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Macro Thoughts

If volatility spikes, positions are going to be reduced en masse. Or
to put it another way and to borrow the lyrics from the Eagles Hotel
California:

Mirrors on the ceiling,
The pink champagne on ice
And she said “We are all just prisoners here, of our own device” Last
thing I remember, I was
Running for the door
I had to find the passage back
To the place I was before
“Relax,” said the night man,
“We are programmed to receive.
You can check-out any time you like,
But you can never leave! “
What is clear is that we are at the fag-end of this party.

Conclusions

It took a long time to unwind but unwind it will

#Nikkei breaking out into 26-year recovering high. Will now channel
ATH approx 38957. $N225 $NK_F $N225_F The Rising Sun is back in
business.

Home Thoughts

Meet Simba, the undisputed ruler of the great plains of Talek in the
Maasai Mara. He might look harmless in this photo, but his roar is
blood cuddling and can be heard for up to five miles by humans and
probably even further by other lions. Photo by Mihir Mahajan.

"I wish my prose to be transparent—I don’t want the reader to stumble
over me; I want him to look through what I’m saying to what I’m
describing." V. S. Naipaul

Still, the offers suggests that South Korean President Moon Jae-in has
struck, if not gold, then certainly silver, in his aim of getting the
stalled denuclearization process, on which North Korea and the United
States are deeply divided, back on track.

The Question remains as follows. Kim Jong-Un can hardly forget what
happened to Saddam Hussein and Muammar Gaddafi, both of whom met their
Ends after being de-fanged. So my Question remains, what security
guarantees can Trump provide to Kim? that convince him to
denuclearise. Offering up bullet-proof security guarantees is the
equivalent of threading the needle.

The Events that took place on Friday at the truce village of Panmunjom
and during the Inter-Korean Summit were breathtaking for the Hollywood
Optics. The Opening Shot of Kim Jong Un surrounded by a Phalanx of
North Korean Officials [later replayed as Chairman Kim sat in his
Presidential Vehicle surrounded by his Ninja bodyguards] was almost as
good as the opening Sequence in PT Anderson's Boogie Nights [Steadicam
operator Andy Shuttleworth]. This was Cinema of the highest level
which is no surprise when You consider that Kim Jong-Il the Father was
obsessed with Cinema and amassed arguably the world’s largest personal
film collection: over 20,000 bootlegged 35mm screening copies. Kim
Jong-Il also had a penchant for Hennessy Paradis cognac and for two
years in the mid-1990s, he was the world's largest buyer of Hennessy
Paradis cognac, importing up to $800,000 of the stuff a year.  Kim
Jong-Il began his career as the head of the state’s propaganda and
agitation department and its clear that Kim Jong-Un's sister Kim Yo
Jong who holds the same role and evidently handles all the optics, is
a chip off the old Block. Friday was tip-top Geopolitical Optics. Mike
Pompeo, the newly minted US Secretary of State [His predecessor was
fired via Twitter] had visited Pyongyang the previous week and
pronounced; that the young North Korean leader was "a smart guy who's
doing his homework"

“Water is fluid, soft, and yielding. But water will wear away rock,
which is rigid and cannot yield. As a rule, whatever is fluid, soft,
and yielding will overcome whatever is rigid and hard. This is another
paradox: What is soft is strong,” Lao Tzu

South Korea is set to be peeled off and going by his puppy dog smiles
President Moonriver will be in PyongYang before you can pronounce Kim
Yo Jong correctly. Russia always had their back. China was never
interested in bringing him to heel. After all, he is the buffer state
between China and more than 30,000 US soldiers parked on their
doorstep in South Korea.

Gravity’s Rainbow is a 1973 novel by Thomas Pynchon which is about the
design, production and dispatch of V-2 rockets by the German military.
In particular, it features the quest undertaken by several characters
to uncover the secret of a mysterious device named the “Schwarzgerät”
(black device), slated to be installed in a rocket with the serial
number “00000”. As the world watches PyongYang, I cannot help
wondering if Kim Jong-Un has read Pynchon which speaks of “A screaming
comes across the sky” and North Korea.

“But it is a curve each of them feels, unmistakably. It is the
parabola.  They must have guessed, once or twice -guessed and refused
to believe -that everything, always, collectively, had been moving
toward that purified shape latent in the sky, that shape of no
surprise, no second chance, no return.’’

They all have had tiny little hands like the Elves in the Elves and
the Shoemaker. And this country has nuclear weapons and on its border
with its neighbour South Korea sit 25,000 American soldiers.

As the U.S.-China trade war escalates, with both parties imposing
higher tariffs on the other, U.S. Commerce Secretary Wilbur Ross tried
to defuse some of the tension. Because America’s 10 percent tariff on
some $200 billion worth of Chinese imports is “spread across thousands
and thousands of products,” he noted, “nobody is going to actually
notice it at the end of the day.”

This argument has been met by scorn, but has a disturbing grain of
truth to it. It is also a reason that the trade war may be worse, not
better, than expected.

To see why, it’s necessary to understand something called “tax
salience theory.” It is a basic principle of economics that consumers
notice changes in market prices and react accordingly. But tax
salience theory considers why consumers are more bothered by some
taxes than others.

For example, consumers (and voters) seem to be especially irritated by
high gas prices. Drivers have to buy gas regularly, the price is
advertised conspicuously, and higher gas expenses typically come out
of consumers’ discretionary income. The net result is that gas taxes
are probably lower than is socially optimal, considering that
congestion, road wear and climate change may imply a fairly high gas
tax. Because voters can so easily notice gas taxes, they hate them
more than they ought to. Another example: When highway tolls are
collected electronically, consumers tend to mind less, because they
are less aware of the payment, and that leads to higher tolls.

Given that tariffs also worsen relations with China, and increase the
risk of a broader breakdown in international cooperation, these latest
escalations are especially worrisome: They may have introduced
American politicians to a dangerous and essentially cost-free weapon.
Welcome to the next phase of the Trump administration.

James Dean was an iconic American actor, who tapped into the universal
yearning and angst of nearly every adolescent human being with a raw
connection that has surely not been surpassed since. In one of his
most consequential films, Rebel without a Cause, two players (read,
teenage boys) decide to settle a dispute (read, teenage girl) by way
of near-death experiences. Each speeds an automobile towards a cliff.
A simple rule governs the challenge: the first to jump out of his
automo- bile is the chicken and, by universally accepted social
convention, concedes the object in dispute. The second to jump is
victorious, and, depending on context, becomes gang leader, prom king,
etc.

#Bitcoin to drop to $5400, BofAML says. Cryptocurrency surged from
$400 to $19,600 in just 3yrs, 'greatest investment bubble of
all-time.' Bitcoin has slumped 65% to $6500, BUT average
peak-to-trough decline of 11 largest bubbles of all-time = 72% =
Bitcoin @ $5400, BofAML says.

King Dollar is unlikely to lose its crown before the end of the year.

That’s the consensus among participants at a currency conference.
Among the reasons for its trend to continue: a hawkish Federal Reserve
backed up by U.S. economic fundamentals, a European Central Bank on
hold until late next year and Brexit.

“I see the dollar going stronger,” said Thomas Wind, head of foreign
exchange and trading at Woodman Asset Management AG. “I can’t see
really what should change that besides inflation, weaker numbers out
of China and if Europe and the ECB goes a bit more aggressive on the
rates side.”

Predictions of the death of voice trading with the advent of the
updated MiFID regulations appear to be coming true. Andreas
Anschperger, head of currency trading in Frankfurt for Allianz Global
Investors, said not a single trade had been executed by voice on his
desk over the last few months, with the once-common method now
reserved for “emergency cases.”

Aside from the decline of voices, the next hot topic of discussion was
artificial intelligence and how it can be used to further expand
automation efforts in the currency trading sphere.

“The algorithms are getting much more advanced and dynamic,” said
Andrew Maack, global head of foreign-exchange trading at Vanguard
Group Inc. “They’re changing their behavior based on what they’re
seeing real time, they’re adjusting for real time liquidity in the
markets.”

The likely path of Britain’s exit from the European Union continues to
divide investors. Predictions at the gathering ranged from no Brexit
at all to a so-called hard Brexit, where Britain leaves the bloc
without a deal. Some thought the tide had turned over the preceding
few weeks, with signs that both sides may be more open to compromise.

Conclusions

.@RencapMan added some great nuance - Please watch his interview. In
essence, Trump he predicts will declare victory before the Mid-Terms -
then he expects the Tariff War to resume in 2019.

Since the beginning of 2018 the US has been reducing its balance
sheet, reducing the amount of Dollars and also increasing the interest
rate on those Dollars. The Dollar which had appeared like a Toy Gun
has suddenly metasized into an AK47. The Worry is what happens if it
metasizes even further? The Dollar is seriously weaponised. The US
economy is blowing hot. The risk is that US interest rates will go
higher than the market is currently predicting. Punch-drunk markets
need to sober up fast. Hyperbolic and populist responses are inversely
correlated to the state of the real economy, note Nicholas Maduro's
Venezuela and President Erdogan.

Euro 1.1677
Dollar Index 94,51
Japan Yen 112.19
Swiss Franc 0.9673
Pound 1.3149
Aussie 0.7258
India Rupee 72.035
South Korea Won 1119.32
Brazil Real 4.1315
Egypt Pound 17.9025
South Africa Rand 14.6631

$TSLA: 3.5
$AAPL: 4.3
$AMZN: 4.6
$GOOGL: 6.6
$MSFT: 7.9
$NFLX: 12.1
Tilray: 708

The maker of cannabis products nearly doubled before wiping out the
entire gain in less than an hour, only to finish 40 percent higher
than where it started. Sure, Tesla has delivered some whipsaw sessions
and AMD has tripled this year, but Wednesday’s moves had a different
feel.
“It’s almost like everyone wanted to express their fear and greed
through one entity,” Michael Antonelli, an institutional equity sales
trader and managing director at Robert W. Baird & Co., said by phone.
“It’s fun to watch. It’s the wild west right now for cannabis. It
isn’t the kind of thing that institutions would touch.”
Almost $6.5 billion worth of Tilray shares traded hands on U.S.
exchanges Wednesday, second only to Amazon.com’s $7.6 billion -- a
stock almost 47 times the size of Tilray’s $20 billion market
valuation. The weed company finished the day bigger than 40 percent of
the companies in the S&P 500.
As Twitter buzzed with pot jokes and incredulous takes on the rally,
news hit that a private equity fund backed by billionaire Peter Thiel
held 76 percent of Tilray. Three of the fund’s founders joined him in
the billionaire club, at least on paper.
“The behavior is very reminiscent of the internet bubble,” said
Michael O’Rourke, chief market strategist at JonesTrading
Institutional Services. “A nascent industry, a company with what is
viewed as first mover advantage, a small float and some media hype is
a dangerous recipe for investors.”
Then things really took off.
Tilray surged another 25 percent in 15 minutes to touch an intraday
high of $300.00 at 2:50 p.m. in New York -- a gain of 94 percent. Then
it cratered, plunging enough in two minutes to trigger an automatic
trading halt, a mechanism put in place after the flash crash of 2010
to prevent prices from spiraling out of control before humans have
time to sort out whether the moves are justified.
When trading resumed after the prescribed 10-minute break, shares shot
higher, tripping another stop. The next resumption led to a plunge and
another time out.
Sellers were ready. In minutes, Tilray plunged to $151, wiping out all
of the day’s gains and setting off another trading halt shortly before
the close. This time the bulls pounced, pushing the stock higher by
almost 40 percent. It ended at $214.06.
“We saw Tesla making some crazy moves a little over a month ago. That
was peanuts compared with Tilray,” said Don Selkin, chief market
strategist at Newbridge Securities Corp. “ It has nothing to do with
the long-term outlook on the industry. It’s a purely technical move.”
The closing flourish that added $63 to the share price took just six minutes.
“It left a sea of bodies, both longs and shorts, behind in its wake,”
Dave Lutz, Managing Director at JonesTrading, said.

Emaar Properties -- whose name can be seen in big letters on top of
buildings in areas popular among expatriates, such as the surrounds of
Burj Khalifa and Dubai Marina -- trades at about 4.8 times estimated
earnings in the next 12 months, the lowest in more than eight years.
That’s below the 6.6 times of the MSCI EM Real Estate Index. Damac
Properties also trades at 4.8 times.

Money is starting to trickle back into local-currency emerging-markets
debt. This $6 billion iShares ETF that focuses on the debt saw its
biggest inflow yesterday in more than a year.

Frontier Markets

People’s Liberation Movement/Army (SPLM/A), specifically between
President Salva Kiir, an ethnic Dinka, and former Vice President Riek
Machar, an ethnic Nuer. Machar had served as the country’s vice
president between 2005 and July 2013, when he was dismissed by Kiir.
The violence, which broke out in the military barracks in the capital
city, Juba, quickly escalated, with government forces deliberately
killing Nuer civilians based on their ethnicity and perceived
political affiliations. The SPLM/A fractured further, with some
maintaining allegiance to the government and others defecting to
support the armed opposition, led by former Vice President Machar,
which came to be known as the SPLM/A-In Opposition (IO). Within a
matter of days, the conflict spread to Jonglei, Upper Nile, and Unity
States, with both the government and the opposition engaging in a
tit-for-tat escalation in hostilities—the brunt of which was born by
the civilian population.

Of the nearly 2 million internally displaced persons (IDPs) scattered
across the country, around 200,000 are living in “Protection of
Civilian” (POC) sites on the bases of the UN peacekeeping mission in
South Sudan (UNMISS).

Recent years have seen increasing intra-Nuer divisions caused, in
part, by the fractionalization of the armed opposition, the SPLA-IO,
into those loyal to former Vice President Machar and those loyal to
current First Vice President Taban Deng Gai. Both men are Nuer who
hail from Unity state: Deng Gai is from Guit county in northern Unity
state, and Machar is from Leer county in southern Unity state. The
SPLA-IO under Deng Gai and their allied militias have largely
maintained allegiance to the government in Juba.

People who fled their home villages to take refuge on islands in the
swamp said that government forces and allied youth militia even
carried out attacks on these refuges using amphibious vehicles, and in
some instances shelling. A young man who was hiding on the island of
Rubchar, in Mayendit, said that government troops attacked the island
late one night.

The use of sexual violence against women and girls during the
government offensive appears to have been systematic. UNMISS
documented the rape and gang rape of 120 women and girls, one as young
as four years old.42 These acts, UNMISS said, were used “to
demonstrate power over ... victims, impose extreme humiliation,
destroy ... dignity and to fracture families and the community through
the stigma and shame attached to survivors.”43 Medecins sans
frontières (MSF) also reported that they treated 21 survivors of
sexual violence in 48 hours in one village alone.

The elite’s relentless zero-sum scramble for power and profit has
given rise to corruption and kleptocracy characterised by massive
illicit financial flows that have impoverished the country

First, what resources would sustain the transition government? Funding
the bloated government of 40-plus cabinet members and 550 legislators,
together with members of devolved state parliaments and
administrations, will depend on oil revenue and international support.

The finance ministry says renewed oil production should make up for
the over $4-billion revenue loss during the civil war. But governance
ineptitude has led to donor fatigue, making international financial
support less likely.

For instance, former deputy army chief-turned-rebel commander General
Thomas Cirilo Swaka’s recent visit to the US to meet the South
Sudanese diaspora caused jitters back home. It raised questions about
plans for a regime change engineered by the US government using the
rebel leader.

Conclusions

Limit Short

Africa is a young continent Nearly 60 percent of Africans are under
the age of 25 Compare that to 27 percent of Europeans  The median age
across Africa is 18.  Compare that to 35 in North America (or 47 in
Japan).

human-capital investments can do the same for the poorest countries in
Africa. Across sub-Saharan Africa, these investments could increase
the size of the economy by nearly 90 percent by 2050

One-third of African children are stunted, which means their brains
and their bodies aren’t developing fully. But there are proven
strategies for solving the stunting problem. In last year’s
Goalkeepers report, we wrote about Peru, where government
interventions helped reduce stunting by more than half in just eight
years.

I think about the future of my continent in terms of 3 questions: Are
Africans healthy? Do they have access to a good education? And do they
have opportunities to apply their skills? http://gates.ly/2NT3zZQ

Today, Ethiopia’s PM showed some velocity, a clear pivot from the
lofty languages of love and ‘medemer’ that dominated his premiership
to a more assertive tone on a range of issues. He said: we will not
tolerate political entrepreneurs & mercantilists.

He has been Prime Minster for 90 days. During those 90 days, he has
criss-crossed the country, ended a state of emergency, released
thousands of political prisoners, thawed relations with Eritrea [29
Mar 2018 HE Abiy Ahmed @PM_AbiyAhmed - It is time. Lets build a wall
of love between #Ethiopia & #Eritrea], bagged a $1b from the UAE,
announced a dramatic economic about-turn. In matters language and
linguistics, he has tapped into a ‘’Nelson Mandela’’ 1994 mood.  ese
90 or so days represent the most consequential arrival of an African
politician on the African stage since Mandela walked out of prison
blinking in the sunlight and constructed his ‘’rainbow nation’’.

.@AfDB_Group bought insurance on a $1bn portfolio of loans from a
group of investors led by Mariner Investment Group through a so-called
synthetic securitisation, in which the hedge fund does not acquire the
assets but will take on $152m of default risk

Fifteen Liberians, including the son of former president Ellen Johnson
Sirleaf, are banned from leaving the country while the government
investigates the whereabouts of $104 million in missing cash intended
for the central bank, the government said.

A series of shipments of notes ordered by Liberia’s central bank from
printers overseas have disappeared since last year after passing
through the country’s main ports, Liberia’s information minister
Eugene Nagbe told local radio on Tuesday.

The missing amount is the equivalent of nearly 5 percent of the West
African country’s gross domestic product (GDP).

Charles Sirleaf, the son of Nobel Peace Prize winner Ellen Johnson
Sirleaf, and former central bank governor, Milton Weeks, are among
those barred from travel as part of the investigation, said a Ministry
of Information statement released late on Tuesday.

“The government... takes the ongoing investigation seriously because
it has national security implications,” it said.

Dollar versus Rand 6 Month Chart INO 14.6698 [market pricing in a rate hike]
http://quotes.ino.com/charting/index.html?s=FOREX_USDZAR&v=d6&t=c&a=50&w=1

Egypt Pound versus The Dollar 3 Month Chart INO 17.8955
http://quotes.ino.com/charting/index.html?s=FOREX_USDEGP&v=d3&t=c&a=50&w=1

Ghanian Civil Servants getting ambushed by bosses and then fired for
coming late to work. @Asmali77
https://twitter.com/Asmali77/status/1042140031991853056

Ghana Stock Exchange Composite Index Bloomberg +7.93% 2018
http://www.bloomberg.com/quote/GGSECI:IND

This leaves Multichoice free to fend for itself in an increasingly
competitive market where Netflix is already supplying thousands of
viewers with original TV content and Hollywood hits such as “Stranger
Things” and “House of Cards”.

“The intention is to basically have absolutely minimal debt going to
Multichoice to provide them with flexibility to make any strategic
move they want to make,” said Naspers’ chief executive Bob van Dijk.
“We’re not going to suck any cash out of Multichoice.”

Although streaming is still rare on a continent hobbled by slow
internet speeds, reaching fewer than 2 million of sub-Saharan Africa’s
billion citizens, it is increasingly challenging more popular
satellite-TV services.

Multichoice’s fledgling internet-streaming service, Showmax, is
betting a blend of Hollywood blockbusters and local content such as
“Real Househelps of Kawangware” and “The Bachelor South Africa” will
set it apart from rivals. It launched Showmax in 2016.

Multichoice had 7.5 billion rand ($503 million) cash at the end of the
latest financial disclosure period in March, generated largely from
subscription fees of as much as 809 rand a month from some of its 13.5
million households across the continent.

“The listing of Multichoice Group will create a leading entertainment
business on the JSE that is profitable and cash generative,” Patel
said in e-mail reply to questions.

The listing of Multichoice is likely to fetch between 9 and 12 times
its $627 million annual core earnings, or EBITDA, valuing it at least
$5.6 billion

“We endorse this decision. Naspers recently raised 140 billion rand,
twice the size of Multichoice, by selling 2 percent of Tencent and 33
billion rand from the sale of their Flipkart stake,” said Byron
Lotter, a portfolio manager at Vestact, which owns shares in Naspers.

“Historically Naspers used the Multichoice cash cow to fund new
acquisitions. They no longer need the cash from Multichoice.”

Kenya’s budget deficit should be a worry for investors in East
Africa’s biggest economy, according to Renaissance Capital’s chief
economist, Charles Robertson.

The Treasury projects a funding gap of 5.9 percent of gross domestic
product this financial year, compared with 7.2 percent in the previous
year. That still falls short of the 3 percent target the International
Monetary Fund set for the state when it provided a precautionary
arrangement two years ago.

“Kenya should be a country of concern for investors,” Robertson said
at a conference in the capital, Nairobi. “So we need to see fiscal
adjustment in Kenya as we have needed the same in Argentina.”

Kenya is not as dependent on hot money as Argentina, making it a safer
investment destination than the south American economy, he said.

The government’s revenue projections are “too optimistic” and the
budget deficit will likely be wider than estimated, according to
RenCap’s economist for sub-Saharan Africa, Yvonne Mhango.

The state is reducing spending estimates this financial year by almost
2 percent after President Uhuru Kenyatta vowed austerity to improve
the government’s fiscal position. While he intends to cut expenditure,
he’s also promised 500,000 low-income housing units, universal
healthcare, food security and to increase manufacturing’s contribution
to 15 percent of GDP by 2022, when his second term ends.

“I would like to see Kenya borrow more to do a lot of investment to
achieve manufacturing at 15 percent of GDP, but the world economy
shows me they have to do a lot less of this, and raise taxes,”
Robertson said.

RenCap said the Kenyan currency is overvalued and should be about 120
shillings to the dollar. It estimates the shilling will decline to 105
shillings by the end of 2018 from 101 shillings at present, Mhango
said.

“We have seen the current account decline, which will help contain the
FX reserves position and the currency,” she said.

While RenCap initially expected economic growth of 4.5 percent this
year because of a cap on commercial interest rates, output has been
more robust and it now estimates expansion of 5.4 percent, Mhango
said. For about two years, Kenya has had a limit of 400 basis points
above the prevailing central bank rate that lenders say has crimped
credit, especially to risky borrowers.

While Kenya has come under IMF pressure to do away with the cap, the
state wouldn’t want it gone because banks will resume private-sector
lending, which would drive the government’s borrowing costs higher,
Robertson said.

“With the budget deficit, we see a fiscal argument to retain the rate
cap,” he said.

Nairobi All Share Bloomberg -8.96% 2018
http://www.BLOOMBERG.COM/quote/NSEASI:IND

Nairobi ^NSE20 Bloomberg -21.08% 2018
http://j.mp/ajuMHJ

Every Listed Share can be interrogated here
http://www.rich.co.ke/rcdata/nsestocks.php