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Satchu's Rich Wrap-Up
Tuesday 22nd of November 2016

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The Latest Daily PodCast can be found here on the Front Page of the site

This Saturday 26th November #Mindspeak hosts @Safaricomltd CEO
@BobCollymore at the Inter Continental Nairobi from 0930

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21-NOV-2016 :: 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.”

British Prime Minister May and President-elect 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 lifetime, now earn
them a paltry return and a negative one in many cases. When all the
now dumbfounded pollsters reach their ‘’mea culpa’’ moment, they will
all realise that they underestimated the frustration and anger of this

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Toasting the King of Belgium ~ @dreynders Belgium Kings Day in Muthaiga Nairobi cc @DebilderlingR @KideroEvans @BelgiumMFA

“Nothing behind me, everything ahead of me, as is ever so on the
road.” ― Jack Kerouac, On the Road

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My Favourite Robert Frank Photograph remains

Jack Kerouac described this Photograph as follows

In his introduction to The Americans, Kerouac describes this
photograph as "a long shot of night road arrowing forlorn into
immensities and flat of impossible-to-believe America in New Mexico
under the prisoner's moon."

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Ladbrokes opened the market at 3-1, cutting it to 5-2, and again to 9-4
Law & Politics

Bookmaker Ladbrokes has cut the odds on Donald Trump leaving office
early due to impeachment or resignation amid mounting controversy
about how he will manage his business interests after becoming
America’s 45th President.

Ladbrokes opened the market at 3-1, cutting it to 5-2, and again to
9-4 in the wake of a flurry of bets on the back of a growing consensus
among law professors that the controversial Republican is heading for


PEOTUS needs to get some serious conflict of interest/legal advice and
take that advice.

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Ringside With Steve Bannon at Trump Tower as the President-Elect's Strategist Plots "An Entirely New Political Movement" via @thr
Law & Politics

"I'm not a white nationalist, I'm a nationalist. I'm an economic
nationalist," Bannon tells THR media columnist Michael Wolff as the
controversial Breitbart News chief turned White House advisor
unleashes on Hillary Clinton, Fox News and his critics.

In these dark days for Democrats, Bannon has become the blackest hole.

"Darkness is good," says Bannon, who amid the suits surrounding him at
Trump Tower, looks like a graduate student in his T-shirt, open
button-down and tatty blue blazer — albeit a 62-year-old graduate
student. "Dick Cheney. Darth Vader. Satan. That's power. It only helps
us when they" — I believe by "they" he means liberals and the media,
already promoting calls for his ouster — "get it wrong. When they're
blind to who we are and what we're doing."

Bannon now becomes part of a two-headed White House political
structure, with Reince Priebus — in and out of Bannon's office as we
talk — as chief of staff, in charge of making the trains run on time,
reporting to the president, and Bannon as chief strategist, in charge
of vision, goals, narrative and plan of attack, reporting to the
president too. Add to this the ambitions and whims of the president
himself, and the novel circumstance of one who has never held elective
office, the agenda of his highly influential family and the end-runs
of a party significant parts of which were opposed to him, and you
have quite a complex court that Bannon will have to finesse to realize
his reign of the working man and a trillion dollars in new spending.

"I am," he says, with relish, "Thomas Cromwell in the court of the Tudors."

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.0631
Dollar Index 100.89
Japan Yen 110.75
Swiss Franc 1.0095
Pound 1.2497
Aussie 0.7403
India Rupee 68.185
South Korea Won 1175.14
Brazil Real 3.3853
Egypt Pound 17.3965
South Africa Rand 14.2163

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Inside a Moneymaking Machine Like No Other BBG
World Currencies

Sixty miles east of Wall Street, a spit of land shaped like a whale’s
tail separates Long Island Sound and Conscience Bay. The mansions
here, with their long, gated driveways and million-dollar views, are
part of a hamlet called Old Field. Locals have another name for these
moneyed lanes: the Renaissance Riviera.

That’s because the area’s wealthiest residents, scientists all, work
for the quantitative hedge fund Renaissance Technologies, based in
nearby East Setauket. They are the creators and overseers of the
Medallion Fund—perhaps the world’s greatest moneymaking machine.
Medallion is open only to Renaissance’s roughly 300 employees, about
90 of whom are Ph.D.s, as well as a select few individuals with
deep-rooted connections to the firm.

The fabled fund, known for its intense secrecy, has produced about $55
billion in profit over the last 28 years, according to data compiled
by Bloomberg, making it about $10 billion more profitable than funds
run by billionaires Ray Dalio and George Soros. What’s more, it did so
in a shorter time and with fewer assets under management. The fund
almost never loses money. Its biggest drawdown in one five-year period
was half a percent.

“They are the pinnacle of quant investing. No one else is even close.”

 Renaissance’s computers are some of the world’s most powerful, for
one. Its employees have more—and better—data. They’ve found more
signals on which to base their predictions and have better models for
allocating capital. They also pay close attention to the cost of
trades and to how their own trading moves the markets.

Simons is already well-known: math genius, professor at MIT and
Harvard, recipient of the Oswald Veblen Prize in Geometry, and
co-creator of the Chern-Simons theory. He was also a code breaker for
the Institute for Defense Analyses, where he worked finding messages
amid the noise.

The goal of quant trading is similar: to build models that find
signals hidden in the noise of the markets. Often they’re just
whispers, yet they’ll help predict how the price of a stock or a bond
or a barrel of oil might move. The problem is complex. Price movements
depend on fundamentals and flows and the sometimes irrational behavior
of people who are doing the buying and selling.

Today, Medallion uses dozens of “strategies” that run together as one
system. The code powering the fund includes several million lines,
according to people familiar with the company. Various teams are
responsible for specific areas of research, but in practice everybody
can work on everything. There’s a meeting every Tuesday to hash out

In the early 1990s, big annual returns became the norm at Renaissance:
39.4 percent, 34 percent, 39.1 percent. Prospective investors clamored
to get into Medallion, but the company didn’t pay them much heed—or
coddle clients for that matter. Bonnefoy recalls dialing a Manhattan
phone number to hear a recording of the monthly returns; Renaissance’s
legal department doubled as unhelpful customer service
representatives. (To this day the company’s website, rentec.com, looks
like it dates from the Netscape era.) In 1993, Renaissance stopped
accepting new money from outsiders. Fees were also ratcheted up—from 5
percent of assets and 20 percent of profits, to 5 percent and 44
percent. “They raised their fees to exorbitant levels and were still
head and shoulders above everyone else,” says Bonnefoy, who, along
with every other outsider, was finally booted from Medallion in 2005.

“Speech recognition and translation are the intersection of math and
computer science,” says Ernie Chan, who worked at the research center
in the mid-1990s and now runs quant firm QTS Capital Management. The
scientists weren’t just working on academic problems; they were also
developing theories and writing software to implement the solutions,
he says. The group’s work eventually paved the way for Google
Translate and Apple’s Siri.

At the 2013 conference, Brown referenced an example they once shared
with outside Medallion investors: By studying cloud cover data, they
found a correlation between sunny days and rising markets from New
York to Tokyo. “It turns out that when it’s cloudy in Paris, the
French market is less likely to go up than when it’s sunny in Paris,”
he said. It wasn’t a big moneymaker, though, because it was true only
slightly more than 50 percent of the time. Brown continued: “The point
is that, if there were signals that made a lot of sense that were very
strong, they would have long ago been traded out. ... What we do is
look for lots and lots, and we have, I don’t know, like 90 Ph.D.s in
math and physics, who just sit there looking for these signals all day
long. We have 10,000 processors in there that are constantly grinding
away looking for signals.”

In August 2007, rising mortgage defaults sent several of the largest
quant hedge funds, including a $30 billion giant run by Goldman Sachs,
into a tailspin. Managers at these firms were forced to cut positions,
worsening the carnage. Insiders say the rout cost Medallion almost $1
billion—around one-fifth of the fund—in a matter of days. Renaissance
executives, wary that continued chaos would wipe out their own fund,
braced to turn down their own risk dial and begin selling positions.
They were on the verge of capitulating when the market rebounded; over
the remainder of the year, Medallion made up the losses and more,
ending 2007 with an 85.9 percent gain. The Renaissance executives had
learned an important lesson: Don’t mess with the models.

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Producer, hedger bets on WTI rise to highest since 2007: CFTC

Oil traders bought record number of WTI calls on Nov. 15

Wagers on higher and lower prices held by speculators and hedgers
reached 1.47 million contracts in the week ended Nov. 15, the most
since 2007, U.S. Commodity Futures Trading Commission data show.
Trading volume of calls giving investors the right to purchase WTI
futures rose to a record that day. The CBOE Crude Oil Volatility Index
reached the highest since April. Brent oil shorts, bets that prices
will fall, rose to the highest in more than two years.

“There’s tension in the market, with both producers and consumers
worried about what OPEC does or won’t do on Nov. 30,” said Tim Evans,
an energy analyst at Citi Futures Perspective in New York. “They want
to be protected from surprising price moves.”

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21-NOV-2016 :: This is taking policymaking insanity to a whole new level @TheStarKenya

What is unfolding in Nigeria is a debacle of spectacular and monstrous
proportions worthy of a Nollywood movie all of its own.

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Fool Nigeria Once, Shame on You. Fool Nigeria Twice @ForeignPolicy

It’s been a tough year for Nigerian President Muhammadu Buhari. The
mood in Africa’s most populous nation is a far cry from the euphoria
that greeted his historic 2015 election — the first time in Nigeria’s
history that an opposition candidate unseated an incumbent president
in a democratic election. For weeks and even months after the vote,
Buhari was a media darling, praised at home and extoled abroad.

Since then, the cheers have turned to jeers — even from members of the
president’s own party, the All Progressives Congress (APC). Meanwhile,
his administration cowers under attacks from a disillusioned
electorate, members of the opposition, and even Buhari’s wife, Aisha,
who said she might not vote for him in 2019, when he is up for

What’s behind the swift unraveling of Buhari’s presidency? His
inability to formulate a coherent economic plan as Nigeria tipped into
recession and unwillingness to make crucial decisions — as basic as
appointing a cabinet — in a timely manner certainly didn’t help. But
the main reason Buhari has lost the support of his countrymen is that
the last year has revealed the central premise of his candidacy to be
false: The man who claimed in the campaign to be a “reformed democrat”
has proved to be the same old authoritarian showman who ruled Nigeria
in the early 1980s.The man who claimed in the campaign to be a
“reformed democrat” has proved to be the same old authoritarian
showman who ruled Nigeria in the early 1980s.

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Nigeria's Economy Contracts for Third Consecutive Quarter

Nigeria’s economic slump continued in the third quarter hit by low oil
revenue and foreign investors’ wariness of the government’s fiscal and
monetary responses.

Gross domestic product in Africa’s most populous country contracted
2.2 percent in the three months through September from a year earlier,
after shrinking 2.1 percent in the second quarter, the Abuja-based
National Bureau of Statistics said in an e-mailed statement Monday.
The median of 15 economist estimates compiled by Bloomberg was for a 2
percent contraction. The economy expanded a non-seasonally adjusted 9
percent from the second quarter, the statistics office said.

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Nigeria All Share Bloomberg -10.95% 2016

@economics Ghana’s central bank cuts benchmark first time since 2011


Ghana Stock Exchange Composite Index Bloomberg -15.67% 2016


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Mozambique Unveils More Details of Previously Hidden Debts

Mozambique has given investors further details into $1.16 billion of
external debts it admitted to hiding earlier this year, which played a
major role in leading to an October announcement that it couldn’t
afford payments on foreign loans in 2017.

A $622 million loan that state-owned ProIndicus contracted matures in
March 2021, with a $119.4 million amortization payment due in March
next year, the government said in a statement posted on the Ministry
of Economy and Finance website Monday. For the $535 million Mozambique
Asset Management debt, the Southern African nation is already in
arrears of $175.5 million, with a further payment of $133.8 million
due in May, according to the statement. Both have government

Credit Suisse AG’s London unit arranged the ProIndicus loan and
Palomar Capital Advisors Ltd., based in Zurich, and Russia’s VTB
Capital Plc arranged the MAM debt. London-based Clifford Chance LLP
and Maputo-based Couto, Graca e Associados, Lda. were the legal
advisers to the arrangers for both loans, according to the statement.

The southeast African nation’s Eurobonds, which fell to a record low
of 56.16 cents on the dollar on Oct. 31, were trading at 66.03 cents
by 4:02 p.m. in London.

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N.S.E Today

The Nairobi All Share edged -0.19 points lower to close at 138.01
The NSE20 closed -16.41 points at 3,267.53
Equity Turnover clocked 426.567m.

N.S.E Equities - Commercial & Services

Safaricom was the most actively traded share for the 2nd session and
closed unchanged at 20.00 with 12.827m shares traded. Safaricom was
trading at 20.25 +1.25% at the Finish Line with Big Buyers showing at
20.00. its seriously underpinned at 20.00.

TPS Serena was high-ticked +5.41% to close at 19.50 on low energy
trading of just 500 shares.

N.S.E Equities - Finance & Investment

The big banking news was the purchase of Fidelity Commercial Bank
[which is not listed at the Securities Exchange] by Mauritian bank
group SBM Holdings in a deal valued at 100 shillings ($0.98), SBM

The bank will purchase FCB’s entire share capital for 100 shillings
and inject additional equity of 1.46 billion shillings ($14.3
million), the Port Louis-based lender said in a statement e-mailed by
the Stock Exchange of Mauritius on Tuesday. The Central Bank of Kenya
expects the transaction to be concluded by Dec. 31, it said in a
separate statement.

"SBM Group will bring its experience and expertise from Mauritius and
other markets, to enhance competitiveness and the resilience of
Kenya's banking sector," the central bank said.

Fidelity has 14 branches in Kenya and is ranked 31 out of 41 Kenyan
lenders by market share, with 0.39 percent, the central bank said.

SBM Group, which operates one of the Indian Ocean island nation's
leading commercial banks, SBM Bank, had assets of $4.2 billion as of
September. It also operates in India and Madagascar.

"CBK (Central Bank of Kenya) welcomes the interest of foreign banks
that will contribute to the emergence of a world-class financial
sector," the central bank said.

I asked Sunil Sanger on Twitter What do you make of that? @Sang252

Sunil Sanger Shareholders funds at 2016 HY were KES 1.75 bn. Loan book
KES 9.4 bn. Bad loans causing full write-off of shareholder funds?

Interestingly, There has been no announcement from Fidelity Commercial Bank.

This marks the firing of the Starting Gun for the long-awaited
consolidation in the Banking sector.

KCB closed unchanged at 30.50 and traded 2.281m shares and was the
most actively traded bank stock at the Exchange today.
Equity Group closed unchanged at 31.75 and traded 1.668m shares.
COOP Bank firmed +0.71% to close at 14.15 and traded 752,300 shares.
COOP Bank has rallied +10.98% this month and has rallied since
releasing better than expected Q316 Earnings last week.
Standard Chartered [which is certainly the biggest Beneficiary other
than Citibank of the Deposit Flight to Quality] firmed +2.16% to close
at 189.00 and traded 10,900 shares. StanChart has more room to
out-perform versus its peers.

Housing Finance reported a +7.8% improvement in Q316 Profits and rowed
back -1.36% to close at 14.50 and traded 34,900 shares.

The Stanlib Fuhari-IREIT followed on yesterdays gain with a further
+3.28% bounce making that a +12.3% 2 session bounce and essentially is
a strong validation of Mwebesa's redeployment.

Home Africa firmed +4.35% to close at 1.20.

N.S.E Equities - Industrial & Allied

Mumias Sugar rebounded +4.55% to close at 1.15 and traded 748,500
shares. There were Buyers for 4x the volume traded and Mumias was
trading at 1.20 +9.09% at the Finish. Raw Sugar prices have been a
Stand-Out this year and this Tail-wind might finally have caught up
with Mumias Sugar.

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

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