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Satchu's Rich Wrap-Up
Wednesday 07th of September 2016

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Macro Thoughts

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Cross Asset Volatility falls to years low @Business

Home Thoughts

Hannah has started reading the Mill on the Floss.

I will let read it before giving her my thoughts.

“Childhood has no forebodings; but then, it is soothed by no memories
of outlived sorrow.” ― George Eliot, The Mill on the Floss

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Quote of the day is from Chinese philosopher Mencius Economist

“The barbaric gleams right under the surface of all human skin.”
—Jorie Graham Paris Review

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William Randolph Hearst Mansion in Beverly Hills Seeks $195 Million @WSJ

A Beverly Hills estate once owned by William Randolph Hearst and
featured in the movie “The Godfather” will list for $195 million—up
18% from its last formal listing price of $165 million in 2007.

Truth is not only stranger than fiction, it is more interesting.
William Randolph Hearst

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Bozos, goat lovers and sons of whores: a history of political insults Guardian
Law & Politics

President Rodrigo Duterte’s description of Barack Obama as a “son of a
whore” has caused a spat between the Philippines and the US and raised
eyebrows in diplomatic circles. But Duterte’s discourteous language is
not exactly a new low in high-level political discourse.

Insults – mortal, vulgar, stylish or lighthearted – have been levied
by politicians against other politicians, national leaders, public
figures and the countries they represent ever since the Greeks
invented democracy.

In Shakespeare’s Henry IV Part One, Falstaff drunkenly calls the young
Prince of Wales, the future king of England, a “bull’s pizzle”. Henry
hits back, calling his flabby tormentor a “whoreson round man” – not
so very different from Duterte’s crude jibe 600 years later.

François Mitterrand, the former French president, famously said of
Margaret Thatcher that she had “the mouth of Marilyn Monroe but the
eyes of Caligula”.

Anybody who still believes gross political insults are a modern
phenomenon should study the experience of a 19th-century American
president, as related by Geoffrey Stone in the Chicago Tribune. The
president was furiously castigated as a “liar”, a “despot”, a
“usurper”, a “thief”, a “monster”, a “perjurer”, an “ignoramus”, a
“swindler”, a “tyrant”, a “fiend”, a “coward”, a “buffoon”, a
“butcher,”, a “pirate”, a “devil”, a “thief in the night” – and a
betrayer of the nation.

The president’s reputation has since recovered a little. His name?
Abraham Lincoln.

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Zimbabwe Follows Robert Mugabe's Health by Following His Plane NYT
Law & Politics

HARARE, Zimbabwe — It is an indirect clue at best, but it is often all
they can get: Many Zimbabweans have taken to divining the state of
their increasingly frail 92-year-old leader’s health from the
movements of his presidential plane.

On Saturday morning, anyone with a smartphone could see that Air
Zimbabwe Flight 1, as the plane is known, was hugging Africa’s eastern
coast on its way home to Harare, the capital, after four days in
Dubai. The flight designation, UM1, meant that President Robert
Mugabe, the world’s oldest head of state, was on board.

Mr. Mugabe’s trip to the Middle East had been made suddenly, with no
explanation from the secretive Zimbabwean government, fueling rumors
that the president was deathly ill and desperately seeking medical
treatment overseas.

The main political opposition helped feed those rumors, with one of
its leaders posting online, in a tone of great authority, that Mr.
Mugabe had suffered a stroke and that it was unlikely “he can come
back from this.”

But ordinary Zimbabweans and journalists were left with hardly any
verifiable facts, other than what flight tracking apps could tell
them. And it was not the first time.

In March, when Mr. Mugabe was traveling in Asia, he canceled a visit
to India at the last minute, and the government refused to reveal his
whereabouts. The apps showed that his plane was in Singapore, one of
the places where he has received medical treatment in recent years.
(The government said he had cataract surgery there and was otherwise
healthy, but a 2008 American diplomatic cable released by WikiLeaks
said he had been treated in Singapore for prostate cancer.)

The president’s health has been an all-consuming topic this year for
Zimbabweans of all classes, as the effects of age and possible illness
have become harder for Mr. Mugabe to hide. Many Zimbabweans, who have
known only one leader since gaining independence 36 years ago, are
bracing for the future with the same trepidation that many Chinese
felt near the end of Mao Zedong’s long rule, or that the Congolese did
with Mobutu Sese Seko. They speak about “when the old man goes” or
“when nature takes its course.”

Continue reading the main story

The uncertainty of a post-Mugabe political order compounds the
anxieties. The political class is engulfed in a ferocious fight over
succession, and it is far from clear where the security forces, the
traditional guarantors of Mr. Mugabe’s power, will stand.

In the capital, politicians and diplomats report that Mr. Mugabe has
slowed down considerably in the past year. He works only a few hours a
day and says little in meetings. Several times, he has been caught on
video stumbling or falling asleep at public events.

Like most wealthy Zimbabweans, Mr. Mugabe goes abroad for better
medical care than he can get at home. That narrows the circle of
Zimbabweans who are truly informed about his health — and it means
that every time he flies, especially on extended or unannounced trips
outside Africa, the rumors fly as well, often claiming that he has
died or is at death’s door.

“There will never be a thing called a vacuum, so if the officials are
not giving information, rumors will fill the vacuum,” said Tendai
Biti, the president of an opposition party, the People’s Democratic
Party. “The feelings of uncertainty are a byproduct of a very unstable
environment created by the president himself.”

“But this is not unique to Zimbabwe,” added Mr. Biti, who served as
finance minister in a coalition government from 2009 to 2013. “Mobutu
used to die so many times. In Uganda, Idi Amin used to die so many
times. In China, Chairman Mao used to die so many times. In Russia,
how many times did Brezhnev used to die?”

Mr. Mugabe appeared to bounce back, flying to Kenya on Aug. 26 for a
conference, followed by a meeting in Swaziland. After that, however,
UM1’s movements began raising alarms in some circles. The plane left
Swaziland a day before the conference ended, spent three hours in
Harare and then took off again for Dubai, arriving on the morning of
Aug. 31.

Days of silence ensued. The government said only that Mr. Mugabe was
in the Middle East on official business. The Sept. 1 headline on the
independent newspaper NewsDay read, “Mystery Over Mugabe Trip.”

“Each time you people don’t know the purpose of the president’s visit,
there is always a default explanation that he is ill,” George
Charamba, Mr. Mugabe’s spokesman, was quoted in the article as saying.

Eddie Cross, a lawmaker with the main opposition party, Movement for
Democratic Change, wrote on his blog the next day, “We hear that the
Old Man had a stroke.” He added, “It would have been so much more
dignified if he had recognized that his ‘sell by’ date had arrived and
he had retired and handed over to a chosen successor.”

UM1 took off again after midnight on Saturday, and by 6 a.m. the
tracking apps had it over the waters between Mozambique and
Madagascar, headed southwest. Journalists and officials began to
gather at Harare’s airport, where the sun shone in a clear sky on a
fine spring morning.

When the plane landed at 7:58, reporters for the state news media were
ushered onto the tarmac.

“Yes, it’s true,” Mr. Mugabe told them cheerfully. “I was dead, and I
resurrected, as I always do.”

He said he had gone to Dubai to check up on his elder son, Robert Jr.,
an architecture student.

Conjuring a scene from the macabre comedy “Weekend at Bernie’s,” Mr.
Cross argued that Mr. Mugabe’s allies were propping up a dying
president to maintain their hold on power.

At the airport, a reporter asked Mr. Mugabe whether he was a ghost.
“Once I get back to my country,” he replied, “I am real.”


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25-JUL-2016 Countries like Zimbabwe feel like they are right at the Edge that Hunter S. Thompson described
Law & Politics

“The 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''

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Xi's so-called "four prescriptions" - "innovative, invigorated, interconnected and inclusive" - necessary to re-boost the world economy.
Law & Politics

And take the geopolitics of the official picture; Merkel and Erdogan
stood close to Xi because Turkey hosted the G20 last year, and in 2017
it’s Germany; perfect symmetry for Putin and Obama; perfect symmetry
for two other BRICS members, India’s Modi and Brazil’s Temer The
Usurper – at the extremities, but still first row; Japan’s Shinzo Abe
in the second row – as well as Italy’s Renzi and Britain’s Theresa
“we’re open for business” May.

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Morgan Stanley and Credit Suisse scrap UK recession calls @FT
International Trade

Morgan Stanley and Credit Suisse have both scrapped their forecasts
that the UK will slip into recession in the wake of the Brexit vote,
as a slew of surprisingly decent economic data brightens the outlook
for post-referendum Britain.

“The negative impact of the UK’s vote to leave the EU on growth in the
UK and euro area appears to have been materially less than we expected
in late June,” Credit Suisse says, explaining:

Resumed political stability, a weaker currency and the Bank of
England’s policy response look to have stabilized activity after
confidence fell sharply in the wake of the vote. That may be
sufficient for GDP to avoid a modest contraction.

The bank has revised its forecasts for UK GDP growth to 1.9 per cent
for 2016 and 0.5 per cent for 2017, up from 1 per cent and -1 per cent
respectively, writes Joel Lewin.

Morgan Stanley says:

Previously, we had expected an immediate reaction to the vote to
Leave. But, in practice the reaction has been muted, or rapidly
reversed. We think this is partly since Brexit is obscure and years
away, which implies that events which bring Brexit nearer and clarify
what it means, such as Article 50 notification, could trigger a
stronger reaction. And partly we think this reflects consumer inertia.

The bank has lifted its 2016 growth forecast from 1.2 per cent to 1.9
per cent, and has bumped up its third quarter forecast from a 0.4 per
cent contraction to a 0.3 per cent expansion.

But it’s not all plain sailing.

Morgan Stanley says it still expects “EU exit to drive a near term
slowdown, and act as a persistent medium-term drag”, because:

the EU market is crucial for the UK, accounting for half of trade and
FDI it expects high and protracted uncertainty over future trade
arrangements it thinks the risks are tilted towards a hard exit

The US bank warns:

we expect current resilience will be undermined over time by firms
holding back on investment and hiring, and an erosion of purchasing
power, as the weaker pound drives a pick-up in inflation.


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04-JUL-2016 Now that the pound is outside the EU, it might well eventually morph into the Swiss franc." Now that's a thought. @TheStarKenya
International Trade

The pound closed the week at 1.3255 versus the dollar (multiply by 101
to get the shilling pound cross rate) not far off a 31-year low. For
now the pound drifts lower. Carney has already placed a rate cut and
more QE on the table.  The pound is the “shock-absorber”. However, at
some point the whole world is going to pile in and for medium to
long-term accounts, they are probably looking to scale in already.

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.1253
Dollar Index 94.76
Japan Yen 101.42
Swiss Franc 0.9689
Pound 1.3416
Aussie 0.7678
India Rupee 66.735
South Korea Won 1091.98
Brazil Real 3.1970
Egypt Pound 8.8813
South Africa Rand 13.9161

USD/JPY tanking further..David Ingles ‏


Dollar Index 1 Year Chart INO 94.781 [Big Sell-Off yesterday/93.00
remains key area of support]


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Cash in a Box Catches On in Switzerland as Negative Rates Bite @Business
World Currencies

It’s a sign the world is getting used to negative interest rates when
what once seemed bizarre starts looking like the norm.

Consider Switzerland, where more and more companies are taking out
insurance policies to protect cash hoards from theft or damage.

“Because of the low interest rate level, we note increasing demand for
insurance solutions for the storage of cash,” said Philipp Surholt at
Zurich Insurance Group AG, among underwriters reporting a surge in
such requests. “We’re seeing demand for coverage for sums ranging from
100 million to 500 million francs.”

The Swiss National Bank imposed sub-zero rates in early 2015,
effectively charging banks for excess deposits. Many lenders including
UBS Group AG and Credit Suisse Group AG have passed on at least some
of the charge -- they don’t disclose how much -- to cash-rich clients
like asset managers and big companies.

While the central bank is seeking to rein in the franc, negative
interest rates have side effects that over time could outweigh the
benefits. That risk may be on the minds of SNB officials when they
meet next week for their scheduled quarterly monetary policy review.
Economists expect they will keep the rate steady at minus 0.75
percent, the lowest among major central banks.

“The SNB’s dilemma is that it can’t make everyone happy,” said
Alexander Koch, an economist at Raiffeisen Schweiz. “In its attempt to
get the best deal for the Swiss economy, it also has created losers
and collateral damage.”

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Saudi Arabia Said to Weigh Canceling $20 Billion of Projects @business
Emerging Markets

Saudi Arabia is intensifying efforts to shrink the highest budget
deficit among the world’s biggest 20 economies, aiming to cancel more
than $20 billion of projects and slash ministry budgets by a quarter,
people familiar with the matter said.

The government is reviewing thousands of projects valued at about 260
billion riyals ($69 billion) and may cancel a third of them, three
people said, asking not to be identified as the discussions are
private. The measures would impact the budget for several years,
according to two of the people.

A separate plan includes merging some government ministries and
eliminating others, two people said, also speaking on condition of

The world’s biggest oil exporter is taking unprecedented steps to rein
in a budget shortfall that ballooned to 16 percent of gross domestic
product last year, curtailing fuel and utility subsidies as well as
cutting billions of dollars in spending. The International Monetary
Fund expects the shortfall to drop to below 10 percent of GDP in 2017.

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AUG-2015 The end is nigh
Emerging Markets

Well “The end is nigh’’ for crude oil and oil producers from Caracas
to Luanda, from Riyadh to Abuja who were squealing like pigs are about
to be served up as rashers.

Oil based economies are going to contract, currencies which have
already collapsed are going to be routed and Greek- style austerity
will be the order of the day. The melt-down is coming.

Ryszard Kapuciski said: “If the crowd disperses, goes home, does not
reassemble, we say the revolution is over.”

The revolution is only just beginning.

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Top country ETFs in 2016...Charlie Bilello, CMT ‏@MktOutperform
Emerging Markets

Peru: +71.5%
Brazil: +70.4%
Colombia: +32.4%
Russia: +32.2%

Frontier Markets

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.@_AfricanUnion says to mediate in Gabon election crisis Reuters

"It is an urgent matter and I expect the high-level delegation to be
dispatched very soon," said Jacob Enoh Eben, adding that Chad's
President Idriss Deby, who currently holds the AU chair, was likely to
lead the talks.

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EU observers report 'anomaly' in Gabon vote AFP news agency


The characterisation "anomaly" by the @EU_Commission in Libreville a
euphism for "ballot stuffing" but what next? @kasujja @bbcjuliankeane


''It would be wise to do a recount" @manuelvalls told French radio
station @RTLFrance VOA


President Salva Kiir in closed door meeting with #UNSC delegates
visiting #SouthSudan @AmbassadorPower @PeterWilson Radio Miraya ‏


“The biggest problem is jobs, as those who don’t have jobs become
criminals,” she says. @FT


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South Africa's economy expands 3.3 percent in Q2: stats agency

South Africa's economy expanded by 3.3 percent in the second quarter
of 2016 after shrinking by 1.2 percent in the three months to March,
Statistics South Africa said on Tuesday.

Gross domestic product also expanded by 0.6 percent on an unadjusted
year-on-year basis in the second quarter, compared with 0.1 percent
contraction in the previous three months, the agency said.

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South Africa All Share Bloomberg +5.89% 2016

Rare good day for the rand Bloomberg Africa


Dollar versus Rand 6 Month Chart INO 13.9161 [Big move yesterday]


Egypt EGX30 Bloomberg +17.08% 2016


Nigeria All Share Bloomberg -3.97% 2016


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Yields on the Ghana $1 billion of notes due Aug. 2023 have dropped 110 basis points in the period, reaching a one-year low of 9.22 percent on Aug. 25.

The cedi has stabilized and inflation steadied since the country
agreed to the IMF’s reforms in April last year in return for a $918
million bailout, implementing measures to strengthen its monetary
policy framework and instill fiscal discipline. The currency has
declined 1.9 percent against the dollar this year, compared with a 14
percent plunge in 2015 and 26 percent the year before while inflation
slowed to 16.7 percent in June from a six-year peak of 19.2 percent in

read more

Sustained Brent crude prices below $50 a barrel will damp the prospects for new oil projects in West Africa.

Angola, the continent’s biggest producer, has the lowest break-even
price of $49.60 a barrel, according to Rystad Energy Cube.

Nigeria, which lost its top ranking after attacks by militants on
pipelines and other oil infrastructure, needs $81.80 a barrel to make
a profit.

read more

Announcing the results, KTDA managing director Lerionka Tiampati said this has been the best year in the history of the company.
Kenyan Economy

Tea farmers are set for improved earnings after sales for the year
2015/2016 jumped 32 per cent on higher production and a stable

The farmers' marketing agency, Kenya Tea Development Agency (KTDA),
has announced Sh84 billion in revenue this year, up from Sh63.5
billion last year.

The growers will earn Sh44 billion on average as the final payment,
normally referred to as a bonus. A total of Sh17 billion has already
been paid to farmers as an initial payment.

Announcing the results, KTDA managing director Lerionka Tiampati said
this has been the best year in the history of the company.

“It has been a good year for us as KTDA and we are happy about the
results that we have posted this year,” said Mr Tiampati.

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Kenya Shilling versus The Dollar Live ForexPros 101.293
Kenyan Economy

Nairobi All Share Bloomberg -10.49% 2016 [35 month Lows]


130.42 +0.77 +0.59%

Nairobi ^NSE20 Bloomberg -21.57% 2016


3,169.31 -1.97 -0.06%

Every Listed Share can be interrogated here


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N.S.E Today

A Big Climb-down in U.S. services ISM index yesterday which posted its
biggest monthly fall since Nov 2008 [ just after Lehman] was the
Trigger for a broad based Dollar Sell-Off yesterday.
The Nairobi All Share followed on yesterdays +0.59% bounce higher with
a further +0.25% gain to close at 130.75. We are 35 month Lows.
The Nairobi NSE 20 Index shaved -0.68 points off to close at 3168.62.
Equity Turnover was vibrant and clocked 1.991b with Safaricom taking a
big bite of that volume traded.
The Banking Sector is feeling for a bottom.
Buyers stepped up for Safaricom and KCB today.

N.S.E Equities - Agricultural

Tea farmers are set for improved earnings after sales for the year
2015/2016 jumped 32 per cent on higher production and a stable
currency. The farmers' marketing agency, Kenya Tea Development Agency
(KTDA), has announced Sh84 billion in revenue this year, up from
Sh63.5 billion last year.

Announcing the results, KTDA managing director Lerionka Tiampati said
this has been the best year in the history of the company.

Williamson Tea responded to the KTDA news and surged +5.71% to close at 185.00.

N.S.E Equities - Commercial & Services

Safaricom firmed +0.8% to close at 19.00 on heavy volume of 57.665m
shares worth 1.095b. Safaricom is currently ex-dividend and is
retracing Monday's dividend related pull-back. International Investors
will remain on the Buy-Side [The Dividend Pay-Out is high and
handsome] and I expect the Price to rally to 22.50 by Year End.

Nation Media Group firmed +4.27% to close at 122.00 and traded 3,500
shares. Nation Media is -36.12% Year to date and it has been a
Schumpeter moment for the Media Industry as it is for the Banking

N.S.E Equities - Finance & Investment

KCB Group rebounded +1.94% to close at 26.75 and was trading at
session highs of 27.00 +2.86% at the Finish Line. KCB traded 1.278m
shares with Buyers outpacing Sellers by a Factor of 2 versus 1. Buyers
are stepping up.
Equity Group closed unchanged at 26.00 and traded good ticket size of
13.298m shares worth 347.423m. Equity is -27.77% since the Interest
Rate Cap Bill was signed by the President.
Diamond Trust Bank was up ticked +5.67% to close at 149.00 and traded
just 800 shares.

BRITAM EA retreated -4.5% to close at 10.00 and traded 6.696m shares
worth 67.040m. BRITAM EA is -23.07% in 2016 and recent price weakness
is correlated to its large holdings of Bank Stocks [Equity and HF

N.S.E Equities - Industrial & Allied

Trans-Century maintained its record break rebound to close +9.33% at
8.20 which marks an eye popping rally of +82.22% since 26th August.

Trans-century share price data [Please include 5 week chart]


EABL which closed at a 2 and 1/2 year Low yesterday shaved off a
further -0.41% to close at 240.00 and traded 1.386m shares worth
332.903m. EABL was, however, trading at 250.00 +3.73% at the Finish
Line signalling EABL is set to rebound from its deeply oversold

Home Afrika rallied +9.09% to close at 1.20. Home Afrika remains
-53.84% in 2016.

by Aly Khan Satchu (www.rich.co.ke)
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September 2016

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