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Monday 21st of November 2016 |
Morning Africa |
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The Latest Daily PodCast can be found here on the Front Page of the site http://www.rich.co.ke |
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21-NOV-2016 :: Higher Interest Rate is Propelling the Dollar @TheStarKenya Africa |
On the 12th of September, I wrote
Therefore, my second Trade of the year [And by the way, I issued my 3rd Trade of the Year the day after Donald Trump won the Election which is to Buy the Dollar] is to ''buy put options on 10- year bonds because this is going to pop, and when it pops, the wizardry won’t work anymore, and at that moment there is going to be one heck of a move.''
Since Trump won, we have witnessed some seriously violent moves in the Bond Markets. The US 10 Year Bond has surged 55 basis points higher in 2 weeks, which is the biggest fortnightly rise in 15 years and second biggest in almost 30 years. Of course, The US remains the base-line and this has created a shock-wave across global Bond markets. Higher US interest rates have propelled the Dollar higher and versus the Yen the Dollar is +7.5% over the last 2 weeks, its best fortnightly performance since 1988, second best since end of Bretton Woods. This is big.
What we are watching is the cratering of the Quantitative Easing Consensus.
Prime Minister Theresa May said this at the Conservative Party's annual conference in October
"While monetary policy – with super-low interest rates and quantitative easing – provided the necessary emergency medicine after the financial crash, we have to acknowledge there have been some bad side effects.
"People with assets have got richer. People without them have suffered. People with mortgages have found their debts cheaper. People with savings have found themselves poorer.
"A change has got to come. And we are going to deliver it. Because that’s what a Conservative Government can do."
Prime Minister May and President Trump have been propelled to Power on the back of older [mostly white] Folks, many of whom have seen their hard-earned savings over a life-time, now earn them a paltry return and a negative one in many cases. When all the now dumb-founded Pollsters reach their ''mea culpa'' moment, they will all realise that they underestimated the frustration and anger of this constituency. This is important and this is what the Bond Market has seen very clearly. The QE consensus is dead in the Water. Stone-cold Dead. It is this realisation that is now creating a negative feed-back Loop across Emerging Market assets and Bond Prices. Trumponomics is going to accelerate this Trend. Trump is proposing to cut Taxes and increase spending. The Dollar is at a 13 Year High, Asian currencies are at multi-year Lows and bond yields have soared. For those who have watched the Flight to Quality unfold here at home, this is no different. Trump is accelerating a global Flight to Quality and a stampede back into US Assets.
Here in Africa, Egypt has capitulated. They have taken $12.5b from Madam Lagarde and freed the currency. The USD/EGP which had been pegged at 8.88 climbed as high as 18.00 before settling down to 16.2495 last. Nigeria, which is in the exact same Boat as Egypt has chosen a different Path.
Authorities should be able to jail for as long as two years anybody holding dollars in cash for more than 30 days, or fine them 20 percent of the amount, according to a draft amendment to Nigeria’s Foreign-Exchange Act. Last week, security agents threatened to arrest black-market money-traders if they exchanged the naira at a rate weaker than 400 per dollar, compared with the existing street-rate of around 460. The currency’s official exchange rate, which analysts say the central bank is still manipulating, is 315 against the greenback. [Bloomberg].
“The CBN wants to take its regulatory onus to frightening proportions,” analysts at SBM said in an e-mailed note Friday in response to the new draft law. This is taking policy making Insanity to a whole new Level.
What is unfolding in Nigeria is a debacle of spectacular and monstrous proportions worthy of a Nollywood movie all of its own.
SSA Eurobond Yields have spiralled upwards. Kenya's 10 Year Eurobond [which the Treasury should have tapped earlier in the Year - both the IMF and myself tried to warn] has spiked more than 170 basis points shuttering that option to go to the International Markets. Fortunately, the Interest Rate Capping Bill has stampeded Banks into Government Paper. Unfortunately, this is what crowding out looks like because the stampede into GOK Paper has been at the expense of private sector credit growth.
We are at an Inflexion Point with severe and negative implications for EM and Frontier Assets. Its that moment when you have been climbing steadily on a roller-coaster and all of a sudden you note you cannot go any higher and you are about to drop precipitously. Your hands grip a little tighter and you know your stomach is going to leap into your Mouth
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OBAMA RECKONS WITH A TRUMP PRESIDENCY By David Remnick Law & Politics |
Inside a stunned White House, the President considers his legacy and America’s future.
“This is not the apocalypse,” Obama said. History does not move in straight lines; sometimes it goes sideways, sometimes it goes backward. A couple of days later, when I asked the President about that consolation, he offered this: “I don’t believe in apocalyptic—until the apocalypse comes. I think nothing is the end of the world until the end of the world.”
“So when you stand and deliver that State of the Union address,” Lauer said, “in no part of your mind and brain can you imagine Donald Trump standing up one day and delivering the State of the Union address?”
Obama chuckled. “Well,” he said, “I can imagine it in a ‘Saturday Night’ skit.”
Finally, he read one off his phone from the Republican candidate: “President Obama will go down as perhaps the worst president in the history of the United States! @realDonaldTrump.”
A short, cool pause, then Obama delivered the zinger: “Well, @realDonaldTrump, at least I will go down as a President.” And then, like a rapper dropping the mike, Obama held out his phone and let it fall to the floor.
For tens of millions of Americans, Trump was unthinkable as President. It came to be conceded that he had “tuned into something”: the frequencies of white rural life, the disaffection of people who felt overwhelmed by the forces of globalization, who felt unheard and condescended to by the coastal establishment. Yet Trump himself, by liberal consensus, was a huckster mogul of the social-media age, selling magic potions laced with poison. How could he possibly win?
The fissures and frustrations in the American electorate were nothing new, and some commentators were notably alert to them. Before and after the election, a passage from Richard Rorty’s 1998 book, “Achieving Our Country,” circulated on social media. Rorty, a left-leaning philosopher, who died in 2007, predicted that the neglected working class would not tolerate its marginalization for long. “Something will crack,” he wrote:
The nonsuburban electorate will decide that the system has failed and start looking around for a strongman to vote for—someone willing to assure them that, once he is elected, the smug bureaucrats, tricky lawyers, overpaid bond salesmen, and postmodernist professors will no longer be calling the shots. . . . One thing that is very likely to happen is that the gains made in the past forty years by black and brown Americans, and by homosexuals, will be wiped out. Jocular contempt for women will come back into fashion. . . . All the resentment which badly educated Americans feel about having their manners dictated to them by college graduates will find an outlet.
When Obama wandered down the aisle of Air Force One, I asked him, “Do you feel confident about Tuesday?”
“Nope,” he said.
But then, in Obamian fashion, he delved into a methodical discussion of polling models and, finally, landed on a more tempered and upbeat version of “nope.” He was “cautiously optimistic.”
“I’m like Mick Jagger,” he said. “I’m old, I’m gray, but people still turn out.”
As we rode toward the airport, Obama talked about Trump. “We’ve seen this coming,” he said. “Donald Trump is not an outlier; he is a culmination, a logical conclusion of the rhetoric and tactics of the Republican Party for the past ten, fifteen, twenty years. What surprised me was the degree to which those tactics and rhetoric completely jumped the rails. There were no governing principles, there was no one to say, ‘No, this is going too far, this isn’t what we stand for.’ But we’ve seen it for eight years, even with reasonable people like John Boehner, who, when push came to shove, wouldn’t push back against these currents.”
I asked about Trump’s capacity to eliminate serially a long string of Republican contenders. “Donald Trump beating fifteen people said less about his skills and more about the lack of skills of the people he beat,” Obama said. “But, obviously, he tapped into something. He’s able to distill the anger and resentment and the sense of aggrievement. And he is skillful at challenging the conventions in a way that makes people feel something and that gives them some satisfaction.”
“I’m half Scotch-Irish, man!” he said. “When folks like Jim Webb write about Scotch-Irish stock in West Virginia and Kansas and so on, those are my people! They don’t know it, always, but they are.”
When I kept prodding him for a reaction beyond sheer fact and discernment, he stayed in that calm zone he likes to inhabit, the analyst of even his own gut.
“A lot of you are young and this is your first rodeo,” Obama told the staffers in the Oval Office, a source recalled. “For some of you, all you’ve ever known is winning. But the older people here, we have known loss. And this stings. This hurts.”
Suddenly, Germany, led by Angela Merkel, was the lonely bulwark of Europe and Atlanticism.
The White House was, as one staffer told me, “like a funeral home.”
The official line at the White House was that the hour-and-a-half meeting with Trump went well and that Trump was solicitous. Later, when I asked Obama how things had really gone, he smiled thinly and said, “I think I can’t characterize it without . . . ” Then he stopped himself and said that he would tell me, “at some point over a beer—off the record.”
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Abe Convinced Japan-Bashing Trump 'Is a Leader We Can Trust' Law & Politics |
Abe told reporters in New York on Thursday night that he had frank discussions in a “warm atmosphere” at Trump Tower. He said he explained his views on a range of issues, but declined to comment on the substance of the talks in a meeting that lasted more than an hour. Abe gave Trump a golf club, and received a golf shirt from the real-estate mogul.
“He made time for me, even though he is busy with personnel matters,” Abe said after the meeting. “I am convinced that President-elect Trump is a leader we can trust.” The pair agreed to meet again for broader and deeper talks when their schedules allow, he said.
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"I am Thomas Cromwell in the court of the Tudors," Steve Bannon Law & Politics |
“I am Thomas Cromwell in the court of the Tudors,” Steve Bannon, Trump’s chief strategist, told the Hollywood Reporter, likening himself to Henry VIII’s right hand man and master manipulator (who, in a fact he may have overlooked, was ultimately executed for treason). Bannon did not propose historical roles for Reince Priebus, chief of staff, or Jared Kushner, an intimate adviser married to Trump’s daughter, but they are his rivals for Trump’s attention.
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The biggest copper rally in almost six years Commodities |
The biggest copper rally in almost six years is leaving hedge funds squaring off with Goldman Sachs Group Inc. Futures in New York jumped 18 percent in just a month. The gains were propelled by a drop in London Metal Exchange-monitored inventories and speculation that Donald Trump’s pledges on infrastructure building will increase metals demand. The president-elect seems to have convinced money managers, who boosted their wagers on further price gains to the largest ever.
Emerging Markets
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Nigeria Proposes Jail Time, Fines as It Tries to Boost Naira Africa |
Authorities should be able to jail for as long as two years anybody holding dollars in cash for more than 30 days, or fine them 20 percent of the amount, according to a draft amendment to Nigeria’s Foreign-Exchange Act
The latest move will further worry foreign investors, according to Lagos-based SBM Intelligence. Last week, security agents threatened to arrest black-market money-traders if they exchanged the naira at a rate weaker than 400 per dollar, compared with the existing street-rate of around 460. The currency’s official exchange rate, which analysts say the central bank is still manipulating, is 315 against the greenback.
“The CBN wants to take its regulatory onus to frightening proportions,” analysts at SBM said in an e-mailed note Friday in response to the new draft law. “The move smacks of desperation and can only result in negative investor perception and capital flight.”
The central bank didn’t introduce the bill, Isaac Okorafor, a spokesman, said in a text message in response to questions, without elaborating.
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Ghana Nkrumah's heirs The Economist Africa |
FLAGS coloured with the red, black and green of Ghana’s ruling party flutter feebly in the still, hot air that barely stirs above Independence Avenue as it bends down towards the sea. There it ends abruptly before the sweeping curves of grey Italian marble meant to resemble, depending on whom one asks, the stump of a tree or the buried hilt of a sword. Beneath it lies the body of Kwame Nkrumah, the country’s first president and, for many millions of people, a man synonymous with Africa’s liberation from colonialism. Ghana, in 1957, was the first sub-Saharan African country to win its independence.
Yet here, at the birthplace of democracy in Africa, are portents of its fragility. On what was once the whites-only polo ground where Nkrumah declared the new state, his headless statue stands as a reminder of how a once-promising flame guttered. After declaring a one-party state and mismanaging the economy, Nkrumah was overthrown in a violent coup in 1966. It took more than a quarter of a century before the restoration of multiparty democracy in 1992 ushered in the start of what many now call Africa’s second liberation, and put an end to a cycle of military coups in Ghana interspersed only by brief periods of civilian government.
More worrying than reminders of democracy’s past corruption are the whiffs of its current decay. A presidential election is to be held on December 7th. But apart from a few billboards, most of them hailing the accomplishments of the incumbent, John Mahama, there are few visible signs that either the ruling National Democratic Congress (NDC) or the opposition New Patriotic Party (NPP) are campaigning vigorously for the support of voters.
The NPP’s muted campaign is easily explained: it last formed a government eight years ago and its coffers are almost empty. Without a victory this year it will struggle to finance another serious bid for the presidency in four years’ time.
The NDC’s lackadaisical drive for votes, by contrast, reflects the insouciance of Mr Mahama. Instead of trying to win over voters through a battle of ideas, his party relies on patronage, and on spending money it does not have. Since the NDC came to power eight years ago, spending on civil servants has exploded (see chart), pushing Ghana precipitously close to a debt crisis so severe that it was forced to turn to the IMF for a bail-out last year. Under strict supervision the government has grudgingly brought its spending under control. However, with public debt hovering at about 70% of GDP (and debt repayments accounting for a third of government revenue), its finances are precarious. Worse, it has already squandered the windfalls it expects from the development of large offshore oilfields. The roads are full of potholes, there are regular power cuts and big companies talk openly about moving across the border into Ivory Coast.
And politics in Ghana can be a grubby business at the best of times. “The 2012 election was won because of me,” boasted one government minister to your correspondent. “I’m the one who did the gerrymandering.” More recently a video has circulated showing Mr Mahama’s motorcade driving through a market with him leaning out of the sunroof of his car handing out wads of cash. At first his spokesman said he was handing out pamphlets, though he was at a loss to explain why they were palm-sized and tightly rolled. He later said the money was compensation for damage to some of the market stalls.
If Ghana is to live up to its reputation as a beacon of democracy in Africa, it needs to clean itself up.
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Woman detained for spreading malicious messages against Family Bank Kenyan Economy |
In the statement, the bank urged its customers to ignore negative statements and malicious rumours on social media that tried to depict it negatively.
“The source of the malicious statement is under investigation by the directorate of Criminal Investigations,” the statement read.
Family Bank confirmed its strong financial position stating that it operates within requirements governed by the Central Bank of Kenya.
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Ciano, other ex-Uchumi officials barred from holding office in public firms, to pay Sh21.7m Kenyan Economy |
Mr Ciano, together with former Uchumi chairman Khadija Mire, finance manager Chadwick Okumu, former directors James Murigu and Bartholomew Ragalo have also been banned from holding office in any publicly listed company. The markets regulator has also barred Faida Investment Bank from carrying out any advisory services for six months for acting as lead transaction adviser and sponsoring stock broker ill-fated Sh895 million Uchumi cash call. CMA has slapped Mr Ciano with a financial penalty of Sh5 million and will also seize Sh13.5 million deemed as proceeds of crime as he did not declare conflict of interest to the Uchumi board.
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N.S.E Today |
The Kenya Shilling traded a : 101.689 - 102.240 range today. The Market tends to focus on this Pair but its worth considering that against a Basket of currencies - the Shilling has appreciated quite considerably. The Nairobi All Share closed -0.53 points lower at 138.20. The Nairobi NSE20 Index ticked -7.31 points lower to close at 3283.94 Equity Turnover was lackadaisical and clocked 294.313m.
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N.S.E Equities - Commercial & Services |
Safaricom was the most actively traded counter at the Securities Exchange and closed unchanged at 20.00 with 10.284m shares worth 205.668m [some 69.78% of the total volume traded today] changing hands. I look forward to hosting the CEO Bob Collymore this Saturday from 0930 am at the InterContinental Hotel. All are welcome. Safaricom has been a Bull Outlier for a number of years and is +31.16% on a Total Return Basis in 2016 vastly performing the All Share Index which is -4.76% through this morning. I am expecting Fresh All Time Highs before Year End.
WPP-Scangroup firmed +0.28% to close at 18.10 and was trading at session highs of 18.95 +4.99% at the Finish, WPP-ScanGroup is -39.66% through 2016.
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N.S.E Equities - Finance & Investment |
The Presidential Spokesman Manoah Esipisu MBS tweeted as follows Sunday afternoon
''The Central Bank of Kenya whose mandate it is to regulate banks, is in full control of the situation and must be allowed to do its work.''
''We are all aware of careless & alarmist reports regarding the banking industry peddled mainly in social media in the last couple of days.''
Family Bank urged its customers to ignore negative statements and malicious rumours on social media that tried to depict it negatively.
“The source of the malicious statement is under investigation by the directorate of Criminal Investigations,” the statement read.
The StanLib Fuhari IREIT rallied +8.73% to close at 13.70 on the news that SBG Securities chief executive Nkoregamba Mwebesa was joining Stanlib Kenya replacing James Muratha who left in August.
The Big Banks are now Piranhas and the Little ones tadpoles.
Kenya Commercial Bank eased -0.69% to close at 30.50 and traded 878,800 shares. KCB is -25.71% in 2016 on a Total Return Basis in line with a Banking Sector which has been wrestling with some serious headwinds. Equity Bank eased -0.78% to close at 31.75 and traded 545,400 shares. Equity is -15.62% in 2016 on a Total Return Basis.
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N.S.E Equities - Industrial & Allied |
KenolKobil rallied +3.6% to close at a 2016 High of 12.95 and traded 229,900 shares. KenolKobil is +36.45% through 2016 and has seriously outperformed through this year.
Kenya Power KPLC rebounded +2.23% to close at 9.15 and was trading close to session highs of 9.45 +5.59% at the Closing bell.
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