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Will Africa's historic Free Trade Agreement succeed? African Continental Free Trade Agreement #AfCFTA @AJENews @AJInsideStory @MartineDennis
The World Bank ranks many countries in Africa among the hardest places
to do business.
However, an ambitious project to ease trade between them is a step
closer to reality.
The African Union agreed last year to create a free trade zone on the
continent, the largest since the World Trade Organization was formed.
On Tuesday, The Gambia became the 22nd country to ratify the accord,
reaching the threshold for it to be implemented.
It's hoped the deal will reduce tariffs and trade rules, and create
jobs for a market of 1.2 billion people.
But Africa's largest economy, Nigeria, isn't on board with the agreement.
So will the deal succeed?
Presenter: Martine Dennis
Aly-Khan Satchu - CEO of Rich Management and an emerging markets economist
Stephen Yeboah - cofounder of Commodity Monitor
Olusegun Okubanjo - founder and managing partner of finance firm OBSIDIAN
Saudi threatens to ditch the USD the ''Grand Daddy'' of all Geopolitical Red Lines
Last week, Reuters reported
Saudi Arabia threatens to ditch dollar oil trades to stop 'NOPEC' -
“The Saudis know they have the dollar as the nuclear option,” one of
the sources familiar with the matter said.
“The Saudis say: let the Americans pass NOPEC and it would be the U.S.
economy that would fall apart,” another source said.
[NOPEC, or the No Oil Producing and Exporting Cartels Act, was first
introduced in 2000 and aims to remove sovereign immunity from U.S.
antitrust law, paving the way for OPEC states to be sued for curbing
output in a bid to raise oil prices]
In c21st Geopolitics, this is the ''Grand Daddy'' of all Geopolitical
Red Lines. And allow me to explain why. The Petro Dollar Economy was
symbolically born on February 14, 1945 when King Abdul Aziz Ibn Saud
of Saudi Arabia met with President Franklin D. Roosevelt aboard the
USS Quincy in Great Bitter Lake, Egypt. The Saudi Kingdom would sell
its Oil for US dollars, recycle surpluses into US Treasuries [The
kingdom has nearly $1 trillion invested in the United States and holds
some $160 billion in U.S. Treasuries] and the US would lend its
legitimacy and protection to the Kingdom.
Dr. Zbigniew Brzezinski said this
The three grand imperatives of imperial geostrategy are to prevent
collusion and maintain security dependence among the vassals, to keep
tributaries pliant and protected, and to keep the barbarians from
Saudi Arabia falls in the ''vassal'' category in Brzezinski's description.
There is plenty of Propaganda in the c21st discourse around Oil and
''resource'' wars but the lets do the Math. Depending on prices, oil
is estimated to represent 2 percent to 3 percent of global gross
domestic product. At the current price of $70 per barrel, the annual
value of global oil output is $2.5 trillion. Trading in derivatives
such as oil futures and options is mainly dollar denominated. The top
two global energy exchanges, ICE and CME, traded a billion lots of oil
derivatives in 2018 with a nominal value of about $5 trillion
[Reuters]. The c21st Oil Economy is a very big deal and Ryszard
Kapuściński who wrote as follows about the Oil and Petro Dollar
Economy in Shah of Shahs
“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.”― Ryszard Kapuściński, 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.” ― Ryszard Kapuściński, Shah of Shahs
Therefore, in many respects whomsoever controls this Spigot because
this is real cash can control the World. Therefore one must also
accept that access to oil "defined 20th-century empires and the
petrodollar agreement was the key to the ascendancy of the United
States as the world's sole superpower" The United States dollar
remains de facto world currency. Accordingly, almost all oil sales
throughout the world are denominated in United States dollars
(USD). Because most countries rely on oil imports, they are forced
to maintain large stockpiles of dollars in order to continue imports.
This creates a consistent demand for USDs. America’s war machine runs
on, is funded by, and exists in protection of oil. Threats by any
nation to undermine the petrodollar system are viewed by Washington as
tantamount to a declaration of war against the United States of
There has existed no greater Geopolitical Red Line in the American Century.
It is typically a very bad idea to pronounce the ditching of the
PetroDollar in public. And to have your ''Vassal'' State do it in
public speaks to a level of dissonance and mind boggling arrogance at
the heart of the Saudi Court which I will return to momentarily. Sure
Muammar was a Dictator as was Saddam but the proximate cause for their
'Red in tooth and claw' deletions were their public pronouncements
around ditching the Dollar.
Gadhafi had a plan to quit selling Libyan oil in U.S. dollars — and
wanted payment instead in gold-backed “dinars” (a single African
currency made from gold). Saddam wanted to be paid in Euros.
In a March 22 2018 Article in The Intercept ''MBS bragged to the
Emirati crown prince and others that Kushner was “in his pocket,” The
Crown Prince's Antennae are evidently completely scrambled. Jared
Kushner is no Protection against the Petrodollar Deep State. The
Petrodollar Deep State is currently engaged with bringing the Chavismo
Revolution [which was after all a Revolution in its Monroe Doctrine
Backyard] to heel but make no mistake that declaration of War by a 34
year Old Saudi Crown Prince will have been heard real loud and real
clear. Therefore, he should not ask for whom the Bell tolls. It is the
Bell he chose to ring.
Rage within the machine: Brexit headline blizzard overloads FX algos @Reuters
Machine-driven trading systems in the $5.1 trillion-a-day global
currency market are struggling to cope with the blizzard of headlines
about Britain’s efforts to extricate itself from the European Union,
making it more expensive and risky to bet for or against sterling.
As a divided government battles a divided parliament over a way
forward, the chorus of characters who can now influence events has
grown, flummoxing news-reading algorithms, or ‘algos’, which are
designed to parse phrases from recognized speakers before executing a
“The model signals are more quantitative driven and rely on historical
data feeds,” said Neil Jones, head of hedge fund currency sales at
Mizuho in London.
“Brexit headlines have thrown a spanner in their works for the sheer
number of characters moving the currency on a daily basis.”
News-reading algos are a growing part of a wider revolution on the
trading floor of banks and asset managers, where machines have
supplanted swathes of human traders, slashing costs and boosting the
speed at which deals are done - sometimes down to millionths of a
Traditionally designed to process economic data or central bank policy
statements, some computer trading models have evolved to allow for
split-second analysis of news headlines or Twitter storms before
executing a buy or sell order.
The problem for the computers is that Brexit is producing too many
headlines for them to process.
Reuters, for instance, has published up to 400 news headlines on
Brexit per day in recent weeks, up from around 15 on British politics
before it became an issue.
Rival Bloomberg has also pumped up the volume of Brexit content by
four times since last autumn, running more than 1,000 headlines some
days - such as on March 12 when May’s deal was defeated a second time,
according to a spokeswoman.
The mechanics of how Brexit may be hammered out have also made it more
difficult for the computers.
Obscure British parliamentary procedures are now at the center of
policymaking and people who typically would not feature in a computer
trading model are suddenly taking center stage.
John Bercow, the speaker of the House of Commons, for example, sent
sterling skidding last month when he stopped May from bringing forward
a vote on her deal.
So sensitive is the currency to developments that even a hand signal
can affect the price.
On November 6, Britain’s then Brexit Minister Dominic Raab, pushed the
pound up simply by giving a “thumbs up” after a cabinet meeting — a
visual cue that would outfox machines programmed to analyze words.
Raab’s market-moving gesture came after the pound had fallen on a
tweet warning of a no-deal Brexit from Jeffrey Donaldson, one of 10
Democratic Unionist Party lawmakers whose support May needs.
Data is elusive on algorithms’ exact share in sterling trade, it
likely mirrors broader trends — around 70 percent of orders in all
currencies on the EBS platform, a major trading venue, are submitted
via algorithms, the Bank of International Settlements estimated last
Some hedge funds have opted out of trading sterling altogether because
the usual models they rely on don’t work in the current climate,
according to one FX trader at a major UK investment bank.
Their models are based around economic data and expectations for Bank
of England rate changes, but those have become secondary drivers
compared with political news, he said.
Some banks are ensuring that trading the pound is not left completely
to the machines while other banks are using tiny orders within narrow
trading ranges to prevent large losses.
“If it was your job and given the complexity of the Brexit story, do
you really want to precode something to automatically infer and put
material risk on the back of that,” said David Leigh, global head of
FX spot and electronic trading at Deutsche Bank.
Market makers who provide liquidity by offering to buy and sell
currencies on their own account also use algorithms to set bids and
offers. But confusion around Brexit has made that more difficult too.
To reduce the risk of getting caught on the wrong side of a headline,
market makers are programming algorithms to offer a wider spread
between the price they will buy, the bid, and sell, the offer.
But a wider spread makes it more expensive to deal in pounds. Rob
Turner, a quantitative trader at RBC Capital Markets said the average
cost of trading, by taking into account the spreads, for sterling in a
usual 10 million ticket jumped last week to 2.9 pips from 1.9 pips in
“That shows that the price at the very best moment for executing a
sterling trade last week was still a lot worse than the worst moment
in a normal week,” Turner said.
The upshot is less volume as investors stay on the sidelines and wait
for the political drama to end.
Daily cash volumes for sterling were around $65 billion in February,
around 35 percent less than $100 billion traded before the Brexit
referendum in June 2016, according to CLS, a major settler of foreign
Sterling volatility, meanwhile, is at the highest levels in more than
two years, having more than tripled from end-February lows, even while
volatility elsewhere has declined.
Overall, sterling has fallen 13 percent against the dollar since
Britons voted to leave the European Union but the market is confused
about its future direction.
Buford Scott, managing partner at Stelrox Capital Management, a
London-based family office which made money trading sterling during
the Brexit referendum, said he was steering clear for now.
“Pound trading is characterised by turmoil and risk aversion resulting
in wide ranges and largely directionless markets proving to be
generally unprofitable for systematic strategies,” Scott said.
25-FEB-2019 :: Currency Puzzles
The Currency Markets remain the most liquid market of all in the World
and something equivalent to the Challenger Deep in the Mariana Trench
which is the deepest known point in the Earth's oceans. The Foreign
Exchange market trades in excess of $5.1 trillion a day.
Once upon a time, the FX market was a ''voice-over'' market, today its entirely screen-based and algorithimic and High Frequency Trading is a big component
Once upon a time, the FX market was a ''voice-over'' market, today its
entirely screen-based and algorithimic and High Frequency Trading is a
big component and both are heavily reliant on complex mathematical
formulas and high-speed computer programs. HFT strategies utilize
computers that make elaborate decisions to initiate orders based on
information that is received electronically, before human traders are
capable of processing the information they observe. Algorithmic
trading and HFT have resulted in a dramatic change of the market
microstructure, particularly in the way liquidity is provided. The
attraction of the FX market is that it allows all Participants to
deploy outsize leverage. Basically, You can deploy up to 200x
Leverage. There is no other market that allows this level of leverage.
The US Dollar [notwithstanding endless chatter over its imminent
demise] remains the dominant currency representing around 60% of the
BJP sidesteps @ImranKhanPTI on Balakot - Indian Punchline @BhadraPunchline
Law & Politics
Isn’t it curious that the BJP has been put on the defensive by
Pakistan Prime Minister Imran Khan who trashed India’s ruling party
for its “attempt to win elections through whipping up war hysteria and
false claims of downing a Pak F 16”?
The BJP has apparently panicked over Imran Khan’s sharp tweet on
Saturday insisting that the Modi government’s claim of having shot
down a Pakistani F-16 jet is sheer baloney. Imran Khan tweeted: “The
truth always prevails and is always the best policy. BJP’s attempt to
win elections through whipping up war hysteria and false claims of
downing a Pak F 16 has backfired with US Defence officials also
confirming that no F16 was missing from Pakistan’s fleet.”
To be sure, Delhi is acutely conscious that Imran Khan’s tweet came
soon after the Pakistani military spokesman threatened the Modi
government on Thursday that it has “surprises” in store, which would
presumably expose the Modi government thoroughly over the latter’s
version of what actually happened in the downstream of the Balakot
strike on February 26, which is still shrouded in the fog of war, and
the subsequent jingoistic election rhetoric by the PM and the BJP
leaders. If the Pakistani military official keeps his word, it may
cause serious embarrassment to the Modi government, especially if the
“surprises” are sprung during the coming fateful weeks of the current
election season in India. That probably explains the nervousness
apparent in the BJP’s diversionary tactic apropos Imran Khan’s tweet
mocking it as a bunch of war mongers. Interestingly, the BJP has
fielded Railway Minister Piyush Goyal to launch a diversionary attack
on the Congress instead of Rajnath Singh or Arun Jaitley or Sushma
Swaraj opening all 8 cylinders to fire at Imran Khan.
Of course, any number of possibilities arise that could puncture the
jingoistic version that Modi presented on public platforms. That
explains the degree of nervousness apparent in the BJP’s hurry to
deflect attention from the gauntlet that Imran Khan threw at it
yesterday and to move on.
However, will the ISI and GHQ in Rawalpindi be pacified? Put
differently, will Imran Khan and Gen. Bajwa cooperate with Modi’s need
to use Pakistan as his punch bag during the election campaign to
polarise Hindu voters? Time will tell.
The prices of the world's top 1,000 crus rose by 264% in the 15 years to end-February, according to Liv-ex, a wine-trading platform, beating both the FTSE 100 (61%) and S&P 500 (144%) equities indices. @TheEconomist
Proponents of wine investment also argue that it displays little
correlation with equities, making it a good way to diversify a
portfolio. In a crisis, though, almost everything becomes connected.
The Liv-ex 100 index, an industry benchmark, fell by 15% in the month
of September 2008 (see chart 1). But Philippe Masset and Jean-Philippe
Weisskopf, two academics at the Swiss Hospitality Management School in
Lausanne, agree that the inclusion of fine wine in an investment
portfolio tends to increase returns while lowering risk—as long as you
are prepared to sit out the downturns. During recessions, wine is “one
of the last things that goes and one of the first things that come
back,” Mr Staples concurs.
That consensus is much easier to forge in the digital world. Auction
houses are not the only ones to have migrated online. Merchants like
BBR now promote £1,000 bottles on Twitter and Instagram. Apps such as
Vivino, which boasts 32m users, display reviews and ratings at the
scan of a label. Web aggregators compare prices across the planet.
Such transparency creates “a virtuous circle”, says Mr Masset. Buyers
and sellers gain trust in prices, attracting more wine and more money
to the market.
In tandem, the wine-investment world has developed an infrastructure
that echoes other financial markets. It now has its own exchanges,
like Liv-ex or Cav-ex, offering instant quotes, indexes and settlement
services. Various firms specialise in managing wine investors’
cellars, often referred to as “portfolios”. Brokers help buyers find
the rarest stocks. Asset managers now offer to “educate” neophytes by
providing tailored advice.
Bordeaux’s dominance has thus eroded. The region, which represented
95% of trades in 2010, now accounts for 59% of them, according to
Liv-ex. Burgundy comes next, followed by Champagne, Tuscany, Piedmont
and the Rhȏne valley. Burgundy prices have nearly doubled since 2015
(see chart 1). It has helped that these regions’ top estates usually
have a tiny production, split into many different crus, which makes
each of them incredibly scarce. Château Lafite Rothschild, a Bordeaux
star, yields up to 20,000 cases of its best wine a year; Domaine de la
Romanée-Conti, a Burgundy, puts out 450.
Wines deteriorate if they are not kept in dark, damp and cool
locations. They also do not like being moved around very much. This is
why most investment-grade wines are stored in huge cellars managed by
specialist firms, where thousands of cases lie still as they wait to
change owners. When they eventually do, they sometimes do not even
move. Reallocating a reference code to a new custodian can be all it
takes to change ownership. Yet convenience is costly: storage
providers typically charge £10 per case a year.
Sub Saharan Africa
Protests against Sudan's government reach army headquarters @FT
Hundreds of thousands of demonstrators across Sudan on Saturday
mounted what appeared to be the biggest series of rallies against the
government of Omar al-Bashir since protests began in December. In
Khartoum, the capital, protesters reached the army headquarters for
the first time, in a sign that the security forces’ resolve to put
down the almost four-month-long rebellion may be weakening.
Mr Bashir, 75, who has ruled Sudan for 30 years, has quelled
demonstrations outside Khartoum and the twin city of Omdurman since he
imposed a state of emergency in February.
But Saturday’s protest, which marked the anniversary of the 1985
overthrow of the then government of Jaafar al-Nimeiri, represented an
apparent escalation of the popular revolt. It comes only days after
mass demonstrations in Algeria forced the exit of Abdelaziz
Bouteflika, the 82-year-old president.
“This has to be the end of [President] Bashir,” said Muhamed Osman, a
political analyst in Khartoum. “The crowd that gathered today in front
of the army’s headquarters is huge and offers the clearest sign that
the country is sick of him. The most likely scenario is a coup.”
Mr Osman said that some senior members of the military must be
thinking about overthrowing a regime that had been discredited by
economic collapse and perceived rampant corruption. “It’s only a
question of who among them will be bold enough to take action against
the old man,” he said.
One potential member of a transitional government, who spoke on
condition of anonymity, said discussions were being held to install an
administration run by technocrats and a leadership council.
“I think that it will not take long,” he said of the possibility of Mr
Bashir being forced from office. “We are at a historical moment. If we
use this well, we can put the country back on the right track.”
Speaking in Abidjan at his foundation’s annual forum, Mo Ibrahim, a
prominent Sudanese businessman, also said the president should follow
Mr Bouteflika into retirement. “Bashir and his gang have been there
for 30 years and destroyed the country. You bled the country dry. What
more do you want?” he said.
In Khartoum, as demonstrators neared the army headquarters, which are
close to Mr Bashir’s residence, they chanted “one people, one army”.
Witnesses said that soldiers nevertheless fired tear gas and made
Baha Ibrahim, a 28-year-old university graduate, speaking in front of
the army headquarters, said: “I’m here because I want to see a change
of the entire regime, not only the president. They all should go.”
In the city of Zalinji in central Darfur, one woman was shot dead,
according to the spokesperson of a rebel group. Sudan Doctors
Committee said a doctor had also been killed. Demonstrations began
last year over rising bread prices but quickly became a broader
protest against the 30-year rule of Mr Bashir. Initially led by
professionals, youth and women have since joined in large numbers,
with protests spreading to 35 cities. Some analysts fear that, with a
fragmented opposition and an economy on its knees, Islamist groups
linked to the armed forces could exploit the political vacuum to seize
“The army will stay loyal as long as they think Bashir will survive,”
said the person in discussions about a transitional government, who
admitted that the situation was unpredictable and potentially
dangerous. “Today, after 100 days of protests, this is reaching a
"LIKE SHOE polish", is how one oilman describes Uganda's black stuff. It is waxy when heated and solid at room temperature. @TheEconomist
“LIKE SHOE polish”, is how one oilman describes Uganda’s black stuff.
It is waxy when heated and solid at room temperature. Some 6bn barrels
lie in the western region around Lake Albert, of which 1.4bn may be
Commercial discoveries were first made in 2006—the biggest onshore oil
finds in sub-Saharan Africa for two decades. But if the oil moves
slowly, so too does oil development. Production is not expected to
begin until 2022 at the earliest.
Waiting is hard. Researchers have long worried about a “resource
curse”, as oil distorts economies, corrupts politics and fuels wars.
Now some warn of a “presource curse”, which strikes even before the
first drop is pumped.
Ghana and Mozambique found large reserves, of oil and gas
respectively, at around the time that Uganda did. Both lurched into
economic crises. Uganda is trying to learn lessons.
The main one is patience. Ghana borrowed heavily, eager to cash in on
future oil revenues. By 2012, even with the oil flowing, the
government was racking up big deficits; in 2015 it needed the IMF to
bail it out.
Mozambique sold bonds and took out hidden loans, then plunged into a
debt crisis when they were exposed. As part of a restructuring deal
the government has promised bondholders a share of gas revenues, which
are still four years away. Its former finance minister is now in a
South African jail, fighting extradition to America.
Borrowing binges are often based on inflated expectations. In a paper
from 2017, James Cust of the World Bank and David Mihalyi of the
Natural Resource Governance Institute, a think-tank, analysed 236 oil
discoveries around the world between 1988 and 2010.
They looked at IMF growth forecasts made after oil was found, then
checked to see if the predictions were right.
On average, countries grew slower than anticipated, even before any
oil was pumped: in the six years after a discovery, forecasts fell
short by 0.8 percentage points per year.
In places with especially weak institutions the gap was 1.4 percentage points.
That bodes ill for Uganda, where Yoweri Museveni, the president, keeps
a tight grip on power. But when it comes to oil his political
dominance has made it easier to plan long-term, argue Angelo Izama, a
Ugandan analyst, and Sam Hickey of the University of Manchester.
In Ghana, which is more democratic, leaders struggle to think beyond
the next election. They rushed to the pumps before rules were in
place. In Uganda, by contrast, the government held out for better
deals from the oil companies. Technocrats were given space to work.
The Ugandan fields are being developed jointly by Total, a French oil
major, CNOOC, a Chinese state-run giant, and Tullow, a British firm.
They have tussled with the government over tax, a refinery, and the
tariff charged to get oil to the Tanzanian coast, down what will be
the longest heated pipeline in the world.
Disagreements have delayed a final investment decision on the oil
project, now expected later this year.
The worry is that Uganda’s patience will run out. The country has less
oil than many Ugandans think. Shared out equally, each citizen would
get about two barrels a year at peak production (against 39 in Angola
and 261 in Norway).
Within three decades it will be gone. The government, prudently, has
not issued dollar-denominated bonds. But public debt, which stands at
43% of GDP, has doubled in a decade.
Some of it will need to be renegotiated if oil does not arrive on
time, warns Adam Mugume, head of research at the central bank.
The government has dipped into the Petroleum Fund, which holds tax
revenues collected from the oil companies, to plug budget holes.
Mr Museveni is increasingly resorting to patronage politics as his
popularity dwindles. He shields the oil sector from scrutiny.
Lawyers in the western region report a spike in land conflicts;
civil-society groups complain they have been blocked from visiting
affected villages. Innocent Tumwebaze, one of 7,000 people displaced
to make way for a refinery, is already disillusioned with oil. “Maybe
it will benefit others,” he says, “but not me.”