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Satchu's Rich Wrap-Up
Thursday 08th of December 2016

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Normal Board - The Whole shebang
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The Latest Daily PodCast can be found here on the Front Page of the site

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Citi trader deepened October's pound 'flash crash' @FT

The UK investigation into October’s “flash crash” in sterling has
focused heavily on the Japanese trading operations of Citigroup, which
fired off repeated sell orders that exacerbated the pound’s fall,
according to bankers and officials involved in the inquiry.

The value of the pound fell from $1.26 to $1.14, with a 9 per cent
slide in about 40 seconds.

People with knowledge of events at Citi that day said one of the US
bank’s traders placed multiple sell orders when the currency slumped
in unusually fragile market conditions. One of the people said the
trader “panicked”.

jerky moves are not uncommon in the dead of night, and sterling was on
a fragile footing with support undermined by the impact of the vote to
leave the EU.

But people involved in the investigation said the second stage of the
slide coincided with a large number of rapid-fire sell orders placed
in Tokyo by a Citi trader using an electronic tool known as
“Aggregator”, which sends trade instructions into a range of trading
venues. A trader at another bank said at the time that was when “all
hell broke loose” with the pound.

For a short time, orders to sell sterling met with zero buying
interest on the other side — a highly unusual event — due to
abnormally poor liquidity and entrenched bearishness about the pound
in the wake of the Brexit vote.

Nonetheless, the sell instructions from Citi’s desk in Tokyo kept
coming and started tripping over each other in a pattern known as
“looping” that is normally constrained by safety nets embedded in bank
trading tools. Citi declined to comment on whether those safety nets,
which are part of the Aggregator programme, were operating at the time
of the flash crash for its own traders.

Human error and the use of a “poorly calibrated execution algorithm”
were among the possible reasons for the sell-off, the BoE said,
without naming any particular bank or banks. “It is hard to
definitively rule out these possibilities as not all activity in the
foreign exchange market is observable,” the BoE concluded.

Typically, it is close to impossible for a small handful of trades to
move a major currency by such a large degree, because there is usually
a wide range of buyers and sellers at any time. But on October 7, the
BoE noted that during the worst point of the fall in sterling, “there
was a drop off in participation on key trading systems, which points
to a potentially greater role for the idiosyncratic actions of
individual market participants”.

The BoE suggested the selling was too aggressive for market conditions
at the time, noting that the flows “may have occurred without regard
to underlying market conditions or [the] likely price impact of

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10-OCT-2016 The falcon cannot hear the Falconer - Losing control of the Narrative @TheStarKenya

These comments coupled with hard-line comments on immigration sent
sterling into a tail-spin.  this tail-spin culminated in the early
hours of Friday morning (when most of us were tucked up in bed and in
the blissful land of nod), when the pound fell as far as 1.1200 on
some electronic trading platforms – though most financial news wires
are talking about a low around 1.1800. It is still a matter of
speculation as to what could have led to such a precipitous fall. Some
are blaming automated algorithm trading systems (which buy and sell
enormous amounts of foreign exchange on the basis of word counts and
so on), fat fingers and all kinds.  The point is sterling
‘’flash-crashed’’ big.

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FT Asia @ftasia Accelerating outflows: China's forex reserves drop by $70bn in November, the largest fall since January

Home Thoughts

“The names of colors are at the edge between where language fails and
where it’s most powerful.” —A. S. Byatt The Paris Review

“Henry James is the maestro of the semicolon.” —Truman Capote The Paris Review

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"Russia demonized as biggest cyber-villain in the world" @BV @Bershidsky
Law & Politics

Russia, demonized as the biggest cyber-villain in the world in the
wake of the U.S. election campaign, must now take special care of its
own information security. Its adversaries don't just possess powerful
cyber-spying and offensive capabilities -- they suspect Russian
involvement in every incident, and that makes Russia vulnerable to all
kinds of retaliation.

After it was accused of trying to influence the U.S. presidential
race, Russia faces the same charges in Germany. Given Chancellor
Angela Merkel's support of anti-Russian sanctions and her deep-seated
support of a close partnership with the U.S., Russian President
Vladimir Putin has strong motives to undermine her. Last week,
WikiLeaks, which appeared to closely coordinate its U.S.
election-related publications with Russian propaganda outlets such as
the RT channel and Sputnik network of websites, published material
from a German parliamentary inquiry into the cooperation between
Germany's BND intelligence service and the U.S. National Security
Agency. The issue is politically sensitive to privacy-minded Germans,
who do not appreciate their country's collaboration with the intrusive
U.S. service. The Russian propaganda organizations were on it

Merkel said she didn't have any specific information about the
Deutsche Telekom attack, but added, "Let me just say that such
cyberattacks, or 'hybrid attacks' as they're known in Russian
doctrine, are part of everyday life today, and we need to learn to
deal with them."

In a recent interview with the daily Sueddeutsche Zeitung, Bruno Kahl,
the head of the BND, said he had evidence Russia was undertaking
cyberattacks, "which have no other purpose but to cause political
uncertainty." Add the powerful, well-funded BND to the U.S.
intelligence services plotting to prevent Russian attacks, and the
Kremlin has a serious problem.

Putin clearly understands that and feels the need to shift the
narrative or at least signal his preparedness. On Monday, he approved
a new Russian information-security doctrine which mentions "a number
of foreign countries increasing their technological capacity to
impact" Russian infrastructure "to attain military goals." It also
talks about foreign intelligence services attempting to "exert
psychological influence by information means in order to destabilize
the domestic political situation in various regions of the world and
undermine the sovereignty and territorial integrity of states."

According to the document, the Russian stance against such practices
is defensive. But it is more likely an attempt to justify cyberattacks
and the spreading of propaganda in the Kremlin's favorite way -- by
saying everybody else does it, too.

The new doctrine was published on the day the FSB, Russia's domestic
intelligence service, said it expected the start of a major
cyberattack by "foreign special services" against the Russian banking
sector. On Dec. 2, the FSB said in a brief statement that Russian
banks would be attacked from servers in the Netherlands owned by the
Ukraine-based hosting company BlazingFast. At the same time, the FSB
said, social networks would fill with panic-inducing messages about
the collapse of certain banks and the central bank's plans to strip
them of licenses.

Making sure these attacks don't come is a matter of constant
vigilance. The FSB warning may even have been a drill. It also helps
if elections in Western countries are won by people who won't be
interested in retaliating. Donald Trump probably isn't. If indeed
Putin has authorized election meddling and Western intelligence
agencies have proof of that, we can expect that he will double down on
the activity and step up the cyberwar.

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The parabolic rebound of Vladimir Putin @TheStarKenya
Law & Politics

However, my starting point is the election of President Donald Trump
because hindsight will surely show that Russia ran a seriously
sophisticated programme of interference, mostly digital. Don DeLillo,
who is a prophetic 21st writer, writes as follows in one of his short
The specialist is monitoring data on his mission console when a voice
breaks in, “a voice that carried with it a strange and unspecifiable
He checks in with his flight-dynamics and conceptual- paradigm
officers at Colorado Command:
“We have a deviate, Tomahawk.”
“We copy. There’s a voice.”
“We have gross oscillation here.”
“There’s some interference. I have gone redundant but I’m
not sure it’s helping.”
“We are clearing an outframe to locate source.”
“Thank you, Colorado.”
“It is probably just selective noise. You are negative red on
the step-function quad.”
“It was a voice,” I told them.
“We have just received an affirm on selective noise... We
will correct, Tomahawk. In the meantime, advise you to stay redundant.”
The voice, in contrast to Colorado’s metallic pidgin, is a melange of
repartee, laughter, and song, with a “quality of purest, sweetest
“Somehow we are picking up signals from radio programmes of 40, 50, 60
years ago.”
I have no doubt that Putin ran a seriously 21st predominantly digital
programme of interference which amplified the Trump candidacy. POTUS
Trump was an ideal candidate for this kind of support.
Trump is a linguistic warfare specialist. Look at the names he gave
his opponents: Crooked Hillary, Lyin’ Ted, Little Marco, ‘Low-energy’
Jeb — were devastating and terminal. The first thing is plausible
deniability (and some folks here at home need to remember those

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Law & Politics

“What do the President of Pakistan, a cigar smuggler, an arms dealer,
a counterterrorism target, and a combatting proliferation target have
in common? They all used their everyday GSM phone during a flight.”

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Europe's Populists Aren't Going Away @BV
Law & Politics

Europe's revolt against politics as usual is anything but contained.
Governments across the European Union were just beginning to celebrate
the defeat of Austria's hard-right Freedom Party in Sunday's
presidential election when the news arrived from Italy: Prime Minister
Matteo Renzi will resign after his crushing defeat in the referendum
on constitutional reform.

Austria's Freedom Party isn't going away.

In Italy, the populist uprising is still gathering force. Renzi's
margin of defeat was so humiliating -- roughly 20 percentage points

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At this moment, President Putin has Fortress Europe surrounded
Law & Politics

The intellectual father of the new Zeitgeist that propelled Brexit, Le
Pen, the Five Star movement in Italy, Gert Wilders in the Netherlands,
is Vladimir Putin.

In the Middle East, it is Putin who is calling the shots in Aleppo,
and in a quite delicious irony it looks like he has pocketed Opec as

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.0778
Dollar Index 99.99
Japan Yen 113.27
Swiss Franc 1.0060
Pound 1.2648
Aussie 0.7503
India Rupee 67.51
South Korea Won 1157.60
Brazil Real 3.3831
Egypt Pound 18.125
South Africa Rand 13.4860

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28-NOV-2016 I do not see WTI trading above $60.00 under any circumstances through 2017

I do not see WTI trading above $60.00 under any circumstances through
2017. Traders can sell $60.00 strike call options with a 1 year
maturity [into a price rally] and pocket the premium.

Emerging Markets

Frontier Markets

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May 2015 This is another point: there is a threshold beyond which the incumbent cannot go. Where that threshold lies will be discovered in the throes of the event.

As we look around the world today, we can see a battle for the
‘street’ from the streets of Bujumbura to the streets of Baltimore. In
November last year, I wrote about Ouagadougou’s signal to sub-Saharan
Africa and concluded that: We need to ask ourselves how many people
can incumbent shoot stone cold dead in such a situation – 100, 1000,

This is another point: there is a threshold beyond which the incumbent
cannot go. Where that threshold lies will be discovered in the throes
of the event.

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"The revolutionary contingent attains its ideal form not in the place of production, but in the street"

“The revolutionary contingent attains its ideal form not in the place
of production, but in the street, where for a moment it stops being a
cog in the technical machine and itself becomes a motor (machine of
attack), becomes in other words a producer of speed.’’

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Mauritius sees 2016 foreign investment flows up 44 pct: finance minister

France was the main investor over that period with investments
totalling 3.52 billion rupees, followed by China which accounted for
1.90 billion rupees.

The Bank of Mauritius expects the island's economy to grow about 3.8
to 4.0 percent in 2017.

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South Africa All Share Bloomberg -2.4% 2016

Dollar versus Rand 6 Month Chart INO 13.4860 [Quite a nice rally
in the Rand]


Egypt Pound versus The Dollar 3 Month Chart INO 18.1250 [soft
again above 18.00]


Nigeria Plans $3.2 Billion Capitalization for Farming Lender


Nigeria All Share Bloomberg -10.36% 2016


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"Ghana has set the gold standard for democracy in West Africa," said Johnnie Carson

“Ghana has set the gold standard for democracy in West Africa,” said
Johnnie Carson, a board member of the National Democratic Institute,
which is helping monitor the vote. “Elections have been close, but
they have always been largely peaceful, fair and transparent.”

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"This election is being treated by the incumbent party as a do-or-die affair." @FT

Voting pits Mr Akufo-Addo’s NPP against the incumbent President John
Mahama’s National Democratic Congress, two parties that traditionally
clean up all the votes. After eight years of NDC rule, characterised
by what many say are growing levels of corruption, the election is
expected to be the tensest in many years.

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Djibouti's economy is expected to grow 7 percent in 2017 from a projected 6.5 percent this year its budget minister said.

Djibouti's economy is expected to grow 7 percent in 2017 from a
projected 6.5 percent this year, helped by investment in ports,
telecommunications and airports, its budget minister said.

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Kenya Shilling versus The Dollar Live ForexPros 102.045
Kenyan Economy

Nairobi All Share Bloomberg -7.57% 2016 [10 week Lows]


Nairobi ^NSE20 Bloomberg -21.27% 2016 [10 week Lows]


Every Listed Share can be interrogated here


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

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