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Satchu's Rich Wrap-Up
 
 
Tuesday 14th of August 2018
 
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Macro Thoughts

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"The Americans don't want a deal," says one fund manager. "They want to screw us." @TheEconomist
Africa


Chinese officials and investors have swung from a state of denial
about the trade war to deep pessimism. "The Americans don’t want a
deal," says one fund manager. "They want to screw us.”

read more


President Trump seems to be relishing his financial warfare strategies Xi suddenly looks ever so fragile
Africa


President Trump seems to be relishing his financial warfare
strategies. He has Khamenei on the run, Maduro in Venezuela is being
attacked by remote-controlled drone, Xi suddenly looks ever so fragile

read more






13-AUG-2018 :: Trump seems to be relishing his financial warfare strategies. He has Khamenei on the run, Maduro in Venezuela is being attacked by remote-controlled drone, Xi suddenly looks ever so fragile
Law & Politics


President Trump seems to be relishing his financial warfare
strategies. He has Khamenei on the run, Maduro in Venezuela is being
attacked by remote-controlled drone, Xi suddenly looks ever so fragile

read more


13-AUG-2018 :: President Erdogan [Like Xi Jinping] finds himself caught in the Strong Man Conundrum.
Law & Politics


President Erdogan [Like Xi Jinping] finds himself caught in the Strong
Man Conundrum. If You are the Strong Man and have placed yourself on a
Pedestal then you own the problem.

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Currency Markets at a Glance WSJ
World Currencies


Euro 1.1401
Dollar Index 96.29
Japan Yen 110.82
Swiss Franc 0.9939
Pound 1.2762
Aussie 0.7267
India Rupee 69.775
South Korea Won 1130.25
Brazil Real 3.8830
Egypt Pound17.9125
South Africa Rand 14.3235

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Elon Musk has accidentally given Saudi Arabia the power to wreck Tesla via @bopinion
World Currencies


Saudi Arabia now has the ability, if it wants, to hammer Tesla’s
credibility, and stock, with little more than a few well-timed leaks
indicating a lack of interest. No question.

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Bitcoin dropped below $6,000 and dozens of smaller digital tokens tumbled as this month's selloff in cryptocurrencies showed few signs of letting up @crypto
World Currencies


The largest digital currency fell as much as 6.2 percent to $5,887 as
of 10:44 a.m. in Hong Kong, the lowest level since June, according to
Bloomberg composite pricing. Ether sank 12 percent, while all but one
of the 100 biggest cryptocurrencies tracked by Coinmarketcap.com
recorded declines over the past 24 hours.

Bitcoin has now dropped about 23 percent in August, extending its
retreat this year to 58 percent.

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The Mystery Behind Tether, the Crypto World's Digital Dollar @WSJ
World Currencies


A fast-growing digital currency that claims to be backed by U.S.
dollars has become a cornerstone of the volatile cryptocurrency
market. The problem: There isn’t hard evidence the cash supporting it
exists.

Tether, whose main selling point is its tie to the U.S. dollar, has
grown dramatically over the past year—its daily trading volume of
around $3 billion trails only bitcoin’s $5 billion. Tether has also
become a “crypto bank” for cryptocurrency businesses that have trouble
maintaining real-world banking relationships, providing liquidity and
a place to park assets, according to a new study from blockchain
research firm Chainalysis.

Tether has assumed this role because of its link to the dollar. Unlike
other cryptocurrencies that fluctuate wildly in value, one tether
generally equals one dollar. This makes it a sort of digital-dollar
substitute.

That is also why it is important that Tether has dollar reserves
backing each of its approximately $2.5 billion worth of coins in
circulation.

But Tether has never produced an audit showing it has the purported
reserves. The company that controls tether maintains it has the
reserves, yet it has never named the banks it uses to hold these
funds, nor said where they are based and regulated.

Last year, Tether hired accountants Friedman LLP, based in New York,
to audit the reserves. The firm issued a preliminary report last year,
but Tether says it released Friedman before a final audit was
completed. Friedman declined to comment.

Leonardo Real, Tether’s chief compliance officer, said that since then
the company has had difficulty finding a reputable firm willing to
take on a cryptocurrency client. He declined to say why Friedman was
let go.

“There’s nothing to hide here,” said Mr. Real. “It’s not three
managers just cranking out money randomly in a dark basement
somewhere.”

Unlike other cryptocurrencies, there isn’t a set amount of tether in
circulation. In theory, demand drives new issuance. Cryptocurrency
exchange Bitfinex places orders for new tokens with Tether and wires
dollars or euros to the company’s bank account, according to both
companies. Tether sends the newly created tokens to Bitfinex, which
distributes them to investors.

Investors have little visibility into the process. Bitfinex shares
ownership and management with Tether, and it is the only entity
through which Tether issues tokens.

“It’s sort of the central bank of crypto trading,” said David Gerard,
a programmer and author of “Attack of the 50 Foot Blockchain.” Yet
“they don’t conduct themselves like you’d expect a responsible,
sensible financial institution to do.”

Tether Ltd. marketed its cryptocurrency as a way to mediate the
sector’s volatility—offering the safety of the dollar along with the
speed and anonymity of a digital currency.

The pitch worked. Tether’s market value has risen steadily over the
past 18 months, to $2.4 billion from about $10 million at the
beginning of 2017. That has made it a crucial link in the wider
cryptocurrency market.

Tether-based trading volume grew more than 15-fold between October
2017 and March 2018, Chainalysis found. U.S. dollar-based trading
volume, meanwhile, tripled in that same period.

Some investors say tether has become systemically important within the
cryptocurrency market. “There are a couple of forces in this market
that if they failed, it would be catastrophic,” said Ding’An Fei, a
managing partner at Ledger Capital, a digital asset investment firm in
Beijing. “Tether is one of them.”

Chainalysis also found tether trading is increasingly concentrated
among smaller, more speculative digital currencies, a sign it is being
used as a tool of “pump-and-dump” schemes, in which traders hype an
asset, causing its price to rise, before dumping it for a profit.

Tether trading in newer tokens such as EOS and NEO has risen to about
20% of overall tether volume, according to the report.

The Securities and Exchange Commission recently singled out tether in
its rejection of a proposed bitcoin-based ETF, citing studies that
raised the possibility that the digital currency is being used to
manipulate the bitcoin market.

Tether’s Mr. Real contested such claims. “It’s not anything about
tether that enables this volatility,” he said.

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[The End of] Halcyon Days @TheStarKenya
Emerging Markets


Like a great Golden Flood of Liquidity QE is believed to have inflated
market valuations as far as Emerging, Frontier, Sovereign Sub-Saharan
Africa and even crypto currency markets, which I will get to
momentarily and which endured a Bloodbath on Friday.

Interestingly, JP Morgan’s EMBI spread is down to 258 basis points,
the tightest since mid-2014. How long this lasts is anybody’s guess.
Emerging and Frontier Markets Borrowers surely need to get their
skates on and pull the trigger real quick on any borrowing they had
been considering for this year.

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@realDonaldTrump Wields a Tariffs-and-Sanctions Hammer in Risky Strategy @YahooNews
Emerging Markets


Donald Trump isn’t the first American president to rely on economic
sanctions and tariffs to exert U.S. power, but he’s taking that
approach to new heights against allies and adversaries from Turkey to
North Korea.

With an unexpected tweet on Friday morning, Trump announced that he
was employing tariffs -- normally used to address trade disputes -- to
pressure Turkey over its continued detention of an American pastor
held since 2016. Turkish markets, already in a tailspin over President
Recep Tayyip Erdogan’s economic policies, tumbled further with Trump’s
decision to double steel and aluminum tariffs.

The move against Turkey follows Trump’s “maximum pressure” campaign on
North Korea, fresh penalties against Russia and his plan to reimpose a
raft of sanctions against Iran and anyone who does business with it --
including U.S. allies in Europe.

“They are explicitly using tariffs as a sanction,” said Richard
Nephew, a senior research scholar at the Center on Global Energy
Policy and the author of a new book on sanctions. “All these years, we
separated the two. Tariffs were for unfair trading practices, and
sanctions were for foreign policy problems. The president via tweet
said, to heck with it, we’re going to use tariffs for foreign policy
problems.”

read more



Turkey's headed to "full-blown financial crisis." @PIIE senior fellow Jacob Kierkegaard says he's "not sure Ankara understands what's about to hit them."
Emerging Markets


Turkey's headed to "full-blown financial crisis." @PIIE senior fellow
Jacob Kierkegaard says he's "not sure Ankara understands what's about
to hit them." @TheTerminal show's the lira's record melt-up to 7.

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13-AUG-2018 :: Cold Turkey @TheStarKenya
Emerging Markets


Harold Macmillan when asked what a prime minister feared most replied:
'Events, dear boy, events'."

President Erdogan of Turkey who you will recall cut short a State
Visit to Kenya a while back has been President of Turkey since 2014.
He previously served as Prime Minister from 2003 to 2014 and as Mayor
of Istanbul from 1994 to 1998. He founded the Justice and Development
Party (AKP) in 2001, leading it to general election victories in 2002,
2007 and 2011 before standing down upon his election as President in
2014. At an Exchange Rate of TRY 5.6 versus the Dollar Per capita GDP
is just under $8,000.00, the same as in 2006, which equates to 12
years of no growth, and down a 1/3rd since hitting a peak of more than
$12,000.00 in 2013 but still more than double the level when the AKP
took power in 2002. [Charlie Robertson via Twitter].

On Friday, The Turkish Lira death-spiralled lower at one point trading
an eye-popping -20% before recovering some of its losses to close
-10.00% on the day. The Turkish Lira has collapsed -16% over a week,
-20% over a 4 week period and -40% in 2018.

Turkey is now seen more likely to default on its debt than Greece,
which is rated four notches lower by @MoodysInvSvc

In 1998, Prime Minister Margaret Thatcher told the House of Commons:
"There is no way in which one can buck the market."

President Erdogan [Like Xi Jinping] finds himself caught in the Strong
Man Conundrum. If You are the Strong Man and have placed yourself on a
Pedestal then you own the problem. President Erdogan remains a limit
Short Trading position.

President Erdogan said : "Don't get high on your ambitions. You won't
be able make money on the back of this nation. You won't be able to
make this nation kneel." [They have already made a ton of money and
You are kneeling, Mr. President]

And Then  ''Even if they got dollars, we got 'our people, our God'''
[In the markets that is called a ''Hail Mary'' Pass]

Erdogan repeated his call to Turks to sell dollars, euros and support
the Lira. Turks are doing exactly the opposite.

The proximate cause for this currency crisis has of course been the
detention of the U.S. pastor Andrew Brunson but Erdogan and his
son-in-law had already been advocating their own version of ''voodoo''
economics and to quote Sid Verma

Who would have thought that unhedged large foreign debt, politicized
monetary policy, soaring inflation, a current account deficit,
geo-political troubles, an autocratic lurch, and weak sentiment for
emerging markets could create a currency crisis.

President Trump an avowed linguistic warfare Specialist has embraced
coercive sanction and financial warfare. Look at Venezuela where the
Bolivar has cratered -2,000,000%, Iran -30% and China where his Tariff
warfare has Xi Jinping reeling. JP Morgan was reported as suggesting
there is a risk that Trump sells Dollars in order to damp down the
Dollar. In fact, if Trump wanted to press his advantage he should buy
the Dollar not sell it. The Dollar is currently seriously weaponised.

Late Friday Trump double-downed on his short Lira position via Tweet

@realDonaldTrump Aug 10 ''I have just authorized a doubling of Tariffs
on Steel and Aluminum with respect to Turkey as their currency, the
Turkish Lira, slides rapidly downward against our very strong Dollar!
Aluminum will now be 20% and Steel 50%. Our relations with Turkey are
not good at this time!''

President Trump seems to be relishing his financial warfare
strategies. He has Khamenei on the run, Maduro in Venezuela is being
attacked by remote-controlled drone, Xi suddenly looks ever so
fragile.

President Erdogan is a Shakespearean Figure, he has slayed Enemies
real and not real, his chest has been puffed up with Pride, he even
rescued the Emir of Qatar but he has now met his match, that match
being the markets. I hope he still has Madam Lagarde's number on speed
dial.

Such is the ultimate Bonfire of Populist Vanity. The Populist Leaders
with their cheer-leading claques have drunk their own Kool-Aid and
therein lies our ultimate salvation. They will be driven over the Edge

"The Edge...There is no honest way to explain it because the only
people who really know where it is are the ones who have gone over"

President Erdogan is right at the Edge.

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Turkey's Erdogan says exchange rate will go back to rational levels within the econ reality. Says recent US actions are a stab in the back against Turkey @Schuldensuehner
Emerging Markets


Turkey's Erdogan says exchange rate will go back to rational levels
within the econ reality. Says recent US actions are a stab in the back
against Turkey. Says spreading false news about Turkey's economy is
"TREASON". Lira extends drop & Yields rise following Erdogan remarks

read more






Kabila's decision to step aside won't change the DRC's power dynamics @TC_Africa
Africa


Nevertheless, the party’s announcement means that for the first time
in modern Congolese history, presidential power will be transferred
through an election. Instead of Kabila, the Peoples’ Party for
Reconciliation and Democracy has fronted former interior minister
Emmanuel Ramazani Shadary as its presidential candidate.

Many commentators have described Shadary as a loyal regime hardliner.
There should be no illusions that his candidacy means that the DRC
faces a brighter democratic future. He is very close to Kabila (as he
was to his father) and is unlikely to threaten the incumbant’s grip on
power. Kabila will most likely pull the strings in the background if
Shadary is elected president in December.

One of the founders of the Peoples’ Party for Reconciliation and
Democracy , Shadary’s administrative career began in 1997 when the
former president Laurent Désire Kabila, appointed him as vice-governor
of the eastern Maniema province. A year later, he became governor.
Maniema is an important mining centre in eastern Congo even if it’s
not the most significant as it contains diamonds, copper, gold and
cobalt resources.

Since 2012, Shadary has been the president of the party’s
parliamentary group. He wields a lot of power in Kinshasa. Until
February this year he was instrumental in organising the violent
repression of protesters in the capital.

The US and EU have imposed sanctions on Shadary for his involvement in
repressive activities. This means that even if he’s elected president,
he will not be allowed to enter America or Europe.

That notwithstanding, the EU and the US are among the DRC’s largest
donors. And their sanctions have not impeded Shadary’s rise to power.

Shadary’s candidature means that Kabila may still retain a good deal
of power. There’s speculation that he could become prime minister
under Shadary. The president can technically choose the prime minister
under the Congolese constitution although their choice has to be
ratified by the National Assembly. If Shadary was elected, and Kabila
was chosen as his president, then this cohabitation would increase
Kabila’s power as PM. Both men would be from the same party, the PPRD,
and so the president would find it difficult to exercise power without
Kabila’s support.

There’s also speculation that he could run in the next presidential
elections that would occur five years after the next president is
elected in 2023.

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It's almost certain that the hugely popular former governor of Katanga, @moise_katumbi, will not be able to run for the presidency. @TC_Africa
Africa


@moise_katumbi, who has been in exile for two years, was denied entry
when he tried to enter the DRC at the Zambian border. There has been
widespread protests against the move, mainly in the southeastern city
of Lubumbashi. But he hasn’t been allowed home.

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There are contradicting reports about how Mugerwa was shot dead - with officials claiming the chaos was sparked off after Wadri and @HEBobiwine 's supporters attacked the convoy of President @KagutaMuseveni H/T @Smith_JeffreyT via @observerug
Africa


There are contradicting reports about how Mugerwa was shot dead - with
government officials claiming the chaos was sparked off after Wadri
and @HEBobiwine 's supporters attacked the convoy of President
@KagutaMuseveni H/T @Smith_JeffreyT via @observerug

read more






@Barclays_Kenya reports H1 2018 EPS +6.153% Earnings here
Kenyan Economy


Par Value:                  2/-
Closing Price:           12.35
Total Shares Issued:          5431536000.00
Market Capitalization:        67,079,469,600
EPS:             1.23
PE:                 10.041

Barclays Bank Kenya reports H1 2018 Earnings versus H1 2017 Earnings
H1 2018 Total Assets 316.628855b versus 268.186848b
H1 2018 Customer Deposits 216.808933b versus 188.652234b
H1 2018 Total Interest Income 14.138810b versus 13.136813b
H1 2018 Net Interest Income 10.966521b versus 10.544100b
H1 2018 Total Non-Interest Income 4.696931b versus 4.394476b
H1 Total Operating Income 15.663452b versus 14.938576b
H1 2018 Loan Loss Provision 1.716942b versus 1.353470b +26.85%
H1 2018 Total operating expenses 10.377635b versus 9.786409b +6.04%
H1 2018 Profit before Tax 5.285817b versus 5.152167b +2.59%
H1 2018 Profit After Tax 3.762069b versus 3.542638b +6.194%
H1 2018 EPS 0.69 versus 0.65 +6.153%
H1 2018 Dividend 0.20 unchanged

Conclusions

a Sequential Q-on-Q slowing +9.375% EPS at Q1 2018 now +6.153% at H1 2018

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Through its Country Manager, Martin Mbogo, Tullow Oil Company has expressed its satisfaction with the Government's intervention to break the 45-day stalemate @ngcc_ke
Kenyan Economy


Through its Country Manager, Martin Mbogo, Tullow Oil Company has
expressed its satisfaction with the Government's intervention to break
the 45-day stalemate which has caused losses of up to Kshs. 400
million. The contractor will resume full-time operations on 23 August,
2018.

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by Aly Khan Satchu (www.rich.co.ke)
 
 
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August 2018
 
 
 
 
 
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