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Monday 01st of October 2018 |
Morning Africa |
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If you are tracking the NSE Do it via RICHLIVE and use Mozilla Firefox as your Browser. 0930-1500 KENYA TIME Normal Board - The Whole shebang Prompt Board Next day settlement Expert Board All you need re an Individual stock.
The Latest Daily PodCast can be found here on the Front Page of the site http://www.rich.co.ke |
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01-OCT-2018 :: Brent crude at a four year high Africa |
The World consumes 100 million barrels per day (bpd) - more than twice what it was 50 years ago - If we use a Price of $80.00 a barrel, that equates to $8b a day $2.92 Trillion a Year and thats a raw number without value addition. And this is real cash and why Ryszard Kapuściński wrote in his book Shah of Shahs
“Oil kindles extraordinary emotions and hopes, since oil is above all a great temptation. It is the temptation of ease, wealth, strength, fortune, power. It is a filthy, foul-smelling liquid that squirts obligingly up into the air and falls back to earth as a rustling shower of money.”
“Oil creates the illusion of a completely changed life, life without work, life for free. Oil is a resource that anaesthetises thought, blurs vision, corrupts.”
The History of Oil did not start In February 1945, when Roosevelt met with King Abdulaziz of Saudi Arabia in person aboard the USS Quincy but the History of the Petro-Dollar did. This Grand Bargain between the US President and a Saudi King established that Oil would always be denominated in Dollars and Folks from Saddam Hussein to Chavez of Venezuela and now The High Representative of the European Union for Foreign Affairs Federica Maria Mogherini have all sought to break the chokehold of the Petro Dollar. Mogherini announced that Europe would create a Special Purpose Vehicle ''a legal entity to facilitate legitimate financial transactions with Iran and this will allow European companies to continue trade with Iran, in accordance with European Union law'' Good Luck with that Federica, well, at least she showed willing, which is as far it goes.
Whilst Western Powers have been practically religious about how they characterise Oil Wars as being nothing of the sort. You will recall Wolfowitz who when asked why a nuclear power such as North Korea was being treated differently from Iraq, where hardly any weapons of mass destruction had been found, the deputy defence minister said: "Let's look at it simply. The most important difference between North Korea and Iraq is that economically, we just had no choice in Iraq. The country swims on a sea of oil."
On Friday, Brent Crude surged to A 4 Year high above $83.00 a barrel. The market is anticipating the US sanctions on Iran and a November Guillotine. At its 2018 peak in May, Iran exported 2.71 million bpd, nearly 3 percent of daily global crude consumption. Trump has proven a sanction warfare Specialist in fact his intrusive, coercive, economic and sanction warfare strategy is surely his signature success of what has been an otherwise ''freewheeling'' US Administration. Venezuela which was another big Supplier is imploding. The market is tight and the Total CEO is now calling for triple digit Oil Prices. This is a double whammy for many Emerging Markets [strong Oil weak currencies] , with India and its Prime Minister a Sitting Duck, for example.
Trump has become increasingly strident about high prices which is a little cute given that it is his sanction warfare [particularly against Iran] which has lifted prices. Donald Trump spoke on the phone Saturday with King Salman bin Abdulaziz of Saudi Arabia, days after the U.S. president’s latest criticism of OPEC over high oil prices. Trump has gone after OPEC multiple times this year, including while speaking at the United Nations on Sept. 25.
“OPEC and OPEC nations, are, as usual, ripping off the rest of the world, and I don’t like it,” Trump said in an address to the United Nations General Assembly in New York. “We want them to stop raising prices. We want them to start lowering prices and they must contribute substantially to military protection from now on.”
He of course is facing a problematic Mid-Term Election and the last thing he wants are Angry Consumers at the Polling Stations. Therefore, I venture, he will tempted to unload Supply out of the US Special Reserve and therefore Bulls need to be wary of a precipitous downside draft on that announcement which might well wash a lot of People out. That announcement will be the starting Gun for Folks who have the guts to catch a Falling Knife because it will prove a momentary and fleeting firesale.
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What Oil at $100 a Barrel Would Mean for the Global Economy @business Africa |
4. Who wins from higher oil prices?
Most of the biggest oil-producing nations are emerging economies. Saudi Arabia leads the way with a net oil production that’s almost 21 percent of gross domestic product as of 2016 -- more than twice that of Russia, which is the next among 15 major emerging markets ranked by Bloomberg Economics. Other winners could include Nigeria and Colombia. The increase in revenues will help to repair budgets and current account deficits, allowing governments to increase spending that will spur investment.
4. Who loses?
India, China, Taiwan, Chile, Turkey, Egypt and Ukraine are among the nations who would take a hit. Paying more for oil will pressure current accounts and make economies more vulnerable to rising U.S. interest rates. Bloomberg Economics has ranked major emerging markets based on vulnerability to shifts in oil prices, U.S. rates and protectionism.
One of the biggest winners might also find itself on the losing end: Oystein Olsen, Norway’s central bank governor, warned that western Europe’s biggest petroleum producer risks problems if the industry takes its eyes off controlling costs.
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Black mirror: '20:50', 1987, by Richard Wilson at the @haywardgallery via @spectator Africa |
A reflection on still water was perhaps the first picture that Homo sapiens ever encountered. The importance of mirrors in the history of art has been underestimated
“The sky was rarely more than pale blue or violet, with a profusion of mighty, weightless, ever-changing clouds towering up and sailing on it, but it has blue vigour in it, and at a short distance it painted the ranges of hills and the woods a fresh deep blue.” ― Karen Blixen, Out of Africa
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Happy (811th) birthday, Mowlana #Rumi @JZarif Africa |
"I am not of the East, nor of the West, nor of the land, nor of the sea; ... For I belong to the soul of the Beloved. I have put duality away, I have seen that the two worlds are one; One I seek, One I know, One I see, One I call."
Happy (811th) birthday, Mowlana #Rumi.
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@jpmorgan Sees All-Out U.S.-China Tariffs, Lowers Yuan Call @economics Law & Politics |
“JPMorgan has adopted a new baseline that assumes a U.S.-China endgame involving 25 percent U.S. tariffs on all Chinese goods in 2019,” JPMorgan strategists including John Normand wrote in a note Friday. While growth forecasts for both the U.S. and China aren’t much affected, thanks in part to Chinese stimulus measures, “a weaker yuan becomes part of the new equilibrium,” they wrote.
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Former foreign secretary @BorisJohnson questioned whether @theresa_may believes in Brexit and branded her Chequers plan "deranged" @thesundaytimes Law & Politics |
In an interview with The Sunday Times — his first with a newspaper since resigning from the cabinet — the former foreign secretary questioned whether Theresa May believes in Brexit and branded her Chequers plan “deranged”.
Johnson also called for the government to be “proud” to advance Conservative ideas and far bolder in building houses and infrastructure.
He said Britain should build a bridge to Ireland and put the HS2 scheme on hold so a high-speed rail link can be built across the north of England instead. And he touted his own experience of winning two London mayoral elections as evidence that the Tories can win in unlikely places — if they have the right leader.
In a scarcely coded attack on May’s taste for new regulations and taxes, Johnson said: “I think we need to make the case for markets. I don’t think we should caper insincerely on socialist territory. You can’t beat Corbyn by becoming Corbyn.”
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His performance was right out of Norman Rockwell with a touch of "Mad Men." @NYTimes Law & Politics |
What America saw before the Senate Judiciary Committee was an injudicious man, an angry brat veering from fury to sniveling sobs, a judge so bereft of composure and proportion that it was difficult not to squirm. Brett Kavanaugh actually got teary over keeping a calendar because that’s what his dad did. His performance was right out of Norman Rockwell with a touch of “Mad Men.”
This is what you get from the unexamined life, a product of white male privilege so unadulterated that, until a couple of weeks ago, Kavanaugh never had to ask himself what might have lurked, and may still linger, behind the football, the basketball, the lifting weights, the workouts with a great high-school quarterback, the pro-golf tournaments with Dad, the rah-rah Renate-ribbing yearbook, the Yale fraternity, and the professed sexual abstinence until “many years” after high school.
For my common sense, Mr. Kavanaugh “doth protest too much, methinks.” Christine Blasey Ford rang true. I’ll take her “100 percent” over his. She felt no need to yell. Nor did she hide behind a shield of repetition. She did not succumb to pathos (“I may never be able to coach again”). She spoke with a deliberation, balance and humanity missing in the judge.
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Kenya Shilling versus The Dollar Live ForexPros Kenyan Economy |
Kenya Shilling gained marginally against the US Dollar by 0.1% in Q3’2018 to close at Kshs 101.0 from Kshs 101.1 at the end of Q2’2018.
Improving diaspora remittances, which increased by 71.9% y/y to USD 266.2 mn in June 2018 from USD 154.9 mn in June 2017 and by 4.9% m/m, from USD 253.7 mn in May 2018,
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Unga Group Ltd reports FY 2018 EPS +1,271% Earnings here Kenyan Economy |
Par Value: 5/- Closing Price: 41.00 Total Shares Issued: 75708872.00 Market Capitalization: 3,104,063,752 EPS: 6.72 PE: 6.011
Unga Group Limited FY 2018 results through 30th June 2018 vs. 30th June 2017 FY Revenue 19.982070b vs. 19.528785b +2.321% FY Operating profit 1.273403b vs. 237.868m +435.340% FY Finance income 116.649m vs. 67.415m +73.031% FY Profit before taxation 1.299266b vs. 228.350m +468.980% FY Profit for the year from continuing operations 788.774m vs. 111.912m +604.816% FY Profit for the period 783.203m vs. [7.039m] FY [Loss]/ Profit attributable to owners of the parent 509.082m vs. 37.371m +1,262.238% Basic and diluted EPS 6.72 vs. 0.49 +1,271.429% Total assets 9.932664b vs. 9.455316b +5.048% Cash and cash equivalents at the end of the period 1.088455b vs. 1.714755b -36.524% Dividend 1.00 vs. 1.00 –
Company Commentary
Discontinuation of operations at the Ugandan subsidiary shielded the Group from some of the losses suffered in the preceding year, in which an investment impairment was recorded. exploration of regional opportunities is ongoing.
Conclusions
Strong rebound.
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NDII: Fiddling, while Kenya burns @DavidNdii Kenyan Economy |
First, the expenditure cuts are less than the revenue forecast which is revised downwards by Sh. 96 billion, while expenditure is revised downwards by Sh. 83 billion. Even though the 10 billion difference is not such a big sum, it’s unclear why the government would go to such lengths to table an austerity budget that increases the deficit.
More significantly, the revenue forecast is still unrealistic. The budget was based on revenue growth of 31 percent, comprising of 30 percent and 36 percent increase in tax and non-tax revenues respectively, which has now been scaled down to 25 percent, with tax and non-tax revenue forecast down to 24 and 28 percent respectively. These forecasts are out of touch with reality. Tax revenues increased only three percent and non-tax by 12 percent for a total revenue increase of four percent. This, as we will see shortly, is not an anomaly—it is a significant trend.
But the National Treasury’s growth projections are as panglossian as ever. In the original budget forecast, the nominal GDP expands from 7.7 trillion in FY16/17 (the latest actual data) to Sh. 12.6 trillion in FY20/21 a growth of 64 percent or 17 percent per year. Nominal GDP is the denominator used to calculate budget financial ratios. This translates to a real economic growth rate of 7.4 percent per year (this is obtained by applying an inflation adjustment known as GDP deflator. I have applied the average deflator for the last five years). Average growth rate for the last five years—5.56 percent. Growth has topped seven percent only once in the last thirty years— 2007. Now comes the remarkable part. In the revised projections, nominal GDP has been adjusted upwards to just under Sh. 13 trillion in FY20/21. It is conceivable that the mandarins are factoring higher inflation— one hopes so because otherwise it translates to a delusional eight percent per year growth rate. The reason for the sharp fall in the revenue ratio last year is now clear— GDP has been inflated on purpose. What is this fantasy in aid of? Their purpose is to reduce the budget financial ratios without budget cuts. This way, they are able to “get away” with fiddling with the actual budget figures and still achieve “fiscal consolidation.” This year, the deficit in the revised budget is adjusted upwards by 14b from 603 to 622 billion but it as a ratio to GDP it declines from 6.3 to 6.1 percent on account of GDP being adjusted upwards by 321 billion.
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