someone who is working closely with the
West in a region in chaos that needs to tackle a very worrying
terrorist situation," a senior European diplomat said.


 "A solution must be found that avoids a breakdown in relations with
Kenyatta or the court's authority."

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Kenya Shilling versus The Dollar Live ForexPros 84.964 Last
Kenyan Economy

Nairobi All Share Bloomberg +38.425% 2013 [1.714% below an All Time
High from October 8th 2013]

Nairobi ^NSE20 Bloomberg +19.1628% 2013 [2.0861% below 2013 High from
April 2nd this Year]


Every Listed Share can be interrogated here


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by Aly Khan Satchu (www.rich.co.ke)
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October 2013

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