|Monday 19th of January 2015
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Paul Virilio and Escape Velocity
The relevance of Virilian analysis for contemporary military thought
lies in the fact that Virilio is the first critical theorist to posit
a wholly circulatory theory of power.3 This becomes readily apparent
in his analysis of the world economy, which he subsumes under the
rubric of cyber- capitalism, the digitialization of all forms of
international exchange; 'The effectiveness of electronic money lies in
its mass, which increase its velocity of circulation.'4 Virilio claims
that as the 'last post-industrial resource, acceleration exceeds
accumulation...the escape velocity [vitesse de liberation] becomes the
equivalent of profit.'
That is a near perfect description of what a Sweet Spot feels like in Trading.
For Einstein, the present is already 'the centre of time'; the past of
the original big bang is not, and scientifically cannot be, that old
centre. The true centre is always new, the centre is perpetual, or to
put it even more precisely, the 'present' is an eternal present.
I sat at my desk in the Dark., thinking of secrets. Are secrets a
tunnel to a dreamworld where you control events? Don Delillo White
Currency Markets at a Glance WSJ
Euro 1.559 little changed at $1.1562 after falling to $1.1460 on Jan.
16, the weakest since November 2003
Dollar Index 92.64
Japan Yen 117.17
Swiss Franc 0.8682
India Rupee 61.675
South Korea Won 1078.82
Brazil Real 2.6214
Egypt Pound 7.1511
South Africa Rand 11.5641
ECB policy makers will meet on Jan. 22 to discuss introducing new
stimulus, including quantitative easing, a move that may add to
pressure for the franc to climb against the euro. On Jan. 15, the SNB
scrapped the 1.20 francs per euro cap on its exchange rate.
19-JAN-2015 Sell The Euro [Jordan just told you to] The Swissie [The Swiss Franc] and a very arrhythmic world
In an article I wrote on August 25 2014, I posited that;
"My view is the new normal is a very arrhythmic world''
When I plugged "arrhythmia'' into my computer, it threw up this;
"For years he'd been studying the phenomenon of chaos, of which an
arrhythmic heartbeat was a perfect example''
The Swiss Franc move last week was a perfect example of arrhythmia in
the financial markets.
The Swiss Central Bank (SNB) abruptly lifted its three-year-old cap of
1.20 franc per euro. Essentially,SNB had been buying euros and selling
Swiss francs at the 1.20 level and had spent billions in this
enterprise ballooning the SNB's foreign-currency holdings to $556
billion equivalent by December 2014.
With a statement, the SNB lifted the cap and the Swiss franc surged up
to 41 per cent against the euro to the strongest level on record and
in one of the biggest moves among major currencies since the collapse
of the Bretton Woods system in 1971. The Swiss franc closed the week
more than 20 per cent higher against the euro.
All of the more than 170 global currencies tracked by Bloomberg fell
at least 15 per cent versus the franc last week.
"The interbank market for francs was illiquid for hours after the
event and no traders with an open franc position were able to close it
for a significant period of time, at any broker," said Bloomberg.
The violence of the move in the Swiss franc self evidently created big
losses across the markets.
Switzerland's benchmark SMI index declined as much as 8.7 per cent on
the day in Zurich as investors calculated that a 20 per cent currency
appreciation would be a serious headwind for Switzerland Inc. If I
were sitting at the apex of Nestle or any other Swiss multi- national,
I would be demanding a list of possible acquisitions across
the world and parlaying the rally in the Swissie into a currency for
The SNB moved the deposit rate to -0.75 per cent. In fact the entire
Swiss yield curve out to 10 years is trading at a negative rate, which
again speaks to a financial market arrhythmia. This means that the
Swiss government can borrow money and will get paid for the privilege
This decision by Thomas J. Jordan's SNB came just one week before
European Central Bank policymakers meet to discuss the purchase of
government bonds [quantitative easing]. Jordan is 'front-running' the
ECB decision and therefore, the signal emitting out of this arrhythmic
normal is a very simple one. It is this "Sell the Euro".
I return to one of the traders I most admire Stanley Druckenmiller who
said :"As a macro investor, my job for 30 years was to an- ticipate
changes in the economic trends that were not expected by others - and
therefore not yet reflected in securities prices".
"Soros has taught me that when you have tremendous conviction on a
trade, you have to go for the jugular. It takes courage to be a pig
.... As far as Soros is concerned, when you're right on something, you
can't own enough."
In this instance, I cannot sell enough euros. The euro is set to
unravel and below parity and very quickly.
The @WEF said "The interconnections between geopolitics and economics
are intensifying'' in its latest release. These are markets I like
when you can achieve "Escape Velocity"
"The effectiveness of electronic money lies in its mass, which
increase its velocity of circulation.' Paul Virilio claims that as the
'last post-industrial resource, accelera- tion exceeds
accumulation...the escape velocity [vitesse de libera- tion] becomes
the equivalent of profit."
''It takes courage to be a pig.''
"Selling puts or vol on the franc was deemed to be SNB guaranteed money for old rope"
One-week implied volatility shot up vertically from, like, 3 to
something over 25 percent. This naturally reminds me of my favorite FX
volatility story, from Nassim Taleb's "Dynamic Hedging," the moral of
which is, be careful selling teenies against an exchange rate that's
being protected by a central bank. Sometimes they stop!
the short franc/long euro trade that the Swiss National Bank stopped
itself out of the previous day.
If you run the casino, you don't want the games to be boring, but you
don't want them to be terrifying either.
No One Was Supposed to Lose This Much Money on Swiss Francs @Matt_Levine
Goldman Sachs Chief Financial Officer Harvey Schwartz said on this
morning's earnings call that this was something like a
20-standard-deviation event, and while the exact number of standard
deviations is of course a subjective matter, that's the right
ballpark. Over the 12 months ended on Wednesday, the annual volatility
-- that is, the annualized standard deviation of daily returns -- of
the euro/franc relationship was a bit over 1.7 percent; over the last
three months of that period the volatility was less than 1 percent.
That converts to a daily standard deviation of something like 0.1
percent. On Thursday, the euro ended down almost 19 percent, or call
it 180 standard deviations, depending on what period you use.
An 180-standard-deviation daily move should happen once every ... hmmm
let's see, Wikipedia gives up after seven standard deviations, but a
7-standard-deviation move should happen about once every 390 billion
days, or about once in a billion years. So this should be much less
frequent. Good news I guess, Switzerland won't be un-pegging its
currency for at least another billion years, go ahead and set your
Swatch by it.
Here is Tracy Alloway on bank value-at-risk models and the currency move:
The move from the SNB constitutes a classic VaR shock following a
period in which banks have seen their VaR estimates slip further and
further lower following an historic period of low volatility.
As realized volatility gets lower, estimates of future volatility --
and so estimates of future losses -- get lower. And so position limits
get higher, as banks feel safer with the risks they're taking,
because, on a historical basis, they don't look that risky. And then
the risk that didn't look risky becomes the one that gets you.
Africa's Next Revolution? Yet another African autocrat is looking vulnerable. As protests roil Togo, President Gnassingbe stands defiant.
Over the last two months, large opposition protests have rocked the
small West African nation of Togo. In November, thousands of
opposition protesters marched through the streets of the capital Lome,
where two were injured in clashes with security forces. A few weeks
later, women with brooms took to the streets of Sokode, the country's
second-largest city, chanting that it was time to "sweep" out the
current regime. Building on this momentum, opposition and civil
society groups called for massive nationwide protests on Jan. 5 to
demand political reforms ahead of the upcoming presidential elections
How does this end? Will Togo be sub-Saharan Africa's next revolution?
Codjo Delava, the Secretary General of the main opposition party,
suggests that this could be a real possibility in the absence of
meaningful reforms: "I'm not hoping it can happen. But there is a
chance it can...if Faure Gnassingbe continues to refuse to implement
political reforms so that elections can be free and fair, so that
presidential mandate can limited [sic], maybe it will happen."
South Africa All Share Bloomberg -2.58% 2015
South Africa's Zuma asks parliament to reconsider mineral bill
President Jacob Zuma has asked parliament to reconsider a bill giving
the state a free 20 percent stake in gas and oil ventures, believing
it might not survive a potential challenge that it is
unconstitutional, the government said.
Parliament passed the changes to its main petroleum law last March,
alarming companies such as Shell, Total and Exxon Mobil, which are
looking to explore in South Africa.
"After careful consideration of the Bill and the submissions received,
the President is of the view that the Bill as it stands would not pass
constitutional muster," the Presidency said in a brief statement on
Dollar versus Rand 6 Month Chart INO 11.5645
Egypt Pound versus The Dollar 3 Month Chart INO 7.1519
Egypt EGX30 Bloomberg +6.81% 2015
9,530.92 -25.07 -0.26%
Egyptian Pound Weakens for First Time Since May at FX Sale Bloomberg
The central bank sold $38.5 million to local lenders at a weighted
average price of 7.1901 pounds, according to its data on Bloomberg.
That's a decline of 0.7 percent, the first since May 29. The price has
been unchanged since mid-June. The pound fell last week on the
unregulated market to 7.82 per dollar, according to the average of
three quotes compiled by Bloomberg.
The central bank unexpectedly cut benchmark interest rate by half a
percentage point to 8.75 percent on Jan. 15, taking advantage of a
drop in the rate of inflation and a slide in oil prices. Egypt's
foreign reserves dropped to $15.3 billion in December from $15.9
billion in the previous month.
"This is just the start of the process," Hany Genena, head of research
at Pharos Holding for Financial Investments, said by phone, referring
to the drop in the pound's exchange rate. The Cairo-based investment
bank expects the currency to weaken to 7.5 per dollar before March and
to as low as 8 pounds per dollar before the end of the year.
PATRICK COCKBURN Sunday 18 January 2015 where are the 'Je suis
Nigeria' banners? @IndyWorld
President Obama is being criticised for not joining the 40 other world
leaders at the mass march in Paris in the wake of the Charlie Hebdo
massacre. But, by playing down rather than playing up the terrorist
killings, Obama may have shown a surer instinct about how to deal with
such attacks, however horrific, than those leaders who did turn up.
It is understandable that governments and people want to show
solidarity against terrorism. But in many respects, the gargantuan
size and overblown rhetoric of those responding to the murders of 17
people by three terrorists, treating the episode as if it was Pearl
Harbour or 9/11, plays straight into the hands of al-Qaeda and its
The three terrorists, Chérif and Said Kouachi and Amedy Coulibaly,
were rather pathetic figures before 7 January, but have now achieved
demonic status. Their actions on that day have sent millions of people
into the streets, brought the leaders of much of the world to Paris,
and led to the mobilisation of tens of thousands of soldiers and
police. The three men would have been proud to have provoked such a
response by committing what, by Middle East and North African
standards, was a fairly run-of-the-mill terrorist attack.
This overreaction and the wall-to-wall media coverage may prove
counterproductive. The reasons for this are eloquently identified by
the Israeli commentator Uri Avnery, who writes: "For other potential
Islamic terrorists throughout Europe and America, this [overreaction]
must look like a huge achievement. It is an invitation for individuals
and tiny groups to do the same again, everywhere.
"Terrorism means striking fear. The three in Paris certainly succeeded
in doing that. They terrorised the French population. And if three
youngsters without any qualifications can do that, imagine what 30
could do, or 300!"
The over-concentration on the Paris events diverts attention from far
more violent attacks carried out elsewhere in the world by
Self-interest alone should lead the French, British and Americans to
pay more attention to what is happening in these places, as they are
the physical and ideological breeding grounds for al-Qaeda-type
movements whose activities are increasingly affecting Western Europe.
My friend and former colleague Richard Dowden, director of the Royal
African Society, has written that, if all right-thinking people are
united against terrorism, "where is the 'Je suis Nigeria' movement?"
Certainly, there are explanations and excuses for the focus on France
rather than Nigeria. The Charlie Hebdo murders took place in one of
the media hubs of the world, while the far north-east corner of
Nigeria on the edge of the Sahara is one of the least visited,
impoverished and dangerous places on earth.
I used in 2004 to compare Iraq to Nigeria, saying the government in
Baghdad was at risk of becoming like that in Nigeria - an oil state
that was not just corrupt, but an institutionalised kleptocracy in
which everything was stolen and nothing was built. Then, as the Iraqi
Prime Minister, Nouri al-Maliki, led the country to ruin, I thought
the comparison might be unfair on Nigeria. As it turned out, I was
wrong. The incapacity and wholesale theft of oil revenues by all those
connected to the governments in both countries have a lot in common.
The defence of France, Britain and other countries from terrorist
attacks, like that on the Charlie Hebdo magazine, depends on finding
ways of dealing with the seven or more civil wars being fought from
Pakistan to Nigeria. These are the places where violent Sunni
fanaticism flourishes and by which Western Europe has now been
touched. Security measures and political policies need to be
co-ordinated and, until they are, the march of 40 world leaders in
Paris remains an empty gesture.
Opposing terrorism or supporting free speech is much like being in
favour of motherhood or against sin. The problem with the marches in
Paris and elsewhere is that they may be a substitute for difficult
policy decisions. Many of these, such as closing the Turkish-Syrian
border or putting pressure on Saudi Arabia to control pro-jihadi
media, would be hard to implement. But without such actions,
everything else is bombast. Maybe President Obama was right to stay
Nigeria All Share Bloomberg -16.22% 2015
29,034.89 223.50 0.78%
Nigeria Intervenes With Dollars as Naira Slides on JPMorgan
Nigeria's central bank sold dollars to stem the naira's drop to a
record low after JPMorgan Chase & Co. said the debt of Africa's
biggest economy may be cut from its local-currency emerging-market
Nigeria was placed on Index Watch Negative for JPMorgan's GBI-EM
indexes after central bank measures announced in December reduced
foreign exchange and bond trading, making it difficult for foreign
investors to replicate the gauge, the New-York based lender said in an
e-mailed statement Friday. The Abuja-based regulator intervened after
the announcement, according to Guaranty Trust Bank Plc.
"You've got a bunch of global investors who are benchmarked to the GBI
and Nigeria is 1.8 percent of the index," Kevin Daly, who has cut his
holdings in naira debt to zero among the $13 billion in assets he
manages at Aberdeen Asset Management Plc in London, said by phone. "I
doubt some of those investors would want to own it if it's not in the
Nigerians will vote on Feb. 14 in presidential elections in the face
of increasing violence by the Islamist militant group Boko Haram.
The naira depreciated to an all-time low of 188.48 against the dollar
Friday. It pared losses after the regulator's move to trade 0.4
percent stronger at 185.05 as of 7:35 p.m. in Lagos. The currency is
poised to end the week 3.5 percent down, the most since Nov. 14.
The country's inclusion in the index will be assessed over the next
three to five months, JPMorgan said. Paul Nwabuikwu, a spokesman for
Nigeria's finance ministry, didn't answer calls to his mobile phone
seeking comment. Ibrahim Mu'azu, a spokesman for the Central Bank of
Nigeria, didn't answer calls to his mobile phones seeking comment.
"It would be a big blow" if Africa's most-populous nation was excluded
from the indexes, Adebayo Omogoroye, head of trading at Guaranty
Trust, the biggest lender by market value in Nigeria, said by phone
Average yields on naira-denominated government debt soared 2.5
percentage points in the past three months, compared with a drop of 47
basis points through Thursday for emerging-market local-currency
securities, according to Bloomberg indexes. Nigerian bonds were the
worst performers after Russia among 31 developing nations in the
period, losing 16 percent for dollar investors.
The Abuja-based central bank limited lenders' foreign-exchange
net-open positions to zero from 1 percent of shareholders' funds at
the end of each day in December. It loosened the rule this week by
increasing the limit to 0.1 percent.
"There was a remedial action by the central bank on Jan. 12 to restore
liquidity," Patience Oniha, executive director in charge of market
development at the Debt Management Office, said by phone from the
capital, Abuja. "It needs to take effect while I think every other
measure that needs to be done by the authorities to create liquidity
will be done."
Daily trading volumes for the naira are still just $20 million to $30
million, compared with about $300 million to $500 million six months
ago, according to Samir Gadio, head of African strategy at Standard
"Sourcing FX has become a nightmare," Gadio said by phone from London.
"Theoretically, there are no capital controls and you can take out
whatever you want. But the reality is that it's much more difficult."
Commercial banks should source dollars from the central bank if they
are struggling to access foreign exchange for their clients, Central
Bank Governor Godwin Emefiele said on Jan. 6. The regulator's monetary
policy committee meets on interest rates next week, with a decision
set to be announced on Jan. 20.
While Nigeria could still keep its GBI-EM status, investors will want
the regulator to clarify how it will respond to JPMorgan's review,
Helios to sell half its stake in Kenya's Equity Bank Reuters
Africa focused investment firm Helios will sell half its stake in
Kenyan lender Equity Bank , or 12.22 percent of the bank's shares, to
Norway's Norfininvest AS, the lender said on Friday.
The transaction, which requires regulatory approvals, will involve the
sale of 452.9 million shares at an undisclosed price.
Equity's shares were trading at 52 Kenyan shillings on Friday, up
slightly from the previous day's close of 51 shillings.
Norfininvest is jointly owned by Norfund, the Norwegian Investment
Fund for Developing Countries, and Norfinance AS. Norfinance was
established in 2013 alongside four private Norwegian partners to
invest in banks and financial institutions in Africa.
Helios bought a 24.45 percent stake in Equity in 2007 for more than 11
billion shillings ($120.2 million).
Equity Group released the following Cautionary Announcement pre-market Opening
Helios EB Investors LP has on 12th January 2015 entered into a sale
agreement with Norinvest AS which upon its completion will result in
Norfininvest holding 452,581,275 shares or 12.223% of the issued share
capital of Equity Group.
The Nairobi All Share had rallied +2.41% in January through this
morning throttled back 0.93 points to close at 165.88.
The Nairobi NSE20 which had rallied +1.78% in January through this
morning eased 26.33 points to close at 5177.38.
The Equity Market in Nairobi whilst under performing Egypt is doing a
lot better than the Market on the West Side which at one point last
week was down more than 17% in 2015.
Volumes thinned out to clock 252.561m versus 636.718m last time.
The Shilling is down 1.22 percent this year mainly due to a firmer dollar.
N.S.E Equities - Agricultural
Williamson Tea [which actually under performed the outperformance of
the Agricultural Sector in 2014] spiked 9.96% higher to close at
309.00. Williamson Tea is +24.59% in 2015.
Williamson Tea share price data +24.59% 2015
N.S.E Equities - Commercial & Services
Safaricom which had rallied close to 8% last week eased back 2.0202%
on low volume of just 1.590m shares traded.
Uchumi surged a further +8.9743% to close a Fresh 2015 high of 12.75
and was trading at the Daily Limit of 12.85 +9.83% for most of the
session. Uchumi traded 159,100 shares. Uchumi is now +26.86% in 2015
and is recovering from what was a deeply oversold position.
Uchumi @OfficialUchumi is +26.86% so far in January
Longhorn kenya was the biggest loser at the Exchange and closed at
9.10 on good volume of 149,200 shares.
N.S.E Equities - Finance & Investment
Kenya Commercial Bank was the most actively traded share at the
Exchange and closed unchanged at 59.00 and traded 1.002m shares. Kenya
Commercial Bank is +3.508% in 2015 and 1.666% below a record closing
High reached last year.
N.S.E Equities - Industrial & Allied
Mumias Sugar maintained its parabolic 2015 Rally to close a further
+9.38% higher at 3.50. Mumias Sugar traded 1.987m shares and had
Buyers for 7x the volume traded during the session, at the Finish
Line. Mumias Sugar is +79.48% this year after a torrid 2014.
Mumias Sugar @MumiasSugarCo share data here
Kenya Power KPLC eased back 0.99% to close at 15.00 and traded 1.930m
shares. Interestingly Buyers for 4x that Volume appeared ahead of the
Closing Bell. KPLC rallied real quick and +11.418% out of the blocks
at the start of year through January 8th. Subsequently, Jan 8th
through today, KPLC has corrected 6.83%. The Sizeable Bids seen at the
Finish is signalling the correction is complete and KPLC will turn
higher as early as tomorrow.
KenGen eased 2.02% to close at 9.70 and traded 285,100 shares. KenGen
has retreated 5.82% in 2015 with the already telegraphed Capital Call
continuing to weigh on the Price and on Buyers.
Umeme was well traded with 1.680m shares worth 33.618m all traded at
20.00 +5.26%. Umeme is normally a quiet share and thinly traded. Umeme
is -4.676% in 2015.
BOC Kenya closed 5.8% firmer at 146.00 and traded 500 shares.