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Tuesday 31st of March 2015
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Macro Thoughts |
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29-SEP-2014 A Small Window for Sharks as Dollar Rises Africa |
The greenback is emerging out of a multi-year disequilibrium. The US
is now pushing out a lot of oil imports and the system is awash in the
black stuff, hence why there has been no upside pop in the price of
oil, notwithstanding the drumbeat of war in the Middle East.
Stanley Druckenmiller, who with George Soros bet the bank against the
Bank of England on September 16, 1992 and made off with a billion
pounds in the days when a billion was serious amount of stash said
this:
“As a macro investor, my job for 30 years was to anticipate 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.”
The point I am making is that the dollar has just started going. There
will be blood in the water. There is a small window if we want to be
the sharks.
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@alykhansatchu Paul Virilio War and Cinema The Logistics of Perception #TwitterBookClub remarkable Africa |
Each time a wall is reached, there is a retreat. And history has just
struck the wall of worldwide time. With live transmission, local time
no longer creates history. Worldwide time does. In other words, real
time conquers real space, space-time. We must reflect on this
paradoxical situation which places us in a kind of outside-time. Faced
as we are with this time accident, an accident with no equal.
Virilio, Paul.
But now the travelers are traveled. Dreamers are dreamed. They are no
longer free to move about, they are traveled by the program. They are
no longer free to dream, they are dreamed by the program.
Virilio, Paul.
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28-OCT-2013 ::@BarackObama and @HassanRouhani The 2 Husseins Law & Politics |
THE recent rapprochement between President Barack Obama and Iran’s
Hassan Rouhani has certainly snapped a losing sequence in US-Iran
relations that goes all the way back to the Iranian revolution in 1979
when Ayatollah Khomeini overthrew Mohammad Reza Pahlavi the Shah of
Iran. The Shah was the second and last monarch of the House of Pahlavi
and otherwise known as the peacock throne. Hussein [Barack Hussein
Obama] and Hassan [Rouhani] share the same name as did Prophet
Muhammed’s revered grandsons. Those who pursue the study of
anthroponymy [personal names] especially in the Islamic World probably
view this as very fortuitous.
I was wandering around the Hirshhorn Gallery in Washington last year
and I came across this from the Chinese artist Ai Weiwei:
What’s in a name?
A name is the first and final marker of individual rights, one fixed
part of the ever-changing human world. A name is the most basic
characteristic of our human rights: No matter how poor or how rich,
all living people have a name, and it is endowed with good wishes, the
expectant blessings of kindness and virtue.
Hussein and Hassan are going to cut through a great deal of
interference. In this situation, there are powerful vested interests
fully invested in the status quo. If the pax Americana in the Middle
East were a three legged stool with the US the most important leg,
then Israel and Saudi Arabia are the other two legs of that stool.
Neither Riyadh nor Tel Aviv are aligned with President Obama’s Iranian
rapprochement and Saudi Arabia in particular has become increasingly
forthright and is even threatening its own pivot and away from the US.
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Currency Markets at a Glance WSJ World Currencies |
Euro 1.0793 The euro fell 0.4 percent on the day to $1.0791 EUR=.
Dollar Index 98.18
Japan Yen 120.185 Against the yen, the dollar edged up 0.1 percent to
120.17 yen JPY=, holding firm after having gained 0.8 percent on
Monday for its biggest one-day rise in more than a month.
Swiss Franc 0.96949
Pound 1.47819
Aussie 0.7632 The Australian dollar fell 0.3 percent to $0.7634
AUD=D4, edging back in the direction of a near six-year low of $0.7561
set earlier in March.
India Rupee 62.546
South Korea Won 1110.97
Brazil Real 3.2294
Egypt Pound 7.6309
South Africa Rand 12.1482
Dollar edges higher, on track for best quarter since 2008
http://www.reuters.com/article/2015/03/31/us-markets-forex-idUSKBN0MP0ZY20150331
The dollar index, which measures the greenback's value against a
basket of major currencies, rose 0.2 percent to 98.214 .DXY and was up
8.8 percent for the quarter, putting it on track for its best
quarterly performance since the third quarter of 2008.
The dollar gained broadly against major currencies on the last day of
the January-March quarter.
The euro has fallen about 10.8 percent this quarter, having been
pressured by the launch of the European Central Bank's quantitative
easing program.
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Dollar Index 3 Month Chart INO 98.18 [Target 110.00] World Currencies |
U.S. data on Monday provided a more benign backdrop for the greenback.
An industry report showed a pick up in home sales, while a measure of
core inflation quickened to 1.4 percent, from 1.3 percent, in the 12
months through February.
"This should reassure the Fed that recent low headline inflation
readings are the result of transitory energy price declines and that
inflation is likely to rise toward the Fed's target over time," said
John Ryding, chief economist at RDQ Economics in New York.
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Euro resumes march to parity as Draghi’s QE rallies European bonds World Currencies |
There are three things weighing on the Euro: yield, yield and yield.
As Mario Draghi’s quantitative easing sucks yield out of the European
bond market, large numbers of investors have no choice but to go
elsewhere. Looking at tick data for the past week, there’s a pretty
clear inverse relationship between (for example) the Italian 10-year
bond price and EUR/USD. That points the European unit towards parity.
This might be the world’s most crowded trade, and one of the most
crowded trades in history, so woe to the levered investor that gets
caught on the wrong side of corrections. But the trend remains towards
Dollar-Euro parity.
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“The big elephant in the room is the @SAPresident ” @Julius_S_Malema said Africa |
Spending on South African President Jacob Zuma’s Nkandla home is the
“epitome of corruption” and he’s interfering in the police, the
revenue authority and the state power company, Economic Freedom
Fighters leader Julius Malema said.
“The big elephant in the room is the president,” Malema, who leads the
second-biggest opposition party, told reporters Monday in
Johannesburg. “He interferes in every institution of the state.”
Zuma has rejected opposition party demands that he promise to repay
some of the 215 million rand ($17 million) of public funds that were
used to upgrade his rural home in Nkandla in KwaZulu-Natal province.
The ruling African National Congress defeated a second vote of
no-confidence in Zuma this month and a panel of lawmakers cleared him
of wrongdoing. The police minister is supposed to give a report on
whether Zuma should pay back any of the money.
Malema said Zuma interfered in the management of the South African
Revenue Service after the tax authority started looking into spending
at Nkandla and also meddled in the running of state electricity
utility, Eskom Holdings SOC Ltd.
Eskom Chairman Zola Tsotsi said on SAfm Radio that Zuma wasn’t
involved in the decision to start an inquiry at the company and the
suspension of four of its executives.
Malema, who formed the EFF after being expelled from the ruling party,
said before being elected as leader of the ANC in 2007, Zuma had
agreed to serve only one term as president and was used as a tool to
remove Thabo Mbeki, the former president.
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South Africa All Share Bloomberg +6.47% 2015 [919 points below a record High reached in February this Year] Africa |
52,455.36 +645.20 +1.25%
Dollar versus Rand 6 Month Chart INO 12.14878
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 7.6309
http://quotes.ino.com/charting/index.html?s=FOREX_USDEGP&v=d3&t=c&a=50&w=1
Egypt EGX30 Bloomberg +2.97% 2015
http://www.bloomberg.com/quote/CASE:IND
Nigeria All Share Bloomberg -8.98% 2015
http://www.bloomberg.com/quote/NGSEINDX:IND
31,090.81 +527.88 +1.73%
But there are disturbing indications that the collation process -
where the votes are finally counted - may be subject to deliberate
political interference. Joint UK and US statement on the Nigerian
elections
https://www.gov.uk/government/news/joint-uk-and-us-statement-on-the-nigerian-elections
Nigeria Credit-Rating Outlook Cut to Negative at Fitch
http://www.bloomberg.com/news/articles/2015-03-30/nigeria-rating-outlook-cut-to-negative-at-fitch-amid-elections
Nigeria’s credit-rating outlook was cut to negative by Fitch Ratings,
which cited falling oil prices and rising political risks amid tightly
contested presidential and legislative elections in Africa’s largest
economy.
Fitch affirmed Nigeria’s BB- rating, three steps below investment
grade. Standard & Poor’s lowered Nigeria one level to B+, four rungs
below investment grade, on March 20. Voting opened on Saturday against
the backdrop of a six-year insurgency waged by the Islamist militant
group, Boko Haram, and was extended for a second day at about 300 of
the more than 100,000 polling points where officials arrived late or
equipment failed.
“Political uncertainty is heightened in the context of a tightly
contested presidential election and potential transition issues,”
Fitch said in a statement. “Fiscal and external buffers have been
eroded significantly as Nigeria enters a period of lower oil prices.”
The timing of the Fitch announcement was “very interesting given that
it’s right in the middle of the election, even before the results are
announced,” Ridle Markus, Africa strategist at Barclays Plc’s African
unit, said by phone from Johannesburg. “At the same time we do know
Nigeria has a lot of challenges.”
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Ghana Stock Exchange Composite Index Bloomberg Africa |
Filipe Nyusi, president of Mozambique, took over leadership of the
country’s ruling party, consolidating his grip on power
http://www.bloomberg.com/news/articles/2015-03-30/mozambique-leader-consolidates-his-power-with-ruling-party-post
Nyusi’s predecessor, Armando Guebuza, stood down Sunday from the
leadership of the Front for the Liberation of Mozambique, or Frelimo,
at the end of a four-day annual Central Committee meeting. A power
struggle between Nyusi and Guebuza was impairing government decision
making, with negative implications for investment and relations with
the main political opposition, said Alex Vines, head of the Africa
program at London-based foreign affairs institute Chatham House.
The handover “is good news for Mozambique’s political outlook,” Anne
Fruhauf, senior vice president at Teneo Intelligence, said by e-mail
from New York. “Aligning the leadership of the party and the country
will help Nyusi, who seems more pragmatic than his predecessor,
consolidate his authority and improve governability.”
Mozambique is waiting for Anadarko Petroleum Corp. and Eni SpA to
decide whether to proceed with projects that could make the country
the third-largest liquefied natural gas exporter in the next decade.
The economy, which the World Bank estimated at $15.6 billion in 2013,
may expand 10-fold by 2035 as Mozambique reaps the benefits of the gas
bounty, according to projections by Standard Bank Group Ltd.
In a March 26 address to the meeting, Guebuza showed few signs of
being ready to quit. He said he was worried by “the behavior of
certain comrades” whose comments “generate division” in the party.
Early Sunday, party spokesman Damiao Jose told reporters Guebuza had
“surprised” the committee by deciding to step down. Nyusi was the only
candidate in an election to replace him, winning 186 of 189 votes.
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Fitch Ratings has revised the Outlook on Angola's Long-term foreign and local currency Issuer Default Ratings (IDR) to Negative from Stable and affirmed the IDRs at 'BB-'. Africa |
We expect Angola's economy to slow as a result of a sharp fall in
government expenditure, a shortage of dollar liquidity and uncertainty
about the future direction of oil prices constrains activity in the
non-oil economy.
Fitch expects growth to moderate to 3.3% in 2015, from 4.4% in in 2014
and 6.8% in 2013. The 45% drop in oil prices since July 2014, which
once again highlighted Angola's vulnerability to oil price shocks, is
expected to result in a sharp drain on reserves, weaker economic
growth and rising debt.
This underpins today's revision of the Outlook to Negative.
Nonetheless, the Angolan authorities have responded quickly to sharply
lower oil prices by severely cutting expenditure and allowing the
exchange rate to depreciate, in sharp contrast to the delayed policy
response in 2008, the last time oil prices collapsed. Government debt
shot up between 2013 and 2014, rising to 33% of GDP from 23.1%, but
still below the 'BB' median of 39%. Rising debt reflects a fall in
nominal GDP as well as a USD7bn increase in borrowing over the year.
The authorities forecast debt to rise to 45% of GDP in 2015. Fitch
expects a more modest increase to 39%, although a sharp exchange rate
depreciation or increased borrowing to support the balance of payments
could see this figure rise above 40%. The authorities are planning to
issue a eurobond (USD1.5bn) for the first time this year. Government
deposits are high at 16.7% of GDP, and as a result net debt (17.9% of
GDP) is well below the 'BB' median of 34% and supports the ratings at
the current level. We expect the current account to record a deficit
for the first time since 2009, due to the fall in oil prices. The
deterioration will be partly mitigated by a fall in imports,
reflecting insufficient dollar liquidity and a sharp fall in capital
imports as a result of the reduction in government spending on
infrastructure. As a result, Fitch forecasts a current account deficit
of 7% of GDP. Angola has relied on surpluses on the current account to
offset the outflows on the capital account, as oil companies move
savings abroad. A sharp fall in reserves, as a result of a large
balance of payments deficit, is a significant risk to the ratings. The
National Bank of Angola (BNA) forecasts reserves to fall by USD8bn (to
USD19bn). Fitch expects this figure to be lower, as reduced oil
revenue limits the scope for oil companies to remit corporate savings
abroad.
Tanzania plans to spend $14.2 billion to construct a new rail network
in the next five years financed with commercial loans, the transport
minister said
http://af.reuters.com/article/investingNews/idAFKBN0MQ16K20150330
"This will be the single biggest project ever to be implemented by the
Tanzanian government since our country's independence," Transport
Minister Samuel Sitta said in a statement issued on Sunday, referring
to the year 1961.
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