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Satchu's Rich Wrap-Up
Tuesday 12th of January 2016

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Macro Thoughts

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David Bowie- 03 Moonage Daydream @YouTube

"Moonage Daydream"

I'm an alligator, I'm a mama-papa coming for you
I'm the space invader, I'll be a rock 'n' rollin' bitch for you
Keep your mouth shut,
you're squawking like a pink monkey bird
And I'm busting up my brains for the words

Keep your 'lectric eye on me babe
Put your ray gun to my head
Press your space face close to mine, love

Freak out in a moonage daydream oh yeah!

Don't fake it baby, lay the real thing on me
The church of man, love
Is such a holy place to be
Make me baby, make me know you really care

Make me jump into the air

Keep your 'lectric eye on me babe
Put your ray gun to my head
Press your space face close to mine, love
Freak out in a moonage daydream oh yeah!

Freak out, far out, in out

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David Bowie - Fame

The truth is of course is that there is no journey. We are arriving
and departing all at the same time. David Bowie

I'm not a prophet or a stone aged man, just a mortal with potential of
a superman. I'm living on. David Bowie

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North Korean leader Kim Jong Un salutes during a visit to the Ministry of the People's Armed Forces on the occasion of the new year
Law & Politics

North Korean leader Kim Jong Un salutes during a visit to the Ministry
of the People's Armed Forces on the occasion of the new year, in this
undated photo released by North Korea's Korean Central News Agency
(KCNA) on January 10, 2016. REUTERS/KCNA

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The Arab Spring Began in Hope, But Ended in Desolation

Arab Spring was always a misleading phrase, suggesting that what we
were seeing was a peaceful transition from authoritarianism to
democracy similar to that from communism in Eastern Europe. The
misnomer implied an over-simplified view of the political ingredients
that produced the protests and uprisings of 2011 and over-optimistic
expectations about their outcome.

Five years later it is clear that the result of the uprisings has been
calamitous, leading to wars or increased repression in all but one of
the six countries where the Arab Spring principally took place. Syria,
Libya and Yemen are being torn apart by civil wars that show no sign
of ending. In Egypt and Bahrain autocracy is far greater and civil
liberties far less than they were prior to 2011. Only in Tunisia,
which started off the surge towards radical change, do people have
greater rights than they did before.

What went so disastrously wrong? Some failed because the other side
was too strong, as in Bahrain where demands for democratic rights by
the Shia majority were crushed by the Sunni monarchy. Saudi Arabia
sent in troops and Western protests at the repression were feeble.
This was in sharp contrast to vocal Western denunciations of Bashar
al-Assad’s brutal suppression of the uprising by the Sunni Arab
majority in Syria. The Syrian war had social, political and sectarian
roots but it was the sectarian element that predominated.

 It was one of the paradoxes of the Arab Spring that rebels supposedly
seeking to end dictatorship in Syria and Libya were supported by
absolute monarchies from the Gulf.

The West played a role in supporting uprisings against leaders they
wanted to see displaced such as Muammar Gaddafi and Assad. But they
gave extraordinarily little thought to what would replace these


Its a debacle, its fragile and the Break-Up will take the Refugee Crisis 20x.

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Mohammad Javad Zarif: Saudi Arabia’s Reckless Extremism New York Times
Law & Politics

THE world will soon celebrate the implementation of the landmark
agreement that resolves the unnecessary, albeit dangerous, crisis over
Iran’s nuclear program. All parties hoped, and continue to believe,
that the resolution of the nuclear issue would enable us to focus on
the serious challenge of extremism that is ravaging our region — and
the world.

Unfortunately, some countries stand in the way of constructive
engagement. Following the signing of the interim nuclear deal in
November 2013, Saudi Arabia began devoting its resources to defeating
the deal, driven by fear that its contrived Iranophobia was crumbling.
Today, some in Riyadh not only continue to impede normalization but
are determined to drag the entire region into confrontation.

Saudi Arabia seems to fear that the removal of the smoke screen of the
nuclear issue will expose the real global threat: its active
sponsorship of violent extremism. The barbarism is clear. At home,
state executioners sever heads with swords, as in the recent execution
of 47 prisoners in one day, including Sheikh Nimr al-Nimr, a respected
religious scholar who devoted his life to promoting nonviolence and
civil rights. Abroad, masked men sever heads with knives.

Let us not forget that the perpetrators of many acts of terror, from
the horrors of Sept. 11 to the shooting in San Bernardino and other
episodes of extremist carnage in between, as well as nearly all
members of extremist groups like Al Qaeda and the Nusra Front, have
been either Saudi nationals or brainwashed by petrodollar-financed
demagogues who have promoted anti-Islamic messages of hatred and
sectarianism for decades.

The outrageous beheading recently of Sheikh Nimr was immediately
preceded by a sermon of hatred toward Shiites by a Grand Mosque
preacher in Mecca, who last year said that “our disagreement with
Shiites will not be removed, nor our suicide to fight them” as long as
Shiites remained on the earth.

The Saudi leadership must now make a choice: They can continue
supporting extremists and promoting sectarian hatred; or they can opt
to play a constructive role in promoting regional stability. We hope
that reason will prevail.


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Saudi Arabia’s dangerous games
Law & Politics

The Gulf monarchies are terrified by the strengthening “Shia arc” in the region.

Although it is difficult to see how far Saudi Arabia would go in its
deliberately manufactured confrontation with Iran, it does no longer
seem to be possible for it to reverse the geo-political trajectory of
the Middle East to its sole advantage.

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28-OCT-2013 @BarackObama and @HassanRouhani The Two Husseins
Law & Politics

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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German spy agency warns of Saudi intervention destabilizing Arab world
Law & Politics

The BND document entitled "Saudi Arabia - Sunni regional power torn
between foreign policy paradigm change and domestic policy
consolidation" singled out Saudi Arabia's defense minister, Deputy
Crown Prince Mohammed bin Salman, as trying to strengthen his place in
the royal succession while putting Saudi Arabia's relationship with
erstwhile regional allies in jeopardy.

"The careful diplomatic stance of older members of the Saudi royal
family has been replaced by an impulsive policy of intervention," the
Bundesnachrichtendienst (BND) said.

Since King Salman's succession to power in January 2015, there's been
a more forceful response to the regional standoff between Iran and
Saudi Arabia largely set in motion by Prince Mohammed. The BND said
that this could mainly be observed in Saudi Arabia's military
intervention in Yemen as well as its increased support for Syrian
rebels in a bid to remove Syrian President Bashar al-Assad.

The brief report chiefly spoke about Saudi Arabia's involvement in
Yemen and Syria, but also highlighted other countries such as Lebanon,
Bahrain and Iraq as realms of growing Saudi interest, saying that
Saudi Arabia was "prepared to take unprecedented military, financial
and political risks to avoid falling behind in regional politics."

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.0880
Dollar Index 98.71
Japan Yen 117.45
Swiss Franc 0.9993
Pound 1.4532
Aussie 0.6975
India Rupee 66.895
South Korea Won 1210.76
Brazil Real 4.0544
Egypt Pound 7.8301
South Africa Rand 16.8843

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03-NOV-2014 The Commodity Super-Cycle is Dead in the Water

Policy makers need to react with speed but history informs us that
policy makers are typically very slow to react to trend changes. The
commodity super-cycle is now dead in its tracks. This is a major
turning point and represents a major shift away from commodity
producing countries and towards global consumers and consumer

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Oil market braces for longer downturn as 2020 crude falls to $50

U.S. crude futures are now trading at below $50 a barrel through the
end of 2019, a level at which most shale drillers would struggle to
turn a profit. No futures contracts - which are currently dated to
2024 - are priced above $54 a barrel.

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13-OCT-2014 :Who Kneecapped Oil? Markets overshoot, crude oil does it big time

The conditions [and I will explain them momentarily] are optimal for a
complete wash-out [a ‘blow-off bottom’ was more earthy description in
my time] down as far as $50 a barrel.
Markets over- shoot, crude oil
does it big time and any and every model needs to consider such a
price outcome.

Emerging Markets

Frontier Markets

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Tokyo takes on Beijing in Africa, claiming quality over speed @FT

The eight-lane motorway stretching north for 45km from the heart of
Nairobi to the industrial town of Thika was hailed as a marvel of
Chinese engineering when it opened in 2012 after taking less than four
years to build.

“People liked what they saw because of the speed at which it was
built,” says Moses Ikaria, the managing director of the Kenya
Investment Authority. “The perception here was that roads took a long
time to build but the Chinese changed that.”

In the middle of last year Nairobi’s southern bypass, also built by
the Chinese, opened to similar fanfare. While less than 30km and only
two lanes in each direction, the road is a definite improvement on the
wider Thika highway — not least because the speed bumps are

Sandwiched between the two was the 2013 opening of the “Kileleshwa
bypass”, a Japanese road cutting through the Kenyan capital. It is “of
an infinitely higher standard than of any other road to be found in
Nairobi,” according to Aly-Khan Satchu, an investment analyst in the

Although neither side openly admits they are engaged in an “anything
you can do, I can do better” competition, the evidence can suggest
otherwise. In a speech at the official reception for the Japanese
emperor’s birthday, Tatsushi Terada, ambassador to Kenya, said: “A
Japanese project might cost more but the life cycle cost in the end is
much better because it requires less maintenance.” He did not need to
name names for everyone present to know where his comment was

“Many people overestimate what the Chinese are doing in Africa,” said
Deborah Brautigam, director of the China Africa Research Initiative at
Johns Hopkins in Baltimore. “There are a lot fewer of those big
investments than people think. For example many oil investments are
just exploration while some announced deals never get to the size that
companies expected they might.”

Zanzibar opposition warns of violence if disputed vote re-run


"A re-vote is not a solution to the ongoing crisis and is not
acceptable," Zanzibar's Second Vice-President Seif Sharrif Hamad,
CUF's presidential candidate, told a news conference.


Magafuli needs to do a Houdini in the matter of Zanzibar

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Uganda president urges voters to re-elect the 'old man' Yahoo News

Ugandan President Yoweri Museveni has said he needs more time to
develop the country as he looks to enter a fourth decade in power,
urging voters to re-elect the "old man."

As a younger man he said leaders who "overstayed" in power were the
root of Africa's problems, but 30 years later he is still in charge
and hoping to win a fifth term in elections next month.

"Those who say, 'let him go, let him go', they need to know that this
is not the right time," Museveni said at an election rally in the
western Ntungamo district on Saturday, according to reports in the
Daily Monitor newspaper on Sunday.

"This old man who has saved the country, how do you want him to go?
How can I go out of a banana plantation I have planted that has
started bearing fruits?"

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Uganda: Intimidation of Media, Civic Groups HRW

Ugandan government and ruling party officials are intimidating and
threatening journalists and activists in an effort to limit criticism
of the government, Human Rights Watch said in a report released today.
Uganda will hold presidential and parliamentary elections on February
18, 2016.

The 48-page report, “‘Keep the People Uninformed’: Pre-Election
Threats to Free Expression and Association in Uganda,” documents how
some journalists and activists are facing increased threats as the
elections loom.

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“‘Keep the People Uninformed’: Pre-Election Threats to Free Expression and Association in Uganda” Human Rights Watch

I think government intends to keep the people uninformed. You see,
uninformed people are easy to manipulate. Cases of intimidation are
prevalent. . . . As journalists we are forced to cover up. In the
reporting you don’t hit the nail on top. You have to communicate
carefully. In election season we see this very clearly.
– Radio Journalist, Jinja, September 23, 2015

“There is lot of love between me and the president,” said Ramaphosa
during the SABC breakfast session, which included all top ANC
officials on Monday.


He was responding to the Mail & Guardian report that his absence at
the gala dinner on Friday caught ANC leaders, including Zuma, by
surprise and that it might be interpreted by some within and outside
the ANC alliance as an indication of growing tensions between the ANC
president and his deputy.

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South Africa is moving closer to a recession and possible credit-rating downgrade to junk after the rand collapsed and as investors lose faith

South Africa is moving closer to a recession and possible
credit-rating downgrade to junk after the rand collapsed and as
investors lose faith in the ability of President Jacob Zuma’s
government to stem the slide

The currency of Africa’s second-largest economy crashed to a new
record low of 17.9169 against the dollar early on Monday as market
turmoil in China and a drop in U.S. stocks deterred risk-taking. The
9.9 percent slump in the rand was the most since 2008 and the biggest
of emerging-market and major currencies tracked by Bloomberg.

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Rand Has Flash Crash as China's Woes Trigger Drop of Up to 9%

The rand plunged as much as 9 percent, the most since October 2008, to
17.9169 per dollar, before paring losses. It was trading down 2.1
percent at 16.6468 by 10:04 a.m. in Johannesburg, the biggest decline
among 31 emerging-market and major currencies. One-month implied
volatility surged 4.79 percentage points to 24.69 percent

The rand’s slide on Monday probably came after “a combination of stops
and margin calls caused mass capitulation” by Japanese retail
investors, Gareth Berry, a foreign-exchange strategist at Macquarie
Bank Ltd. in Singapore, wrote in a research note.

“It is hard to see the rand pull back on a sustainable basis,” the
Standard Bank analysts said. “In recent weeks we have seen South
Africa’s real effective exchange rate fall sharply to levels last seen
in 2001 and 2008. We note that in both 2001 and 2008, amid a rand
slide, the South African Reserve Bank embarked on a fairly aggressive
rate hiking cycle.”

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.@Citi cancels loan facility to South African Airways: Treasury

"We are aware that Citi has canceled a 250 million rand facility to
SAA and are working closely with SAA on the issue to make sure there’s
sufficient liquidity. We are unable to comment further," Treasury
spokeswoman Phumza Macanda said.

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Now the restrictions are biting the country’s international jet set @FT

Now the restrictions are biting the country’s international jet set,
who are, to their embarrassment and frustration, finding their debit
cards rejected at ATMs, restaurants and shops from London to Dubai and
from Paris to New York.

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Nigeria Central Bank Cuts Flow of Dollars to Money Changers

Nigeria’s central bank stopped selling foreign exchange to
money-changers as it struggles to stabilize the naira amid a plunge in
oil prices that have hit government finances.

“Operators in this segment of the market would now need to source
their foreign exchange from autonomous source,” Central Bank of
Nigeria Governor Godwin Emefiele said in an e-mailed statement on
Monday. “They must however note that the CBN would deploy more
resources to monitoring these sources to ensure that no operator is in
violation of our anti-money laundering laws.”

“The naira will be devastated by the ban,” said Aminu Gwadabe,
president of the Lagos-based Association of Bureau de Change Operators
of Nigeria.“The naira is going to depreciate further; toward the end
of this week we might see it reach 300 naira per dollar” on the
unofficial parallel market, he said.

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Karuturi Challenges Ethiopia Decision to Cancel Farm Project

Karuturi Global Ltd., one of the largest investors in Ethiopia’s farm
industry, is challenging the termination of its project, claiming the
government broke the terms of its agreement with the company.

The Agriculture Ministry’s cancellation last month of the company’s
2010 lease is invalid as it didn’t follow procedure, contravened an
investment agreement between India and Ethiopia, and wrongly accused
the company of inadequate progress, Managing Director Sai Ramakrishna
Karuturi said in an interview Jan. 5 in the capital, Addis Ababa.

“I don’t recognize this cancellation,” he said. The termination
amounts to expropriation, which the bilateral investment treaty says
must be accompanied by market-value compensation, Karuturi said

The government made the “painful decision” to cancel the contract
because of a lack of progress, said Ethiopian Communications Minister
Getachew Reda.

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Direct flights between Kenya and the United States could begin as early as May Quartz
Kenyan Economy

Aly Khan Satchu, a financial analyst in Nairobi, says the direct
flights will also attract investors to East Africa’s largest economy.

“Nairobi-US direct flights have been seen by many, including myself,
as a silver bullet. US investors have been gung-ho about Kenya. Their
visits and tourism related activity means this ‘highway in the sky”
has legs,” he tells Quartz.

The Kenyan diaspora is another important market. About 102,000 Kenyan
immigrants and their families live in the US, most of whom have the
means to travel home. Their median household income is $11,000 above
the national median, according to a June report (pdf) by the
Rockefeller Foundation and the Aspen Institute.

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India’s largest cement manufacturer UltraTech Cement is in the race to acquire a controlling stake in ARM Cement, in which it could buy convertible preference shares of up to $125 million (Sh12.7 billion).
Kenyan Economy

ARM recently announced the impending transaction — expected to be
complete by March— but did not reveal the identity of the potential

UltraTech is said to be negotiating with ARM for the controlling stake
in Kenya’s second-largest cement manufacturer after the French-owned
Bamburi Cement.

ARM chief executive Pradeep Paunrana, however, declined to comment on
the issue, or confirm that the company is in talks with the Indian

“Such matters and information release are subject to regulatory
compliance,” said Mr Paunrana.

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

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