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Wednesday 06th of January 2016

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Macro Thoughts

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“Only those who will risk going too far can possibly find out how far one can go.” ― T.S. Eliot

“This is the way the world ends
Not with a bang but a whimper.”
― T.S. Eliot

“Do I dare
Disturb the universe?
In a minute there is time
For decisions and revisions which a minute will reverse.”
― T.S. Eliot

“April is the cruelest month, breeding
lilacs out of the dead land, mixing
memory and desire, stirring
dull roots with spring rain.”
― T.S. Eliot, The Waste Land

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29-11-2010 FAR away in distant lands lies the Hermit Kingdom They all have had tiny little hands like the Elves in the Elves and the Shoemaker.
Law & Politics

And this country has nuclear weapons and on its border with its
neighbour South Korea sit 25,000 American soldiers.

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Obama’s Middle East Balancing Act Tilts Toward Iran @BV @joshrogin @EliLake
Law & Politics

As the cold war between Iran and Saudi Arabia heats up, the Barack
Obama administration is trying to straddle the fence and not take
sides, but its actions tell a different story -- they all seem to
favor Tehran.

Following the Saudi government’s announcement Saturday that it had
executed 47 prisoners, including a popular Shiite cleric, the U.S.
State Department did two things. First, it issued a statement
expressing concern that Riyadh’s actions were “exacerbating sectarian
tensions.” Then Secretary of State John Kerry called Iranian Foreign
Minister Javad Zarif, urging him to try to de-escalate the crisis.

Spokesmen for the White House and State Department on Monday insisted
that the U.S. was not taking a side, and that Kerry was set to call
Saudi Foreign Minister Adel al-Jubeir. But U.S. and Arab diplomats
tell us that America's Gulf allies, who feel most threatened by Iran,
see things very differently.

Aaron David Miller, a former Middle East negotiator who is a vice
president at the Woodrow Wilson International Center for Scholars,
said that the Obama administration sees the Iran deal as the one
stabilizing factor in a region that is increasingly spinning out of
control, and is therefore giving the U.S.-Iranian relationship top

“The Iranians hold the Obama legacy in their hands,” he said. “We are
constrained and we are acquiescing to a certain degree to ensure we
maintain a functional relationship with the Iranians.”

That's certainly the signal the Saudis are sending. At this point, the
message couldn't be any clearer. If Obama won't punish Iran, Saudi
Arabia will.


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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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@Aiww What's in a Name?
Law & Politics

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.

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After the execution of Nimr, Iran's Revolutionary Guard elite military force said a "harsh revenge" would strike Saudi's ruling Al-Saud family in the near future.
Law & Politics

"The Revolutionary Guard is part of the Iranian government and their
threats should be taken seriously because they control militia in
Lebanon, Syria, Iraq and Yemen and I would not be surprised if they
use it to act against the Saudis," said Abdulaziz al-Sager, head of
Jeddah-based Gulf Research Centre.

US special forces 'killed' and helicopter 'shot down' in Afghanistan


At least one US special forces soldier was reportedly killed and
others were wounded in Afghanistan. The medical helicopter that came
under to cue them came under fire.

NBC reported on Tuesday that the helicopter flying to pick up wounded
members of the US special forces, had gone down after being hit.
However, it subsequently emerged that although it was damaged, it was
able to take off.

CNN said the soldiers had been involved in a joint counter-terrorism
operation in Helmand province with Afghan forces, when they came under
attack. An unknown number of people were also injured.

Officials said the US medevac chopper called in to recover casualties
came under mortar and small-arms fire and was hit.

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CHIEF ECONOMIST INTERVIEW The Global Economy in 2016 @IMFNews
Law & Politics

IMF Survey: What are the other key issues we need to pay attention to in 2016?

Obstfeld: China will remain high on the list. Its economy is slowing
as it transitions from investment and manufacturing to consumption and
services. But the global spillovers from China’s reduced rate of
growth, through its diminished imports and lower demand for
commodities, have been much larger than we would have anticipated.
Serious challenges to restructuring remain in terms of state-owned
enterprise balance sheet weaknesses, the financial markets, and the
general flexibility and rationality of resource allocation. Growth
below the authorities’ official targets could again spook global
financial markets—but then again, time-honored methods of enforcing
growth targets could simply extend economic imbalances, spelling
possible trouble down the road.

IMF Survey: Will 2016 be the year of Emerging Markets? Are capital
outflows from emerging market countries a growing worry?

Obstfeld: The year will offer an abundance of challenges, but yes,
emerging markets will be at center stage. Capital inflows are down,
some reserves have been spent, sovereign spreads have widened,
currencies have weakened, and growth is slowing sharply in some
countries. Currency depreciation has proved so far to be an extremely
useful buffer for a range of economic shocks. Sharp further falls in
commodity prices, including energy, however, would lead to even more
problems for exporters, including sharper currency depreciations that
potentially trigger still-hidden balance sheet vulnerabilities or
spark inflation.

The mood in financial markets is glum as 2015 ends, and susceptible to
increased volatility, notwithstanding continuing accommodation by the
European Central Bank and the Bank of Japan. Of course, the U.S.
Federal Reserve launched in December what it intends to be a cycle of
gradual interest-rate hikes. It will be critical how the Fed manages
subsequent interest-rate increases during 2016 and how it communicates
with the market—a task it seems to have commenced on the right foot at
the end of 2015. But there is no doubt that global financial
conditions are tightening, and emerging and developing markets are
especially sensitive to the effects, given other current woes.

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.0728
Dollar Index 99.49
Japan Yen 118.53
Swiss Franc 1.0082
Pound 1.4628
Aussie 0.7082
India Rupee 66.673
South Korea Won 1198.38
Brazil Real 4.0112
Egypt Pound 7.8302
South Africa Rand 15.7357

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IMF chief says not in Nigeria to negotiate loan, calls for wider revenue base

International Monetary Fund chief Christine Lagarde said on Tuesday
she was not in Nigeria to negotiate a loan and urged Africa's biggest
economy to diversify its revenue to try and get out of an economic
crisis fuelled by the fall in oil prices.

Lagarde was speaking at the presidential villa in the capital Abuja
moments after holding talks with President Muhammadu Buhari. She
backed Buhari's fight against corruption terming it "very important"
and said the president's reform push could have a positive impact in
the region.

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IMF's Lagarde Says Nigeria Needs Flexibility in Monetary Policy @business

Nigeria needs more flexibility in setting monetary policy so it can
use its foreign currency reserves to support the poor population if
low oil prices persist, said International Monetary Fund Managing
Director Christine Lagarde.

“With a very clear ambition to support the poor people of Nigeria,
there could be added flexibility in the monetary policy, particularly
if, as we think, the price of oil is likely to be lower for longer,”
Lagarde told reporters in the Nigerian capital of Abuja after a
closed-door meeting with President Muhammadu Buhari and members of his

Lagarde’s comments come a week after Buhari said he doesn’t personally
support weakening the naira and would need to be convinced that
devaluing the local currency of Africa’s largest oil producer is the
best course to take for the economy.

The naira has been all but fixed at 197-199 per dollar since early
March. The central bank has curbed foreign-exchange trading and
introduced import controls after the naira fell to a record low as
crude prices plunged. Oil accounts for 95 percent of Nigeria’s export
earnings and 70 percent of government revenues.

“Clearly, the authorities should not deplete the reserves of the
country simply because of rules that could be exceedingly rigid,” she
said. “I’m not suggesting that rigidity be entirely removed, but some
degree of flexibility will be helpful.”

Lagarde, who’s on the second day of a four-day trip to Nigeria and
Cameroon, said she would be meeting with Central Bank of Nigeria
Governor Godwin Emefiele.


Lagarde providing cover for the Authorities to make a move on the Naira?

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IMF MD Christine Lagarde (C) is escorted by Nigeria's Finance Minister Kemi Adeosun (L) and Nigeria's Central Bank Governor Godwin Emefiele (R) upon arriving at the Nnamdi Azikiwe International Airport.

Exotix Sovereign Research: Nigeria: Naira devaluation imminent via Email

Shortly before the end of 2015, the Buhari administration presented
its proposal for the 2016 budget. While the headline spending targets
and priorities were consistent with existing guidance, the speech also
contained new references to a potential policy shift on the FX front.
We interpret these comments as a sign that a devaluation of the naira
is now imminent; we expect the revised target for the exchange rate to
be set in the NGN240-250/US$ range.

Nigeria All Share Bloomberg -1.89% 2016


Ghana Stock Exchange Composite Index Bloomberg +0.08% 2016


Uganda's finance ministry has lowered the East African country's
2015/2016 (July-June) economic growth forecast to 5 percent from a
previous projection of 5.8 percent


"Growth is expected to remain at 5.0 percent in fiscal year 2015/16,
constrained by the higher commercial bank rates," the ministry said in
the paper.

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French tycoon Guy Wildenstein faces tax fraud charges linked to Kenya’s Ol Jogi ranch resort
Kenyan Economy

A lavish holiday ranch located in Kenya’s Laikipia plains is at the
heart of a multi-million euro tax evasion battle whose hearing began
on Monday in a Paris court.

French authorities accuse owners of Ol Jogi Ranch – the setting for
award-winning film Out of Africa – of hatching a tax fraud scheme that
has cost the European nation millions of euros in uncollected taxes.

French prosecutors say the wealthy art-collecting Wildenstein family,
which also owns the holiday ranch, has been running the fraudulent
scheme for years and are seeking to recover millions of euros through
the suit.

Guy Wildenstein, who inherited his father’s vast estate and a close
associate of former French president Nicholas Sarkozy, was on Monday
arraigned on multiple charges of tax fraud and money laundering that
carry a 10-year jail term if found guilty.

French authorities are demanding €550 million (Sh60.9 billion) in
unpaid taxes from Mr Wildenstein, who is accused of hiding the Ol Jogi
Ranch, rare art collections, prime properties, and pedigree racehorses
from the taxman and laundering huge sums of cash.

“It also included a vast real estate portfolio, with the jewel in the
crown a luxury Kenyan ranch,” reported French news agency AFP. “Such
assets were in the main registered in tax havens in a series of
trusts,” the AFP said.

Daniel Wildenstein (deceased), a world renowned art collector,
acquired the wildlife sanctuary which sits on the Laikipia plateau in

Court documents filed in Paris say Guy had in 2012 declared the
family’s vast estate to be worth €40.9 million (Sh4.5 billion) but
French authorities estimate that the estate could be worth as much as
€4 billion (Sh443 billion).

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The US ready to invest Sh2.4 billion in Kenyan oil industry Nation
Kenyan Economy

The American Government Tuesday expressed interest in funding
construction of an oil pipeline linking northern Kenya oil fields to
Lamu, upping its stake in the Lappset project.

Initially designed and planned to be funded by Chinese, the US says it
is ready to invest in the Sh2.4 billion project to open up northern
Kenya and link up landlocked South Sudan and Ethiopia to the Lamu

US Ambassador to Kenya, Mr Robert Godec, said his government would
help secure funding to a tune of Sh1.4 billion towards the oil
pipeline and power generation projects thereby fast-tracking the
government’s pledge to export oil as well as provide locals with cheap

“Commercially viable oil reserves were discovered in 2012 but to date
nothing has happened which makes Kenyans wonder what happened. We are
confident that the PowerAfrika initiative will help us realise our
pledge to Kenyans,” said newly appointed Energy Cabinet Secretary
Alfred Keter adding that extra funds will also be sourced through the
Export-Import Bank.


I have a lot of doubts about LAPPSET because of the Crude Oil Price
Curve. If the Americans can pull this out of the Hat - That will be a
big Win

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CBK injected Sh76bn to soften Imperial Bank closure impact @BD_Africa
Kenyan Economy

The Central Bank of Kenya has injected Sh76.6 billion net liquidity
into the market over the last 10 weeks after the collapse of Imperial
Bank, underlining the impact the closure had on the country’s
financial system.

In the 10 weeks before the closure, the regulator had mopped up Sh28.3
billion from the market as it sought to support a weak shilling.

“The CBK stands ready to use all instruments at its disposal to
provide adequate liquidity support to the banking system to ensure its
stability and robustness at this time,” said the CBK governor Patrick
Njoroge, after the collapse of the lender.

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21 DEC 15 The Teflon Shilling and Other Matters @TheStarKenya
Kenyan Economy

Oil accounts for about a quarter of Kenya’s annual import bill.
According to latest data, Kenya imported Sh177.2 billion worth of fuel
and lubricants between January and September, a 34.66 per cent drop
from the Sh271.2 billion it took in during the same period last year.
That’s a Sh94 billion swing and nearly a $1 billion. That’s $1 billion
of dollar demand that has evaporated. Since September, the price of
fuel has tanked more than 20 per cent further accelerating this trend.
Earlier in the year, I spoke of how this $1 billion boost would
underpin our economy by providing a powerful grassroots stimulus.
However, what has happened is that the government has creamed off a
great deal of this by raising taxes on the price of fuel and thereby
improving its fiscal position and this has blunted the price move at
the pump.

Other factors that are supporting the shilling are the bona fides of
the Central Banker. The regime change at the apex bank has been
extremely well received by the markets.

The political hullabaloo around the Eurobond is now being discounted
because no one in fact believes that there was a Sh140 billion heist.

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