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Satchu's Rich Wrap-Up
 
 
Thursday 15th of January 2015
 
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Macro Thoughts

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Forget Emerging Markets. Hot Topic at Davos 2015 Is the U.S
Africa


The World Economic Forum has long been something of a coming-out party
for emerging economies, with developing countries dispatching
politicians and executives to the Swiss resort of Davos to drum up
interest. This year, the big magnet for investment looks to be an
older player on the global stage: the United States.

While Brazil stagnates, Russia enters a recession, and India struggles
to implement economic reforms, the U.S. is booming as energy prices
plummet and Silicon Valley dominates global tech. Though yesterday's
retail sales report dampened enthusiasm about the scale of the U.S.
rebound, the American economy grew at its fastest pace in over a
decade in the third quarter of 2014, reaching an annualized rate of 5
percent.

"The pendulum has shifted," said Jacob Frenkel, chairman of JPMorgan
Chase & Co. (JPM)'s international arm, who's been attending Davos
since the mid-1980s. "The U.S. is now regaining its position in the
world economy. It is the place where the recovery took hold in the
most robust way."

read more


12-JAN-2015 The US economy is the 'come-back kid' of 2015
Africa


'Come-back kid'


The big winners are the US and China. Last year, the US created the
most jobs since 1999. Lower oil prices are a tailwind worth a trillion
dollars.

The US economy is the 'come-back kid' of 2015. The Federal Reserve has
stopped printing dollars and I think the Fed is just one headline
economic print from raising interest rates. A rate hike, even as small
as 0.25 per cent, will be the catalyst for a renewed surge in the
dollar. The Dollar Index is headed a lot higher - buy the dollar.

Home Thoughts

"the only people for me are the mad ones, the ones who are mad to
live, mad to talk, mad to be saved, desirous of everything at the same
time, the ones who never yawn or say a commonplace thing, but burn,
burn, burn like fabulous yellow roman candles exploding like spiders
across the stars."
-- Jack Kerouac, On the Road

read more


Jack Kerouac On the Road [by Robert Frank]
Africa


Frank asked Jack Kerouac to write the introduction to "The Americans."
Of this photograph, Kerouac wrote: "Long shot of night road arrowing
forlorn into immensities and flat of impossible-to-believe America in
New Mexico under the prisoner's moon."

read more






On Thursday, a Saudi blogger will receive his second flogging for 'insulting Islam'. Robert Fisk @Independent
Law & Politics


Sir William Hunter was a senior British civil servant and in 1871
published a book which warned of "fanatic swarms" of Sunni Muslims who
had "murdered our subjects", financed by "men of ample fortune", while
a majority of Muslims were being forced to decide "once and for all,
whether [they] should play the part of a devoted follower of Islam" or
a "peaceable subject".

read more



12-JAN-2015 Events in Paris - the #CharlieHebdo offices, then the 'Bonnie and Clyde' show in and around Paris, and finally the denouement in two separate locations - captured the airwaves completely.
Law & Politics


We all understand the language of the media. As such, the Kouachi
brothers and Amedy Coulibaly and his cross-bow toting partner Hayat
Boumeddiene were so proficient at taking over the world's attention
that Boko Haram's single biggest massacre and a 10-year- old female
suicide bomber did not even rate a mention.

In fact, President Goodluck Jonathan saw fit to send condolences to
France but failed to mention events at home, entirely.

The arrival of the asymmetric threat on the streets of Paris was
deeply unsettling and will surely keep Europe off-balance and presages
a 'new normal'. As small boys, the Kouachi brothers were abandoned by
their Algerian-born parents and brought up in a children's home in
Brittany, according to The Independent.

Money printing


Europe printed a negative year-on-year deflation rate of 0.2 per cent
in December and the European Commercial Bank is imminently look- ing
to launch a Quantitative Easing [money-printing] programme.

The euro/dollar exchange rate is headed to parity and even lower in
2015. I know Goldman Sachs has a parity call for euro/dollar in 2016,
but I think the unravelling will happen in 2015 and a lot more
quickly.

The economic blowback from the frozen conflict in Ukraine with Russia
has exacted a price, as well. Economics and geopolitics are more
intertwined than ever before. If European bond yields - they are at
record all-time lows - are the 'signal in the noise', then this means
Europe is in danger of a major 'death-spiral'.

read more


Exclusive: @Samsung talks to BlackBerry about $7.5 billion buyout - source @Reuters
International Trade


South Korea's Samsung (005930.KS) proposed an initial price range of
$13.35 to $15.49 per share, representing a premium of 38 percent to 60
percent over BlackBerry's current trading price, the source said on
Wednesday.

"BlackBerry is in such transition today, so any investment has been a
bet on the future, so at this point Samsung is cutting in before that
full future becomes a reality," said Morningstar analyst Brian
Colello.

Samsung's strength as the No. 1 global smart phone marker has been
built on making devices for the consumer market, which has become
crowded in recent years. With a takeover of Blackberry, Samsung could
make greater inroads into the corporate market, where it has trailed
rivals.

"How many Samsung phones do you see in offices? This would be
Samsung's chance to get into the enterprise," said BGC Partners
analyst Colin Gillis.

read more


Currency Markets at a Glance WSJ
World Currencies


Euro 1.1767
Dollar Index 92.23
Japan Yen 117.75
Swiss Franc 1.0206
Pound 1.5230
Aussie 0.8208
India Rupee 61.785
South Korea Won 1082.90
Brazil Real 2.6160
Egypt Pound 7.1505
South Africa Rand 11.4588

read more




Commodity Markets at a Glance WSJ
Commodities


Gold 6 month INO 1230.74

http://quotes.ino.com/charting/index.html?s=FOREX_XAUUSDO&t=c&a=50&w=1&v=d6

 Spot gold had steadied at $1,230.65 an ounce by 0403 GMT.

http://uk.reuters.com/article/2015/01/15/markets-precious-idUKL3N0UU07I20150115

The metal on Wednesday jumped to its highest since Oct. 23 at $1,244,
before paring gains to close flat.

Gold was sold off along with copper, which slid to a 5-1/2 year low on
Wednesday after the World Bank cut its global growth forecast, and
oil, which rebounded late in the session.

"Gold has now tested $1,245 three times and failed on each occasion.
We believe gold could test $1,215-20 in the coming days," said Jason
Cerisola, a metals dealer at MKS Group.

read more



Crude Oil 6 Month Chart INO 48.29
Commodities


Oil Collapse of 1986 Shows Rebound Could Be Years Away

http://www.bloomberg.com/news/2015-01-13/oil-s-1986-collapse-signals-rebound-years-away-chart-of-the-day.html

The CHART OF THE DAY shows how West Texas Intermediate, the U.S. oil
benchmark, tumbled 69 percent from $31.82 a barrel in November 1985 to
$9.75 in April 1986 when Saudi Arabia, tiring of cutting output to
support prices, flooded the market. Prices didn't claw back the losses
until 1990. Oil has dropped 57 percent since June and OPEC members say
they're willing to let prices sink further.

read more


Venezuela's Maduro Securing Financing From Qatari Banks Voice of America @maduro_en
Emerging Markets


Venezuela is securing financing from Qatari banks, President Nicolas
Maduro said from Doha on Monday, as he seeks to boost his country's
coffers amid falling oil prices and a recession.

"We're firming up a financial alliance with important banks in Qatar,
that are giving us sufficient oxygen to cover the fall in oil
revenue," Maduro said without providing details.

"We're raising financing for several billion dollars, not only for
2015, but also for 2016," he added in comments to journalists.

Venezuela depends on oil for 96 percent of its export revenue. Credit
Suisse estimates Venezuela faces a foreign exchange financing gap of
some $33.9 billion should its oil basket average $50 this year. The
basket dropped to $42.44 per barrel last week.

read more


@JacquelinePSUV @NicolasMaduro reflexiona a la orilla del mar en Argelia como han caído los imperios d todas las épocas...Venceremos!
Emerging Markets


Rajan lowered the benchmark repurchase rate to 7.75 percent from 8
percent, he said in a statement today, the first reduction since May
2013.

http://www.bloomberg.com/news/2015-01-15/india-unexpectedly-cuts-rates-in-unscheduled-review.html

Consumer-price inflation will probably be below the central bank's
target of 6 percent by January 2016, he said.

The benchmark S&P BSE Sensex index rose 1.6 percent as of 10:13 a.m.
in Mumbai, the best performer in Asia. The rupee strengthened as much
as 0.8 percent to 61.72 per dollar, the strongest since November. The
yield on the benchmark 10-year sovereign bond dropped 10 basis points
to 7.67 percent, the lowest since July 2013.

Conclusions


Rajan is with the @NarendraModi Program.

Frontier Markets

read more


Half of Africa's GDP is at stake in 10 elections this year: 16 facts that tell us it could be much bigger
Africa


NEARLY half of sub-Saharan Africa's Gross Domestic Product  (GDP) will
be at stake when Zambia next week kicks off a swarm of presidential
elections around the continent, with at least 10 countries expected to
have voted this year when the dust settles, including Africa's two
most populous nations.

Nigeria and Ethiopia's general elections will add to ballots in Sudan,
Cote d'Ivoire, Tanzania and Togo, while troubled South Sudan, Central
African Republic and Burkina Faso will also attempt a vote.

1. Intra-African trade has in absolute terms increased fourfold over
the last decade to reach $130 billion, despite in relative terms
remaining at 12%. Between 2003-2012 intra-African greenfield Foreign
Direct Investment nearly tripled, to reach 21% of all greenfield
inflows into the continent. South Africa, Kenya and Nigeria lead,
highlighting the importance of ongoing Tripartite Free Trade Area
(FTA) negotiations which would further unlock regional markets for
African firms.

2. Cross border banking and financial services are the dominant sector
in intra-African FDI, accounting for about 50% of greenfield projects
between 2003 and 2014. Four large banking groups are present in at
least 18 countries--Nigeria's UBA, South Africa's Stanbic, Morocco's
BMCE and Ecobank, the latter in 32 countries. This trend has been
influenced by among other factors financial liberalisation and
favourable regulation.

3. Stock markets in Africa have grown from 5 in 1990, to the 29 that
currently represent 38 nations. Yet the total market capitalisation of
stock exchanges in Africa has remained low, accounting for less than
2% of the world's total. One bourse, the Johannesburg Stock Exchange
(JSE), represents 65% of the total African market capitalisation. This
is changing, in large part due to the establishment of regional stock
exchanges and cross-listings.

4. Close to 25% of Africa's 54 countries, or 16, are landlocked, more
than in any other region, which means higher costs and risks of doing
business. When conflict is taken into account, it could actually be
argued that they are "double landlocked".

5. On average, Africa experiences more migration per year, than many
other parts of the world. The popular perception, reinforced by
reports of sinking migrant ships, is that they are moving to the West.
But the report notes that in sub-Saharan Africa, the majority of
people--65%-- usually migrate within their immediate sub-region. Also,
while conflict and related issues were big push factors in the past,
climate change issues and the youth "bulge" have newly emerged. An
estimated 31 million, or 2.5-3% of the continent's population, are
documented international migrants.

6. Due to the absence of pro-integration migration regimes, Africa has
some of the world's most onerous visa restrictions. On average,
Africans need visas to visit 60% of African countries. Only Comoros,
Madagascar, Mozambique, Rwanda and Seychelles offer visa-free access
or visa-on-arrival to citizens of all African countries.

The DR Congo, Equatorial Guinea, Sao Tome and Principe and Sudan
require all African entrants to apply for a visa before arrival. And
16 African countries are currently developing restrictive migration
policies, even as alarmed economists show that opening up movement can
significantly increase world GDP, by up to 100%.

7. In 2010, remittances from the African diaspora amounted to $40
billion, or 2.6% of regional GDP. In several fragile states
remittances may exceed 50% of their GDP, yet it is estimated that at
least $15 billion a year is lost to high fees, burdensome documentary
requirements and lack of competition in the money transfer market. It
for example costs as much $32 to send $200 between Burkina Faso and
Ghana.

8. South African firms in 2010 accounted for about a fourth of all
intra-African exports, but only 10% of imports; a major imbalance in
part due to its protective nature. Indeed the country  accounts for
more than 90% of imports in sub-Saharan African countries for over
1,000 country/product combinations (export opportunities). The only
region on the continent that it is not a major supplier to is North
Africa.

9. Regional integration in Africa is not too recent a process; the
Lagos Plan of Action was adopted by regional heads of state in 1980,
with the Abuja Treaty of 1991 giving it "teeth". Regional Economic
Communities (RECs), of which there are eight, were then identified as
the building blocks, with an eventual view to establishing an African
Economic Community. A protocol of on relations between the AEC and
RECs entered into force in 1998. The problem has been that while
Africa knows what to do about integration, it is not explicit on how
to do it.

10. Of the eight economic blocs, the East African Community (EAC) has
made the most progress towards an economic union. It started with a
customs union in 2009, a common market a year later leading to a fully
functioning Free Trade Area. In 2013 its five member countries adopted
a protocol that envisions a monetary union in ten years. Comesa, SADC
and Ecowas have FTAs, though not fully running, while the rest have
plans on paper, excluding IGAD which has no such ambition. (Three EAC
states - Kenya, Uganda, Rwanda - also have a single tourist visa, and
Rwanda and Uganda now operate single customs/immigrations points at
their land borders).

11. One of the main challenges to Africa's regional integration has
been the reluctance of member states to cede their sovereignty to the
secretariats of RECs and the African Union. In contrast, the member
states of the European Union cede their national sovereignty on all
trade matters to their secretariat, which represents them at the World
Trade Organisation. However, the Comesa-EAC-SADC tripartite has moved
towards adopting such a general structure.

12. Though there are benefits to be had, the issue of overlapping
membership has also been a major stumbling block. There are 17
regional integration agreements in Africa, and of Africa's 54
countries, only Algeria, Cape Verde and Mozambique are party to only
one agreement. Cote d'Ivoire holds the "record", as a member of five
regional organisations.

13. A regional approach to infrastructure development is the best way
to deliver on the continent's economic goals, the bank says. Among the
benefits are delivering economies of scale, enabling market efficiency
and supporting the mobility of among other factors capital and skill.
The strongly-backed Programme for Infrastructure Development in Africa
(PIDA) has taken up the continental challenge. Data show that between
2003 and 2012 African countries increased investments as a share of
its GDP to about 22%.

14. The regional infrastructure financing need has been estimated at
$360 billion, which would sustain an average economic growth rate of
6% between 2012 and 2040, when PIDA's long-term infrastructure plan
winds down. PIDA categorises some 433 projects with a cost of $68
billon as priority, with the main headache being their innovative
financing.

15. Commitments for infrastructural development reached $89 billion in
2012, with the largest share (47%) committed by African governments.
Chinese investors have surpassed traditional investors and now account
for 15% of pledges. The Asian country's investment investment in
African infrastructure grew more than five-fold between 2006 and 2012,
mainly in energy.

16. For every $1 billion invested in infrastructure, between 26,000
and 110,000 direct and indirect jobs can be created, with this being
highest in the roads sector, and lowest in the capital-intensive power
sector.

South Africa All Share Bloomberg -3.40% 2015

http://www.bloomberg.com/quote/JALSH:IND

48,057.46 -1,375.54 -2.78%

Dollar versus Rand 6 Month Chart INO 11.4580

http://quotes.ino.com/charting/index.html?s=FOREX_USDZAR&v=d6&t=c&a=50&w=1

Egypt Pound versus The Dollar 3 Month Chart INO 7.1504

http://quotes.ino.com/charting/index.html?s=FOREX_USDEGP&v=d3&t=c&a=50&w=1

Egypt EGX30 Bloomberg +6.96% [The Equity Market loves Sisi]

http://www.bloomberg.com/quote/CASE:IND

9,544.08 +235.10 +2.53%

10-NOV-2014 Turning to the markets in Africa, the Nigerian naira and
the All- Share index have been "Ouagadougou-ed" by the collapse in
price of oil.

https://twitter.com/alykhansatchu/status/535032614848327680

Nigeria All Share Bloomberg -17.07% 2015

http://www.bloomberg.com/quote/NGSEINDX:IND

28,740.61 -1,149.25 -3.84%

The Nigerian Stock Exchange All Share Index (NGSEINDX) dropped 3.8
percent to 28,740.61, the lowest since Jan. 10, 2013. The gauge lost
16 percent in 2014 and has weakened a further 17 percent this year,
the most among 93 primary indexes tracked by Bloomberg.

19 Nov 2014 @alykhansatchu The Currency heads to 200.00. The Central
Bank does not have the Fire Power. Matters #Nigeria and the #Naira

https://twitter.com/alykhansatchu/status/535032614848327680

read more


Satellite image showing the extent of damage in Doron Baga taken on 7 Jan 2015, following an attack by Boko Haram.(c) DigitalGlobe @Amnestyonline @Bagakillings
Africa


Satellite images released by Amnesty International today provide
indisputable and shocking evidence of the scale of last week's attack
on the towns of Baga and Doron Baga by Boko Haram militants.

Before and after images of two neighbouring towns, Baga (160
kilometres from Maiduguri) and Doron Baga (also known as Doro Gowon,
2.5 km from Baga), taken on 2 and 7 January show the devastating
effect of the attacks which left over 3,700 structures damaged or
completely destroyed. Other nearby towns and villages were also
attacked over this period.

"These detailed images show devastation of catastrophic proportions in
two towns, one of which was almost wiped off the map in the space of
four days," said Daniel Eyre, Nigeria researcher for Amnesty
International.

"Of all Boko Haram assaults analysed by Amnesty International, this is
the largest and most destructive yet. It represents a deliberate
attack on civilians whose homes, clinics and schools are now burnt out
ruins."

Conclusions

read more


12-JAN-2015 In fact, President Goodluck Jonathan saw fit to send condolences to France but failed to mention events at home, entirely.
Africa


We all understand the language of the media. As such, the Kouachi
brothers and Amedy Coulibaly and his cross-bowtoting partner Hayat
Boumeddiene were so proficient at taking over the world's attention
that Boko Haram's single biggest massacre and a 10-year- old female
suicide bomber did not even rate a mention.

In fact, President Goodluck Jonathan saw fit to send condolences to
France but failed to mention events at home, entirely.

read more


Insurgency Tail Risk 08-SEP-2014
Africa


The insurgency tail risk remains and how it plays out will have
important consequence for ourselves and the entire Africarising
narrative.

What is clear is that the Boko Haram insurgency in the West and the
al-Shabaab [and its franchises] insurgency here in the East have both
intensified and ratcheted higher.

read more


"We are very happy with what happened at the heart of France," Boko Haram's leader Abubakar Shekau said in an eight-minute video posted on YouTube
Africa


"Oh you French people, oh you who follow the religion of democracy,
between you and us is enmity to eternity," said the man, speaking in
Arabic and holding an AK-47 assault rifle.

"Boko Haram continues to focus on consolidating its territorial gains
in the extreme northeast, while also hitting northern cities further
afield with one-off bombings," Poole, U.K.-based security consultancy
Drum Cussac said in e-mailed comments today. "In these regions,
militants appear undeterred by counterinsurgency operations, attacking
both remote security and civilian targets with near impunity."

read more





Uganda's shilling, the worst-performing currency in Africa against the dollar this year, weakened for an eighth day to a more than three-year low.
Africa


The currency of the continent's biggest coffee exporter depreciated
0.9 percent to 2,890 per dollar by 12:27 p.m. in Kampala, the capital,
the lowest on a closing basis since at least June 1993. The shilling
extended its loss this year to 4.1 percent, the worst among 24 African
currencies tracked by Bloomberg.

read more







Kenya Holds Key Lending Rate as Inflation Seen Slowing Further @BW
Kenyan Economy


Leaving the rate unchanged "will ensure that inflation continues to
decline towards the 5 percent target," the bank said. It has held the
rate at the same level since May 2013.

The inflation rate of East Africa's biggest economy fell to 6 percent
in December, remaining within the government's 2.5 percent to 7.5
percent target band for a fourth consecutive month, partly driven by
lower energy prices. The country imports almost all of the fuel it
consumes.

The Energy Regulatory Commission from tomorrow is lowering the maximum
cost of fuel prices to the lowest level in four years, the
Nairobi-based Daily Nation reported. Crude oil prices are trading at
more than five-and-a-half-year lows in New York and London, after
slumping about 50 percent last year.

"I am expecting a slump in the inflation rate to, and even through,
the lower inflation band," Aly-Khan Satchu, chief executive officer of
Nairobi-based Rich Management Ltd., said in an e-mailed response to
questions before the decision.

Relief for motorists as fuel prices drop to four-year low @BD_Africa

http://www.businessdailyafrica.com/Fuel-prices-drop-to-four-year-low/-/539552/2589018/-/86rwy6z/-/index.html

Effective midnight on Wednesday, the maximum recommended retail price
on Super Petrol is down by Sh9.13 to Sh92.88 in Nairobi.

Diesel drops by Sh7.50 to Sh83.35 while kerosene down by Sh5.78 to Sh65.59.

"These are the lowest fuel prices in four years," said ERC
director-general Joseph Ng'ang'a.

27-OCT-2014 The sharp fall in oil prices will see super petrol prices
below Sh100 per litre before year-end

http://www.rich.co.ke/media/docs/038NSX2710.pdf

This will prove a powerful catalyst for improved consumer sentiment
and improved spending.

Data from the Kenya Motor Industry Association (KMI) shows that new
vehicle dealers sold 17,499 units in 2014, marking a new high since
the liberalisation of the local motor trade in the 1990s that allowed
for import of used cars.

http://www.businessdailyafrica.com/Corporate-News/New-car-sales-hit-record-high-on-rising-demand/-/539550/2588482/-/item/0/-/iokm0xz/-/index.html

The number of units sold last year is 20.3 per cent more than the
previous peak of 14,542 units recorded in 2013.

read more



Kenya Shilling versus The Dollar Live ForexPros 91.271
Kenyan Economy


Nairobi All Share Bloomberg +1.96% 2015

http://www.BLOOMBERG.COM/quote/NSEASI:IND

166.08 +1.32 +0.80%

The Nairobi All Share rallied a further 0.8011% to close at 166.08 and
making that a powerful +2.486% two day rally. The All Share is within
0.416% and spitting distance of a All Time High reached 9th December
2014.

read more









 
 
by Aly Khan Satchu (www.rich.co.ke)
 
 
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January 2015
 
 
 
 
 
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