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Macro Thoughts

Home Thoughts

I am all for Girl Power.

“We are like butterflies who flutter for a day and think it is
forever.” ― Carl Sagan, Cosmos

“The cosmos is within us. We are made of star-stuff. We are a way for
the universe to know itself.” ― Carl Sagan

The arrival of the asymmetric threat on the streets of Paris was
deeply unsettling and will surely keep Europe off-balance and presages
a ‘new normal’.

The prime minister slips easily into the safety-first mode that
blighted Hillary Clinton’s presidential campaign, a persona dubbed
“the Maybot” in the media. What has gone wrong with the campaign? “The
one poll that matters is the poll on June 8,” she says.

Jeremy Corbyn, the sixty-eight-year-old leftist who heads the
opposition Labour Party in the U.K., wasn’t scheduled to appear at the
BBC’s televised general-election debate this week. With Theresa May,
the Conservative Prime Minister, and the hot favorite to gain
reëlection, skipping the event out of a super-abundance of caution,
Corbyn’s aides didn’t think that it would do him any good to debate
the Home Secretary, Amber Rudd, who was standing in for May, and the
leaders of five smaller parties: the Liberal Democrats, the U.K.
Independence Party, the Greens, the Scottish National Party, and the
Welsh nationalist party Plaid Cymru.

At the last minute, however, Corbyn, changed his mind. Buoyed by a
series of opinion polls showing Labour gaining ground on the
Conservatives, he zipped up to Senate House, at the University of
Cambridge, where the debate was being held. Seizing on May’s absence,
and her reluctance to appear anywhere in public except in front of
confirmed Conservative supporters, he performed well. “The Tories have
been conducting a stage-managed, arms-length campaign, and have
treated the public with contempt,” he declared. And he went on, “On
June 8, you have a choice. More cuts in services and living standards
with the Conservatives, or vote Labour to transform Britain for the
many and not the few.”

The tightening in the polls has unnerved some Conservative
politicians, and no wonder. It represents the biggest swing to either
major party during an election campaign since U.K. polling began, in
1945. Not surprisingly, there is a lot of debate about how real the
swing is.

Summary

In summary, the evidence so far shows that there are six inter-related
aspects of blowback:

Salman Abedi and his father were members of a Libyan dissident group –
the Libyan Islamic Fighting Group (LIFG) – covertly supported by the
UK to assassinate Qadafi in 1996. At this time, the LIFG was an
affiliate of Osama Bin Laden’s al-Qaeda and LIFG leaders had various
connections to this terror network.
Members of the LIFG were facilitated by the British ‘security
services’ to travel to Libya to fight Qadafi in 2011. Both Salman
Abedi and his father, Ramadan, were among those who travelled to fight
at this time (although there is no evidence that their travel was
personally facilitated or encouraged by the security services).
A large number of LIFG fighters in Libya in 2011 had earlier fought
alongside the Islamic State of Iraq – the al-Qaeda entity which later
established a presence in Syria and became the Islamic State of Iraq
and Syria (ISIS). These fighters were among those recruited into the
British-backed anti-Qadafi rebellion.
UK covert action in Libya in 2011 included approval of and support to
Qatar’s arming and backing of opposition forces, which included
support to hardline Islamist groups; this fuelled jihadism in Libya.
One of the groups armed/supported by Qatar in 2011 was the February
17th Martyrs Brigade which, some reports suggest, was the organisation
which Ramadan Abedi joined in 2011 to fight Qadafi.
Qatar’s arms supplies to Libya in 2011 also found their way to
Islamist fighters in Syria, including groups affiliated with al-Qaeda
and ISIS.
Conclusions

The evidence points to the LIFG being seen by the UK as a proxy
militia to promote its foreign policy objectives. Whitehall also saw
Qatar as a proxy to provide boots on the ground in Libya in 2011, even
as it empowered hardline Islamist groups.

Both David Cameron, then Prime Minister, and Theresa May – who was
Home Secretary in 2011 when Libyan radicals were encouraged to fight
Qadafi – clearly have serious questions to answer. We believe an
independent public enquiry is urgently needed.

The evidence suggests that British actions in three different theatres
– Libya, Iraq and Syria – cannot be viewed in isolation:

The raw feed of the capture and then death of the Libyan dictator
Muammar Gaddafi and his son Mo’tassim Gaddafi raise plenty of
questions. The bodies are currently lying side by side, bloodied and
half-naked on a filthy mattress in a meat locker, in Misrata.
John Donne wrote: “... Therefore, send not to know for whom the bell
tolls, It tolls for thee...”
I am left thinking, this dead Gaddafi  business is one powerful
message. And today Marshall McLuhan’s prediction in The Gutenberg
Galaxy (1962) that ‘The new electronic interdependence recreates the
world in the image of a global village’ has come to pass.
The image of a bloodied Gaddafi , then of a dead Gaddafi in a meat
locker have flashed around the world via the mobile, YouTube and
Twitter.
Who is in charge of the messaging? Through the fog of real time and
raw footage, I note a very powerful message. The essence of that
message being;
‘Don’t Fxxk with us! Be- cause you will end up dead and a trophy
souvenir in a fridge.’ That same person is probably repeating
Muammar’s comment, “I tell the coward crusaders: I live in a place
where you can’t get me. I live in the hearts of millions.”
And asking ‘Really? Are You? Or are you now very dead and in a meat locker?''

Four Arab countries led by Saudi Arabia cut diplomatic ties with Qatar
and moved to close off access to the Gulf country, escalating a crisis
that started over its relationship with Iran and its support of the
Muslim Brotherhood.

The governments of Saudi Arabia, Bahrain, the United Arab Emirates and
Egypt said in statements they will suspend air and sea travel to and
from Qatar. Saudi Arabia will shut land crossings with its neighbor,
according to the official Saudi Press Agency, potentially depriving
the emirate of imports.

Saudi Arabia cited Qatar’s support of “terrorist groups aiming to
destabilize the region,” including the Muslim Brotherhood, Islamic
State and al-Qaeda. It accused Qatar of supporting “Iranian-backed
terrorist groups” operating in the kingdom’s eastern province as well
as Bahrain.

Today, Qatar is a big player in the region punching far beyond its
absolute size (estimates are that there are fewer than 300,000 Qatari
citizens) both in terms of hard and soft power. In a geopolitical
context, Qatar played a big role in toppling Muammar Gaddafi in Libya
and its influence can be seen similarly in the move to remove
President Bashar al-Assad in Syria. In foreign policy terms, Qatar has
packed a big punch beyond merely hosting the US military at al Udeid
air base.

According to Nye, the soft power of a country depends largely on three
components: its culture, its political values, and how it conducts
itself in the world and at home. To the extent that these three
factors are attractive to others, a country can wield considerable
sway abroad. This soft power complements more traditional notions of
hard power: the military, the economy, and coercive elements of
policy.

Euro 1.1267
Dollar Index 96.78
Japan Yen 110.60
Swiss Franc 0.9641
Pound 1.2869
Aussie 0.7454
India Rupee 64.335
South Korea Won 1118.82
Brazil Real 3.2487
Egypt Pound 18.0025
South Africa Rand 12.8487

West Texas Intermediate for July delivery fell 70 cents to settle at
$47.66 a barrel on the New York Mercantile Exchange. Total volume
traded was about 27 percent above the 100-day average. Prices fell 4.3
percent this week, the biggest weekly decline since the week ended May
5.

Brent for August settlement fell 68 cents to end the session at $49.95
a barrel on the London-based ICE Futures Europe exchange. The global
benchmark crude traded at a premium of $2.08 to August WTI.

The OPEC “Go-Go” days of Sheikh Yamani, his prayer beads and delphic
pronouncements belong to yesteryear. Mohammed Sanusi Barkindo, the
current OPEC secretary-general, is a poor imitation of Yamani and is
playing with a set of cards that is stacked against him. Reserves have
been depleted from Abuja to Riyadh, from Luanda to Caracas and in all
the oil producing capitals in the world. So many capitals are fiddling
while sitting on a tinderbox and playing with matches.  The deputy
Crown Prince was quoted on Al-Arabiyya about Iran: “How can I
communicate with them while they prepare for the arrival of al-Mahdi
al-Montazar?”
This is deluded thinking at a time when things could seriously fall apart:
Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
the blood-dimmed tide is loosed, and everywhere  e ceremony of
innocence is drowned;
Thee best lack all conviction, while the worst Are full of passionate intensity.
Surely some revelation is at hand;
Surely the Second Coming is at hand
[W.B Yeats  e Second Coming]

We have experienced a precipitous downside move and, in my opinion,
the exponential recent momentum is signalling there is further to go.
My price target is $32.00 a barrel. Crude oil prices in extremis move
exponentially. This move has all the ingredients for turning
exponential. Some thought they found a floor Friday, but I expect them
to be rudely awakened.

Emerging markets are the calmest they have been in nearly three years,
helping to draw a surge of funds from abroad and boosting returns in a
sector that many investors once viewed as notoriously turbulent.

Emerging-market bond funds received inflows of $1.1 billion in the
week to May 24, marking the 17th consecutive week of net inflows,
according to data tracker EPFR Global.

This wave of cash has helped drive down bond yields and lift other
emerging-market investments, such as stocks. The MSCI Emerging Markets
Index is up 25% in the past 12 months, compared with a return of
around 15% for the S&P 500. Emerging-market currencies are up nearly
6% since January, powered by gains in the Russian ruble, Mexican peso
and others.

Rising prices and low volatility place emerging markets firmly in line
with a broader global trend in 2017, in which continued global
monetary stimulus and expectations of improving economic growth are
helping to mute price swings.

Prices for junk bonds are approaching records. A rally in technology
stocks has pushed the Nasdaq and S&P 500 to record levels. The monthly
average of the CBOE Volatility Index, or VIX, a closely watched
indicator of investor anxiety in the U.S. stock market, reached its
second lowest level in history last month.

“When investors believe the market is unlikely to be hit by negative
surprises, they tend to pile into assets that have the highest
risk-reward,” said Alvise Marino, a strategist at investment bank
Credit Suisse Group .

Frontier Markets

SPIEGEL: Still, there is the suspicion that you would follow the
example of the presidents of Burundi, Rwanda, Uganda or Congo and
change the constitution to extend your time in office.

Kabila: If you want to talk about countries that changed their
constitutions, let's talk about countries in Europe. The idea that
it's only Africa which has the tendency of changing constitutions is
biased and not correct. To change the constitution is constitutional.
Within the constitution there is the word "referendum." You can change
the constitution by referendum. But we have not yet called for a
referendum. As of today, we have not yet organized any meeting or
discussions on how to change the constitution.

SPIEGEL: Does the Congolese constitution somehow allow the
interpretation that a third term in office is possible?

Kabila: Our constitution is a very clear one. That interpretation is
not in the constitution.

SPIEGEL: So, there will be no third term for President Joseph Kabila?

Kabila: It depends what a third term is. We don't intend to violate
the constitution. How do you do it without violating the constitution?

SPIEGEL: Perhaps because you see a possibility to interpret the
constitution in a certain way.

Kabila: Neither you nor I cannot interpret the constitution. Only the
constitutional courts can interpret the constitution.

SPIEGEL: Is this a clear "no"?

Kabila: A clear no about what?

SPIEGEL: To a third term of your presidency.

Kabila: You are coming from your air-conditioned offices in Berlin and
Cape Town, and I hope you will find time to understand the Congo and
its difficulties. In any case, the father of democracy is Patrice
Lumumba, the first prime minister after our independence, who was
assassinated under conditions that to this day nobody can clearly
understand. So, for me, this title is not the most important thing.
You can go down in history as the father of democracy, but you can
also go down as the person who brought about chaos just by stepping
down. The constitution is very clear as to how and when the president
hands over power. He can only hand power over to an elected successor.

SPIEGEL: Which means you have to hold elections promptly.

Kabila: And that's why we are working 24 hours a day in order for
those elections to be held.

SPIEGEL: The G-20 countries are preparing a major Africa initiative,
Germany is even promoting a kind of Marshall Plan for the continent.
But in exchange, they are demanding good governance, political reforms
and democratic elections. They are particularly worried about your
country, because there are currently no longer any legitimate
institutions. Neither the president nor the parliament is legitimate
at this point.

Kabila: It's not up to the West or any scholar to decide whether our
institutions are legitimate or not. That's for our constitutional
court to decide. And two, as for the Marshall Plan or whatever it is,
I don't believe in that. Africans have been fed this kind of language
for the last 50 years. The West exploited Africa and now it wants to
save it. We have been living with this hypocrisy for too long. Africa
can only be saved by Africans. Why are we talking about a Marshall
Plan now? It's because you see a lot of immigrants moving into Europe.
And when Europe senses danger, it needs to do something to keep all
these Africans at home where they belong. But is this done in good
faith? No, not at all. So, for me, it's pure hypocrisy.

Kabila: Well, it's not up to me to say whether it's true or false.
It's up to the justice system. Being a Catholic bishop does not mean
that you are a saint. I have not asked the bishops to replace the
justice system in this country. There is no case between the
government and Mr. Katumbi as an individual. He has to deal with the
justice system in this country.

SPIEGEL: Mr. Katumbi has vowed to return soon. Is that your worst nightmare?

Kabila: I don't have any nightmares.

SPIEGEL: Mr. Katumbi could call on the Congolese to mount mass
protests. It's possible that millions of people could show up to
welcome him.

Kabila: And then, what next? If you think that somebody is above the
law because he has 1 or 2 million people following him, we would not
have a lawful country.

Kabila: Please, please … your Western officials! I am all against
neo-colonialism and these actions just perpetuate it.

SPIEGEL: So, you're saying the assessments are baseless?

Kabila: What I want to say is: The correct thing would have been to
share the assessments with us and the people involved. But the
sanctions are not going to stop us from organizing elections. And it's
not the kind of pressure that's going to push us into doing anything
else.

SPIEGEL: Your father was murdered by an aid and a body guard who was
one of his most trusted people. Whom do you trust?

Kabila: I believe that God exists and I trust in God. I trust in the
judgement of the Congolese people, that we are moving in the right
direction.

SPIEGEL: We hear elderly people in the streets saying: We do not want
another Mobutu, a tyrant, who plundered the country for 32 years.

Kabila: Whom are the people comparing Mobutu to? I don't think it's an
appropriate question as far as I am concerned.

Kabila: I would like you to meet with the Electoral Commission to get
that answer. The Congo is a continent unto itself. Don't look at the
Congo through the window of Berlin. We don't even have 10 percent of
the infrastructure you have in Germany. Can you imagine holding
elections 2,000 kilometers from here?

SPIEGEL: So, it may take longer to organize the election?

Kabila: It might take longer or not. As I mentioned earlier: If you
organize chaotic elections, you will get chaos.

SPIEGEL: Where do you see your role or position after the official end
of your term in office?

Kabila: Well, I'll leave that to myself. Don't worry, I'm not going to
commit suicide. And I will definitively continue to be of service to
my country.

Paul Virilio and his extraordinary book – Speed and Politics. “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), in other words a producer of speed.’’

In fact, the numbers were building and Katumbi must have been thinking
this might just turn into a Tsunami. President Kabila, however, out-
witted Katumbi by removing him from the street and the Congo entirely.
This might well prove a cleverly administered technical knock-out. Of
course, the precursor was the Burkina uprising in Ouagadougou in 2014
which terminated ‘’beautiful’’ Blaise Compare.  The street is a
tinderbox and it has become a major area of (political) contestation
across the continent.

Maka Angola is reliably informed that on May 17 Isabel dos Santos went
to see the Finance Minister, Archer Mangueira, to request an injection
of three billion dollars (!!) to rescue Sonangol from imminent
bankruptcy.

From the moment her father appointed her to head Sonangol, Isabel dos
Santos has encountered repeated difficulty in obtaining credit from
the international financial markets given the conflicts of interest
between her private business interests and those of the Angolan state.

International financiers are said to believe that her brand is now "toxic".

It was a massive drought that propelled Karani, who is now almost 80,
into the job that defined his career. Somalia typically has two wet
seasons each year: The long rains, gu, last from April to June and the
deyr from October to November. But in 1974 and 1975, the rains never
came. The Dabadheer drought, as it became known, translates to “the
long-tailed one,” because “it stayed for a long time,” Karani
explained. Some 19,000 people starved to death, and a quarter-million
nomads lost most of their livestock, leaving them destitute.

Dollar versus Rand 6 Month Chart INO 12.8497
http://quotes.ino.com/charting/index.html?s=FOREX_USDZAR&v=d6&t=c&a=50&w=1

Egypt’s net international reserves are nearing levels unseen since
the 2011 Arab Spring @business
https://twitter.com/business/status/871373903519723520

Egypt Pound versus The Dollar 3 Month Chart INO 18.0025
http://quotes.ino.com/charting/index.html?s=FOREX_USDEGP&v=d3&t=c&a=50&w=1

29-MAY-2017 ::  Actually and interestingly a number of African markets
have entered bull market territory, and even Nigeria is at the cusp.
http://www.rich.co.ke/media/docs/PX_014NSX2905.pdf

Nigeria All Share Bloomberg +16.73% 2017
http://www.bloomberg.com/quote/NGSEINDX:IND

31,371.63 +1,057.49 +3.49%

Ghana Stock Exchange Composite Index Bloomberg +13.61% 2017
http://www.bloomberg.com/quote/GGSECI:IND

Once upon a time, well close to 20 Years ago [which might as well mean
some fairy tale past given the speed with which the World is turning
and turning these days], I was a Managing Director at Sumitomo Bank
and running a Repo Desk and reporting to the Anglicised Konishi-san
who was my Executive Chairman. Konishi-san had hired me when I was 30
and made me a Managing Director. I had assembled a Team of 15 that sat
in London, New York and Tokyo. The Repo markets in those days were a
''Go-go'' market and we were aggressive and in fact Clients all over
the World knew we embraced taking on positions that others might blink
at. Sumitomo Bank had invested in an Indonesian Bank and we did some
business there with the ''Bakrie'' Brothers who were quite a colourful
pair and deserving of a column of their own. Well in that period
1997-1998, East Asia was gripped by a financial crisis which started
with the collapse of the Thai Baht. The Indonesian Rupiah followed.

One morning Konishi-san called me into his Office. The Government of
Indonesia is requesting a $500m Facility. Can we do it, he asked? They
are requesting we visit Jakarta immediately. The next day, we were in
Jakarta and in the evening we were in State House with President
Suharto, His Minister of Finance and the Governor of the Central Bank,
Konishi-san and myself. I engaged with the Governor and we established
he could cobble together enough collateral and I turned to Konishi-san
and said, Yes we can. We were of course going to be rewarded very
handsomely and I had persuaded Konishi-san that not only would we make
a lot of money but they would never forget that we had pulled through
when everyone was hitting the eject Button. Konishi-san sat on the
Board of the Bank in Tokyo and started to call other Board members to
get their agreement. We were front-running a request to the IMF by the
Government.

And at that moment, The Phone rings and the Minister picks it up and
then he turns to his President and announces We have got the IMF
Package but one of the conditions is we remove all the Food subsidies.

The President then turns to all of us and says ''Well that means I
will be gone in a week'' and he was.

Such a thing is not something you forget and from that time I have
studied the correlation between Food Prices and political reactions.
And let me tell you that high food prices are typically seriously
inimical to the interests of the incumbent Government. President
Suharto was an extreme example. Now what is crystal clear is that to
date the response to high food prices [and we can discuss another time
why we are here in the first place] could be best described as sub
optimal or more accurately as a Pig's Ear and in an election year.
Markets are often characterised as a Tug of War between Greed and
Fear. Well here it appears that Greed [Profiteering] has triumphed
over Fear [the Political need to win an election].

Intelligence Reports have this Election neck and neck as does my
Proprietary Rich Model. Every Vote will count.

If I were President Kenyatta I would be dialling up President Enrique
Peña Nieto and be ordering all the Food Supplies directly from him. I
would be packaging the Unga on the high seas with the right branding
and stamping it with a 90/= price and dumping it on the local market.
Its called Risk-Management.

Suharto (also spelled Soeharto; About this sound pronunciation
(help·info), or Muhammad Soeharto; Javanese : ꦩꦸꦲꦩ꧀ꦩꦢ꧀ꦯꦸꦲꦂꦠ ; 8 June
1921 – 27 January 2008) was the second President of Indonesia, holding
the office for 31 years from the ousting of Sukarno in 1967 until his
resignation in 1998.

150.08 +1.68 +1.13%

29-MAY-2017 ::  The Nairobi NSE20 similarly entered a bull market last week
http://www.rich.co.ke/media/docs/PX_014NSX2905.pdf

Nairobi ^NSE20 Bloomberg +9.01% 2017
http://j.mp/ajuMHJ

3,473.19 +32.14 +0.93%

Par Value:                  0.05/-
Closing Price:           22.50
Total Shares Issued:          40065428000.00
Market Capitalization:        901,472,130,000
EPS:             1.21
PE:                 18.595

Par Value:                  2.50/-
Closing Price:           7.85
Total Shares Issued:          6243873667.00
Market Capitalization:        49,014,408,286
EPS:             1.08
PE:                 7.269

Geopolitically speaking, we are seeing plenty of uncertainty. The
asymmetric threat on UK streets is plain alarming.
Jeremy Corbyn is landing some real strong punches now and Labour is no
longer the also-ran.
Many Folks including myself [mis]underestimated him.
The Bloomberg Dollar Index sank back to levels last seen during
session-lows on US election day in November.
The Qatar story sent Crude Oil higher but as I write its negative on
the day and that signals what a bearish market it is.
I am looking for $32,00 a barrel. We are last trading just below $47.50.
The Nairobi All Share eased -0.45 points off a 22 month high to close at 149.63.
The Nairobi NSE20 Index firmed +7.59 points to close at 3480.78 a 10
month closing high.
Equity Turnover clocked 458.773m.

Safaricom eased -1.11% off a record high to close at 22.25 and traded
4.777m shares. Safaricom has further price head-room. Safaricom is
+16.187% in 2017 and as undergirded the bull market.

Standard Group rallied +3.78% to close at 34.25 and is now +107.57% in
2017 and the best performing share at the Exchange bar none.

Deacons was upticked +9.722% to close at 3.95 but remains -34.71% in 2017.

KCB was the most actively traded share at the Securities Exchange and
rallied +1.88% to close at a fresh 12 month high of 40.75 and traded
3.915m shares worth 160.346m. KCB has soared +41.73% in 2017.
Equity Bank firmed +0.64% to close at 39.50 a 2017 closing High.
Equity is +31.66% in 2017.
COOP Bank firmed +1.466% to close at 17.35 and is +31.43% in 2017.
Diamond Trust Bank firmed +2.8% to close at a Fresh 2017 High of
147.00. DTB is +24.57% in 2017.

NIC Bank rallied +3.13% to close at 33.00 a 2017 high. NIC Bank IS
+26.9% in 2017.

--