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Macro Thoughts

Home Thoughts

The voice, in contrast to Colorado’s metallic pidgin, is a melange of
repartee, laughter, and song, with a “quality of purest, sweetest
sadness”.
“Somehow we are picking up signals from radio programmes of 40, 50, 60
years ago.”

Political Reflections

On the same day Donald Trump and Xi Jinping struck a trade war truce
in Argentina, some 7,000 miles away Canadian authorities made an
arrest that now threatens to make the U.S.-China conflict much worse.
The U.S. is seeking the extradition of Wanzhou Meng, chief financial
officer of Huawei Technologies Co., after convincing Canada to arrest
her on Dec. 1. Canada confirmed she was in custody shortly after the
Globe and Mail reported she had been arrested in connection with
violating sanctions against Iran.
China promptly reacted with outrage after the news broke, demanding
that both countries move to free Meng. Later, the foreign ministry
said it was waiting for details on why she was arrested, and said
trade talks should continue.
It’s hard to overstate the significance of her arrest in Beijing: Meng
is the daughter of the founder of Huawei, a national champion at the
forefront of Xi’s efforts for China to be self-sufficient in strategic
technologies. While the U.S. routinely asks allies to extradite drug
lords, arms dealers and other criminals, arresting a major Chinese
executive like this is rare -- if not unprecedented.
“The timing and manner of this is shocking,” Andrew Gilholm, director
of North Asia analysis at Control Risks Group, said by phone. “It’s
not often the phrase OMG appears in our internal email discussions. ”
Either way, China is almost certain to view Meng’s arrest as a major
escalation in the trade war that will foment fears of a wider Cold War
between the world’s biggest economies.
“It will definitely complicate the negotiations and they may believe
this was done to increase the pressure during this 90-day period,”
said Dennis Wilder, a former CIA China analyst and senior director for
Asia at the National Security Council under President George W. Bush.
“This is sending a signal that there is a new game,” Wilder said of
the recent U.S. arrests. “They are trying to deter Chinese espionage
and make it clear that there are real consequences.”
“Their goal is to decouple with China,” said Wang Yong, a professor at
the School of International Studies at Peking University.
“Negotiations are the wish of Trump and Wall Street.”

The Dinner ran over by sixty minutes and everyone broke out into
sponta- neous applause after.

“It’s going to be quiet for another one or two years, but then what?
The greater the pressure, the fiercer the backlash.”

Dissent is measured and snuffed out very quickly in China. China has
unveiled a Digital Panopticon in Xinjiang where a combination of data
from video surveillance, face and license plate recognition, mobile
device locations, and official records to identify targets for
detention [CDT]. Xinjiang is surely a Precursor for how the CCCP will
manage dissent.  The actions in Xinjiang are part of the regional
authorities’ ongoing “Strike-Hard” campaign, and of President Xi’s
“stability maintenance” and “enduring peace” drive in the region.

Euro 1.1366
Dollar Index 97.197
Japan Yen 112.835
Swiss Franc 0.9927
Pound 1.2765
Aussie 0.7228
India Rupee 70.545
South Korea Won 1117.605
Brazil Real 3.8793
Egypt Pound 17.9120
South Africa Rand 14.0419

It was an in an article on Dec 30th 2016 that I wrote that my
conviction Trade for 2017 was  1. Long BITCOIN. BITCOIN was trading at
levels around $1,000.00 going into 2017. My Thesis was that BITCOIN
and the entire crypto-currency World which had been very esoteric and
something of a closed World of ''bug-eyed'' Gamers and the Off-Grid
Folks who wanted throw the Yoke of Government off their backs, would
''mainstream'' And it ''mainstreamed'' beyond my wildest dreams
through 2017. By November 2017 BITCOIN was knocking on the door of
$10,0000.00 and on the 27th November 2017, I wrote an article
captioned  Bitcoin "Wow! What a Ride!" and advised booking the profits
on the Trade. A more than 9.7x Price Inflation was getting
uncomfortably close to outpacing the Tulip Mania [see Graph] BITCOIN's
parabolic price rally had spawned thousands of other crypto currencies
which were sold on the same grounds as the greatest South Sea Bubble
prospectus: “For carrying on an undertaking of great advantage, but
nobody to know what it is.”

The Price inflated further reaching a high of $19,763.00 on 18 dec
2017. By the first of January this year we had retreated to
$13,428.00. On the 02-JAN-2018 I reiterated my Point to get out and
said '' I am no longer bullish bitcoin, in fact, I am bearish''  At
this point in time, I met Folks on these Streets who would pull out
their Computer and show me how they were making money every second
[Look at that they would say and indeed There was a number and it was
ticking higher] mining BITCOIN. The recent cryptocurrency market
decline has resulted in a similar drop in mining profitability and
forced Chinese operators to sell their mining devices at a loss. Some
mining machines are being sold on the second-hand market for merely 5
percent of their original value.  Others would tell me, I've bought
Nvidia. Crypto at this point was at Peak Phenomenon.

As I write this BITCOIN is trading at $3,650.00. I think its going
right back to levels below $1,000.00.

We have yet to hit peak melt-down. The reason being so many Folks
espouse the HODL philosophy.

GameKyuubi posted "I AM HODLING," a drunk, semi-coherent, typo-laden
rant about his poor trading skills and determination to simply hold
his bitcoin from that point on. "I type d that tyitle twice because I
knew it was wrong the first time. Still wrong. w/e," he wrote in
reference to the now-famous misspelling of "holding." "WHY AM I
HOLDING? I'LL TELL YOU WHY," he continued. "It's because I'm a bad
trader and I KNOW I'M A BAD TRADER.  Yeah you good traders can spot
the highs and the lows pit pat piffy wing wong wang just like that and
make a millino bucks sure no problem bro."

He concluded that the best course was to hold, since "You only sell in
a bear market if you are a good day trader or an illusioned noob.  The
people inbetween hold. In a zero-sum game such as this, traders can
only take your money if you sell." He then confessed he'd had some
whiskey and briefly mused about the spelling of whisk(e)y.  [HODL
Definition | Investopedia]

Selling at todays levels frankly is still a great Trade.

“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.’’

Let me leave you with Hunter S. Thompson, “Life should not be a
journey to the grave with the intention of arriving safely in a pretty
and well preserved body, but rather to skid in broadside in a cloud of
smoke, thoroughly used up, totally worn out, and loudly proclaiming
“Wow! What a Ride!”

Commodities

The proximity of the beginning of the bear market in Crude Oil and the
disappearance of Khashoggi is no coincidence. The Sell-Off was
'manufactured'' by the Crown Prince and was his response and an
attempt to release some of the Pressure from the [geopolitical]
Pressure Cooker.

Emerging Markets

Frontier Markets

Lee Buchheit, a senior partner at law firm Cleary Gottlieb, has been
brought on board to advise a clutch of London-based funds who are
owners of unpaid debt that has been racking up interest since the
1980s. His reputation for antipathy towards so-called vulture funds
has made him a key pick for clients keen to signal that they are
seeking a fair deal.
Sudan has spent more than two decades in the geopolitical wilderness.
Frozen out of global capital markets by US sanctions, the government
has missed out on booming demand for African sovereign bonds in the
past 10 years. Its presence on a US list of state sponsors of
terrorism alongside Iran, Iraq, Syria and North Korea has added to the
financial pain, disqualifying Sudan from potential debt relief.
As the country’s relations with the US begin to thaw, Mr Buchheit
hopes Sudan will be able to borrow from international capital markets
once more, but says the government must first deal with its old debts.
“One of the things [Sudan] will have to do first is clear the Augean
stables of these old claims,” he told the Financial Times.
The US government lifted its 20-year-old sanctions on Sudan last year,
following improved co-operation on counter-terrorism and other US
priorities. Last month, the two countries agreed to begin negotiations
to remove Sudan from the US terror list, in what should be the final
step in Sudan’s geopolitical rehabilitation.
If Sudan can reach an HIPC deal between its government and
multilateral lenders, which hold the bulk of its external debt, it can
then pursue a similar restructuring with its private creditors. Any
deal with private creditors could see the latter group — often
referred to as the “London club” — take as much as a 90 per cent write
down on its claims.
The creditor group represented by Cleary wants the amount of debt then
left to be converted into a bond, so that it can more easily be traded
and sold on to other investors.
“That’s what I believe will happen,” said Cleary’s Mr Buchheit. “Now
if you ask me when it will happen, well that depends very much on the
politics and the extent of your belief in the efficacy of prayer.”
If successful, the hedge funds believe the negotiations will unlock a
global debt-relief agreement that has stalled for decades, clearing
the way for them to make a return on their investment. The funds hold
more than a third of a SFr1.6bn ($1.6bn) bank loan, which they say has
ballooned to about SFr8bn due to decades of unpaid interest.
A record $8.9bn fine the US levied on French bank BNP Paribas in 2014
over prohibited transactions with Sudan and other regimes — described
by some as ‘sanctions 2.0’ — had a chilling effect on banking activity
in the region. Just last month, Société Générale agreed to pay US
authorities more than $1.3bn to resolve a case involving the handling
of dollar transactions in sanctioned countries including Sudan.

The global population is forecast to reach 9.9 billion by 2050 – a 29%
increase – with most of that growth in Africa, where the population is
expected to double to 2.6 billion
In an interview with the Guardian, he said: “If today Europe is
struggling with economic migration [driven by poverty], can you
imagine the extent of migration 10 years down the road with the
African population set to double?”
“It’s very simple,” said Houngbo. “If we do not take decisive action
now, expect migration levels to double both within Africa and to
Europe. That projection makes me very concerned and European nations
and UN member states should be thinking about investing in rural
transformation.”
The former prime minister of Togo added: “For three years in a row,
the state of food security and nutrition report shows that the level
of food insecurity and malnutrition has been going up after decades of
decreasing.
“That is why we need to look at the bigger picture – the priorities
are decent schools, potable water and basic healthcare. I also
consider access to WhatsApp to be a basic service. Young people need
access to modern technology.”
He said developing renewable energy would also be a consideration as
some local grids are not up to the job. “If you cannot charge your
cellphone or laptop, it’s difficult to do business.”
Smallholder farms produce 50% of all food calories on 30% of the
world’s agricultural land. In sub-Saharan Africa, 80% of all farms are
small-scale. Their productivity varies but they are generally
characterised by growing subsistence crops and one or two cash crops
on a small plot and relying almost exclusively on family labour, with
women playing a vital role.

PayGo #solar system

Not long ago, Chinese engineers were putting the finishing touches to
two expensive rail projects in east Africa, one linking Djibouti on
the Red Sea to landlocked Ethiopia and the other running from the
Kenyan port of Mombasa to the capital, Nairobi.
But less than 18 months after both lines were inaugurated with
grandiose talk of Chinese-led east African integration, doubts are
emerging about their economic viability. The $4.5bn Djibouti-Addis
Ababa line, the first fully electrified cross-border railway in
Africa, has run into financial and operational difficulties, while the
$3.2bn Kenya route is losing money and has been plagued by scandal.
Push-back over the viability of these and other projects is driving a
change in Beijing’s approach to investment in Africa. After nearly 20
years of pouring money into infrastructure projects across the
continent, China’s president Xi Jinping said in September that “vanity
projects” must be shunned in favour of more carefully conceived
initiatives that address proven economic bottlenecks.
The following month The People’s Daily, the Chinese Communist party’s
mouthpiece, warned that Beijing should “pay more attention to how
projects connect with the development and basic interests of relevant
countries”.
Railways in east Africa have a long history of problems. The original
Mombasa-Nairobi line, built by the British in the late 19th century,
was so costly in both money and lives that it became known as the
“Lunatic Express”.
Beijing’s reputation is not all that is at stake: Chinese sponsors are
losing money. Wang Wen, chief economist at Sinosure, said the Chinese
state-owned insurer had been forced to write off $1bn in losses on the
Djibouti-Addis Ababa link. Due diligence on the 718km railway had been
“downright inadequate”, he said.
We knew from the very beginning that [the Mombasa-Nairobi line] was a
lemon of a project and it is simply becoming more and more apparent
every day
Mr Wen’s comments came after Abiy Ahmed, Ethiopia’s prime minister, in
September negotiated easier terms with China on $4bn of railway loans,
extending the repayment period from 10 to 30 years. The move followed
a foreign exchange crisis that hit Ethiopia’s ability to maintain the
railroad and repay its debts to Chinese state creditors, analysts
said.
Meanwhile, criticism of the Mombasa-Nairobi line, Kenya’s biggest
infrastructure project since it gained independence in 1963, has
increased. Three Chinese nationals working for the China Road and
Bridge Corporation were last month charged in Kenya with attempting to
bribe local officials investigating an alleged ticketing scam that was
said to be depriving the railway of $10,000 a day in revenue.
The rail line had failed to achieve its goal of cutting congestion on
the parallel highway by shifting freight from trucks to trains, said
John Githongo, a Kenyan anti-corruption campaigner. The highway was as
busy as ever, he added. Bechtel, a US construction company, even
planned to build a new $3bn road along the same route, he said.
“We knew from the very beginning that this was a lemon of a project
and it is simply becoming more and more apparent every day,” Mr
Githongo said.
Beijing in September signalled its concern about the economic case for
the line, turning down a request to fund an extension towards the
Ugandan border until a full feasibility study had been conducted.
China has for years prioritised infrastructure in Africa, building
roads, bridges, airports and power stations, from Ghana to Mozambique,
for governments keen to emulate the formula that helped kick-start its
own rapid development from the 1980s. While the west has long stressed
governance and institution-building as engines of development, Beijing
has advocated big projects with the potential to link markets, raise
productivity and spur industrialisation.
However, as in China itself, some have turned out to be white
elephants, while others have failed to generate enough return to
service the original loans used to fund them.
The Djibouti-Addis line, for example, has been crippled by electricity
shortages and lower-than-expected use. “While its passenger capacity
has been growing, on the freight side the uptake of the railway by
industrial manufacturers and exporters has been very lacklustre,” said
Yunnan Chen, a researcher at the China Africa Research Initiative at
Johns Hopkins School of Advanced International Studies.
The railway’s prospects have dimmed further with the signing of a
peace deal in July between Ethiopia and Eritrea, which gives Ethiopia
access to the Eritrean ports of Assab and Masawa. When the line was
originally conceived, it was intended to connect Ethiopia with the
port of Djibouti, at that time its sole access to the sea.
Hallelujah Lulie, a regional analyst based in Addis Ababa, conceded
that the line was not “fully operational” and that there were
“definitely some reservations”. But, he said, in spite of teething
problems, the railway — which links Ethiopia’s industrial free-trade
zones and large-scale farming projects to export markets — made
long-term economic sense. “It’s going to be a vital lifeline for the
economy,” he added. “It has issues, but I don’t think there are strong
reservations about the project itself.”
China is not the first “big imperium” having difficulty trying to
build a railway in Kenya, said Mr Githongo. “But the difficulty is not
so much for the Chinese. It is for the poor Kenyans who will have to
pay the money back.”

Matthew Harrington, US Deputy  Assistant Secretary for Africa, says
@MthuliNcube’s budget is “positive and will make an impact”, but the
US is still far off from ending sanctions, or providing debt relief or
new credit until Zimbabwe turns rhetoric into action.

Dollars are hard to find in tiny, troubled Burundi -- but three nearby
African nations and plenty of used Land Cruisers and Range Rovers
offer some entrepreneurs a solution.
Buying vehicles from cash-strapped owners and selling them in Rwanda
and the Democratic Republic of Congo is an increasingly popular ploy
in the East African country, which is trying to emerge from three
years of political upheaval. Along with cross-border sales of
beverages, furniture and fittings, it’s a way to beat foreign-currency
shortages spurred by declines in investment and spats with Western
donors.
“To continue my business, by hook or by crook I need to get dollars,”
says Ali Hassan, who sells two vehicles a week, making $1,000 profit a
month and hard currency to buy spare parts from Dubai for his mechanic
workshop. “Banks don’t serve us, so I thought selling things like used
cars could be a good deal.”
Such workarounds signal the difficulties still faced by Burundi, a
landlocked nation of about 11 million people where violence sparked by
a dispute over presidential terms that began in April 2015 has claimed
hundreds of lives and forced thousands to flee, many to its other
neighbor, Tanzania.
The economy, already the region’s smallest, contracted 4 percent in
2015, according to the International Monetary Fund. Though the
government is touting a coffee- and mining-led resurgence over the
next decade, the IMF says 2018 growth may be just 0.1 percent.
The Brussels-based International Crisis Group warned in August that
worsening unemployment and poverty “increase the likelihood of
instability and exacerbate the risk of violence.”
Central bank officials say currency shortages have stopped some
foreign companies from repatriating profits. But they insist the
situation will improve, with inflows that slowed when the European
Union suspended direct aid to the government being replaced with the
proceeds from rising coffee and tea output, and payments to Burundian
troops serving with a peacekeeping mission in Somalia.
The bank’s governor, Jean Ciza, has said Burundi needs to revive other
types of agriculture, livestock-raising and manufacturing that produce
exports while creating jobs.
In the meantime, people like Jeannette Nduwumusi, a shopkeeper in the
capital, Bujumbura, have quickly become experts on the used-car
markets in Burundi’s neighbors. Rwanda, one of Africa’s
fastest-growing economies, has a taste for saloon cars, while buyers
in the rugged, mineral-rich Congo need off-road-friendly vehicles such
as Range Rovers and Toyota’s Land Cruisers.
Nduwumusi and her husband trawl Facebook and WhatsApp groups to find
vehicles for sale locally, buy in Burundian francs and drive them
cross-border to sell where dollars are in greater supply. “We suffer
because of political problems, but we are not ready to give up,” she
said of her business difficulties.
They’re competing with Eric Nzisabira, whose car spare-parts business
had ground to a halt by 2016, and who’s also seeking automobile
bargains. He says he took inspiration from his father, who sold items
to Tanzania in the 1990s to overcome the economic effects of a
regional embargo imposed on Burundi for a military coup during its
civil war.
Cars are the big earners, but other Burundians have stepped up resales
of locally made bottled beers and sodas or are offering household
items.
Since 2016, Said Hassan has built a joinery business with sales of
metal door- and window frames to Congo. Each cross-border sale gets
him dollars he partly uses to import materials to build the next
consignment.
“My income can be about $5,000, but I don’t get that every month,” he said.

Diane Rwigara, a critic of veteran Rwandan president Paul Kagame, was
acquitted by Rwanda’s high court on Thursday of charges that included
inciting insurrection and forging of documents.
The 37-year-old accountant has repeatedly accused Kagame of stifling
dissent and criticised his Rwandan Patriotic Front’s unyielding grip
on power since it assumed control after ending the country’s 1994
genocide.
Her attempt to stand against Kagame in the country’s last presidential
poll in August last year was blocked after she was accused of not
submitting enough supporters’ signatures and that some of those she
submitted were forged.
“Court rules that Diane Rwigara is innocent,” Xavier Ndahayo, one of a
panel of three judges, told a packed courtroom in the capital Kigali.

Dollar versus Rand 6 Month Chart INO 14.0419
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 17.9120
http://quotes.ino.com/charting/index.html?s=FOREX_USDEGP&v=d3&t=c&a=50&w=1

Egypt EGX30 Bloomberg
http://www.bloomberg.com/quote/CASE:IND

Ghana Stock Exchange Composite Index Bloomberg -1.74% 2018
http://www.bloomberg.com/quote/GGSECI:IND

Twelve months into Uhuru’s second term, Kenyans are taking stock, and
taking aim at the failures in the anti-corruption campaign
Commentators and pundits have been giving their verdicts on the first
year of President Uhuru Kenyatta's second term of office since the
anniversary fell on 28 November.
There is satisfaction at the internal peace brought by the burial of
the hatchet with opposition leader Raila Odinga in March, but
disappointment in the gap between lofty pronouncements and action on
the ground, especially over corruption.

Commercial Bank of Africa (CBA) is majority-owned by the Kenyatta
family while the Nairobi Securities Exchange- listed NIC Group is
partly owned by the billionaire businessman James Ndegwa’s family.
If successful, the planned merger of the midsized NIC Bank   and the
tier one CBA Bank would create one of the largest financial services
groups in the region.
“It is the view of the two boards that the potential merger would
bring together the best in class retail and corporate banks with
strong potential for growth in all aspects of banking and wealth
management,” they said.
“A combined entity would create a complementary base of over 38
million customers, a strong digital proposition and a robust corporate
and asset finance offering.”

Closing Price:           22.65
Market Cap $141.274m
EPS: 6.48
PE: 3.495

Nairobi All Share Bloomberg -14.92% 2018
http://www.BLOOMBERG.COM/quote/NSEASI:IND

Nairobi ^NSE20 Bloomberg -24.81% 2018
http://j.mp/ajuMHJ

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