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Tuesday 04th of June 2019 |
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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Big Tech plunges >5% as US moving toward major antitrust probe of tech giants. FTC and DoJ, which jointly enforce antitrust laws in US, have divided oversight over 4 comps Amazon, Facebook, Apple and Google Africa |
Big Tech plunges >5% as US moving toward major antitrust probe of tech giants. FTC and DoJ, which jointly enforce antitrust laws in US, have divided oversight over 4 comps Amazon, Facebook, Apple and Google. Facebook crashes 8%, Amazon 5%, Google 7%
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.@realDonaldTrump lands to pomp and Twitter tirades @FT Law & Politics |
While Mr Trump was breaking all the diplomatic rules when it came to the politics, he basked in the immaculately choreographed pomp laid on by the House of Windsor, from tea at Clarence House to a state banquet at Buckingham Palace Those looking for a presidential gaffe claimed that an awkward hand shake with the monarch was actually an attempted fist-bump, although it was later described by commentators as “half-handshake, half-thumb war”. And finally Mr Trump attended a state banquet at Buckingham Palace, a white-tie occasion attended by around 170 guests dining off the silver gilt of the Grand Service made for George IV. They ate halibut with watercress mousse, saddle of Windsor lamb, and strawberry sable with lemon verbena cream while listening to music from Handel, Copland and West Side Story.
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Bond Yields in "tilt" mode - Forever blowing Bubbles International Trade |
G7 Government Bond Yields have sunk to record lows. The iconic German Bund [10 Year German Bond] sank to -0.21%. The German Finance Ministry receives 20 Cents per 100 euros of debt as a gift from the investors when they sell 10 Year Bunds, In fact Switzerland is experiencing Negative Bond Yields through 20 Years, Germany, Japan, Denmark, Netherlands through 10 years, Austria, France, Finland through 8 years, Sweden, and Belgium 7 years, Ireland and Slovakia 6 years, Spain, Portugal, Slovenia 5 years and even Italy's 6 month Bills are negative. Of course Japan was the first G7 market to enter ''tilt'' territory and its JGB [Japan 10 Year Bond] remains at -0.10%. This macro gale force level move has pulled US 10-Yr Treasuries to a 20-month low of 2.15% [Last November it was at 3.24%]. Rate markets in the US have now priced in close to 85bp cumulatively of easing by the end of 2020. (via JPM). The US Curve has inverted and typically curve inversions are harbingers of recession. Markets and prices exhibit patterns of correlation and essentially my perspective is that it is the correlation that has exerted a ''Pull'' Effect on US Yields and that therefore the ''recessionary'' Signalling of the Yield Curve should be discounted. There has been a Strong ''Safe Haven'' Demand develop over the last few sessions which has lifted Government Bond Prices, Gold and the Yen. And there is a correlation element to recent Yen strength, Japanese Bond Yields were already negative therefore in the comparison Japanese Yields have become more attractive and given further muscle to the Yen.
It was not too long ago that Everyone was predicting a Weimar Republic outcome or if you are looking for a more recent vintage then dial up Caracas, Khartoum or Harare. Classical Economic Theory predicted that if lashings and lashings of freshly printed money were injected intravenously into the Patient, then the value of money should devalue and inflation run off the charts. Clearly this has not happened. In fact Inflation Gauges are slumping and Inflation is ''Like a patient etherized upon a table'' Trump's Tariff War has spiked earlier ''high jinks'', stock markets have lost ground and Investors have continued to run for cover and ''safe havens'' You will recall Ben Bernanke's riposte when asked why Investors buy Gold
People hold Gold "As protection against what we call tail risks: really, really bad outcomes."
Gold crossed $1,300+ on Friday. Crude Oil got crushed -5.34% Friday capping a -15.87% retreat over the last 4 weeks. Crude Oil is an interesting proxy because its been a Tug of War between sharpened Geopolitical Risk [particularly in the matter of Tehran which sent prices higher] versus concerns around Global Growth and the latter has now overwhelmed the Former. It has turned out that it was not April that was the cruellest month [breeding lilacs out of the dead land, mixing memory and desire, stirring dull roots with spring rain] but May. The Trade War intensified through May and its intensification is best perceived through the Linguistics.
What we also know is that you don't stand in front of a Runaway Freight Train. The Question we need to ask ourselves is how much further this move may run? My sense is that the G7 Bond Markets are now in nose-bleed territory. Whilst I accept that its a 20/80 [US Consumer absorbs 20%, China will have to absorb 80%] of the Tariff Price increase, nevertheless even 20% of a 100 is inflationary. The US Rates and Bond Market looks seriously overcooked to me. However, what we also know is that Markets can stay irrational longer than anyone can stay solvent. Therefore, I would be tentatively selling 85bp of cumulative US easing through 2020 as per JPM. Last week we saw positive EM and Frontier market divergence, which was noteworthy. Lusaka is in unprecedented Territory and the forced nationalisation of Mr. Agarwal's Copper mines might well be a cashew nut moment for President Lungu. Zambian $ Eurobond Yields are at 22%. Thats ''whack''
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Mexican Avocado Price Jumps to Highest Since August 2017 @markets Commodities |
One gauge of the Hass variety from Michoacan, the heartland of Mexican avocado production, gained 3.7% on Monday to the highest since August 2017. Unchanged last week, the benchmark has surged 65% this year. Avocados don’t trade on exchanges like soybean futures in Chicago or copper in New York, and like other relatively opaque fruit and vegetable markets, prices start with producers. A tough season has squeezed supply and pushed up prices, according to a survey Friday of half a dozen sellers in Mexico City’s busy wholesale market.
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15 APR 19 :: The Platform Economy Commodities |
The new high tech, millenial, crypto, avocado economy exhibits viral, wildfire and exponential and even non-linear characteristics not unlike Ebola. The tipping point is that magic moment when an idea, trend, or social behaviour crosses a threshold, tips, and spreads like wildfire”- Malcolm Gladwell.
Emerging Markets
Frontier Markets
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10 NOV 14 ::Ouagadougou's Signal to Sub-Sahara Africa Africa |
What’s clear is that a very young, very informed and very connected African youth demographic [many characterise this as a ‘demographic dividend’] – which for Beautiful Blaise turned into a demographic terminator – is set to alter the existing equilibrium between the rulers and the subjects, and a re-balancing has begun. We need to ask ourselves; how many people can incumbent shoot stone cold dead in such a situation – 100, 1,000, 10,000? This is another point: there is a threshold beyond which the incumbent can’t go. Where that threshold lies will be discovered in the throes of the event. Therefore, the preeminent point to note is that protests in Burkina Faso achieved escape velocity. Overthrowing incumbents is all about acceleration, momentum and speed best characterised by the Ger- man word ‘Blitzkrieg’.
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Zimbabwe strikes milestone @IMFNews deal to boost new currency @FT Africa |
Zimbabwe’s central bank said it would stop printing money as part of a milestone deal with the IMF, which has agreed to monitor vital currency reforms in the southern African nation. Under the terms of an IMF staff-monitored programme announced on Friday, President Emmerson Mnangagwa’s government will cease borrowing from the central bank to pay its bills, a practice that has exacerbated Zimbabwe’s debilitating currency crisis. Money-printing has undermined Mr Mnangagwa’s pledge to make Zimbabwe “open for business” after the 2017 coup that overthrew Robert Mugabe, who led the country into penury under his long rule. The IMF said stopping printing money was “critical to support the new currency” which was launched in February to tackle shortages of the US dollars that Zimbabwe has used since hyperinflation destroyed its original currency a decade ago. The institution also said that “significant economic reforms were under way” in Zimbabwe, where the underperformance of the new currency called RTGS dollars has worsened shortages of fuel and other goods. Last year the government borrowed the equivalent of more than half of its revenue from the money printing, though data indicate it has avoided tapping the central bank since December. Although the IMF programme will only dispense advice, not loans, it is the biggest olive branch to Zimbabwe from a big international financial institution since Mr Mnangagwa replaced Mr Mugabe. It will also require Zimbabwe to cease taking on new debt from foreign lenders for the duration of the programme. While the government is seeking an IMF seal of approval in order to shore up the RTGS dollars, the currency is regarded with suspicion in Zimbabwe and has fallen in value on a parallel market since it was launched. Last year’s botched elections and violent crackdowns on opposition groups and protesters have marred Mr Mnangagwa’s attempt to end international isolation for Zimbabwe, which needs financial aid. The IMF programme follows his government’s pledge to repeal repressive public order and media laws. The programme will monitor what the IMF admitted in a staff report was a risky strategy for Mr Mnangagwa’s government to backstop the new currency with tight fiscal limits. Mthuli Ncube, Zimbabwe’s finance minister, is aiming to cut the government budget deficit to about 4 per cent of gross domestic product in RTGS dollar terms this year, compared with more than 7 per cent in 2018. The plan will require cutting spending and increasing tax revenue even as Zimbabwe’s economy is already expected to contract this year because of the currency turmoil. The report also warned that “policy slippages, or interference by vested interests, could impede ongoing efforts to have market-determined exchange and interest rates”. Investors and politicians have accused powerful interests in the fuel trade of plotting against the currency reforms. This month the central bank ended favourable rates for importers of fuel to access US dollars. An interbank market for trading the RTGS dollar has failed to take off. There has been little trading compared with the parallel market where the RTGS dollar is much weaker. In a sign of the widening distrust of the new currency, supermarkets also recently moved to set prices in US dollars. “Although the risks to a successful [staff-monitored programme] are considerable, staff supports the SMP as a strong step to restoring macroeconomic stability,” the IMF report said. Three years ago, Zimbabwe paid off more than $100m of arrears on IMF loans but it is still in default on debts to other international lenders. Only when it clears them will the country be able to fully access international financing. The IMF monitoring will run until early next year. This month the government borrowed $500m from Afreximbank, a Cairo-based lender, to shore up the currency trading market.
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Maybe Africa Really Will Be the New China @economics @bopinion Africa |
When people tell me that Africa will be the new China, I’m not as incredulous as I used to be. The continent is showing potential, and progress could come from what many consider to be a highly unlikely area: manufacturing. All across Africa, investors -- many of them private entrepreneurs from China -- are building factories. Others from India, Sri Lanka, and Bangladesh are joining in, while car companies from Japan, Germany, and South Korea are declaring their intent to put assembly plants in places such as Ethiopia, Tanzania, and Ghana. Meanwhile, overall African growth is looking impressive. The International Monetary Fund forecasts that 6 of the top 10 fastest-growing economies will be African this year: Six of the world’s fastest-growing economies are in Africa, according to IMF forecasts Manufacturing is only one factor. A recovery in natural resource prices and urbanization (which creates more demand for local services) also play important roles. That said, there may be a lot more manufacturing going on than official statistics suggest, since only a small fraction of African workers tend to be employed in the formal sector. So despite myriad policy challenges -- a fragmented patchwork of governments, fragile nations with artificial boundaries drawn by colonial empires of the past, scattered wars and violence -- many African countries might be starting down the well-worn path of manufacturing-driven growth trodden by the developed world. Meanwhile, in South and Southeast Asia, poor countries like Vietnam and Bangladesh are adding factories even more rapidly. Although few expect this process to bring living standards up to the levels of Europe or Japan anytime soon, there’s hope that worldwide industrialization will at least alleviate extreme poverty. Yet many people -- including Nobel prize-winning economist Joseph Stiglitz and researchers at the Brookings Institution -- believe that Africa and South Asia can’t follow the strategy that worked so well for Europe and East Asia. Automation, they claim, will soon render large-scale, labor-intensive manufacturing obsolete. They can point to the recent experience of developed countries, which have seen manufacturing work decline as a percent of total employment in recent years. When productivity improvements outpace demand for manufactured goods -- that is, when automation grows faster than production -- the share of workers employed in factories must decline. Even China is not immune. A new paper by economists Osea Giuntella and Tianyi Wang finds that regions with industries more amenable to the use of industrial robots have seen employment and wages decline more in recent years. But China is already industrialized; the real danger is to the countries that are still poor. Stiglitz notes that in sub-Saharan Africa, manufacturing was lower as a percent of gross domestic product in 2000 than in 1977, and has risen only slightly since then. A 2015 paper by Harvard economist Dani Rodrik makes the case that premature deindustrialization is already hitting the developing world, declaring that “countries are running out of industrialization opportunities sooner and at much lower levels of income compared to the experience of early industrializers.” Stiglitz and the Brookings researchers both suggest that African countries look elsewhere for growth. Their suggestions include tourism, agriculture, natural resource exports, and information technology services -- basically, everything but manufacturing. Yet most of these suggestions offer little reason for enthusiasm. Agriculture tends to automate even faster than industry. Natural resource exports are linked to political dysfunction and trap a country at the low end of the value chain. Tourism is fine, but doesn’t lead to the kind of learning-driven productivity enhancements that manufacturing is known for. One shouldn’t dismiss manufacturing so quickly. The longer-term decline in African manufacturing probably has more to do with the failure of mid-20th-century industrial policies and central planning than with automation: It happened in the 1970s, 80s, and 90s -- when industrial robots were still not widespread, and when China and other Asian countries were rapidly gaining manufacturing jobs. Now that countries like Ethiopia, Tanzania, Vietnam and Bangladesh are industrializing more naturally, through integration into global supply chains rather than government-driven efforts at import substitution, a repeat of 20th century deindustrialization seems unlikely. And even if manufacturing doesn’t provide quite as much employment for poor countries as in the past, factories can still have an outsized impact on overall growth. One reason is an effect called local multipliers. When a city or region exports goods to other regions, the incoming revenue gets spent locally, creating extra demand and jobs nearby. Economist Enrico Moretti, for example, finds that “for each additional job in manufacturing in a given city, 1.6 jobs are created in the nontradable sector in the same city.” Thus, even if most of the new employment in Ethiopia, Tanzania, or Bangladesh comes from restaurants, shops, hair salons, and so on, factories are still very useful for generating those service jobs. So poor countries shouldn’t give up on manufacturing. On the contrary, they should double down. They should lure foreign investment with quality infrastructure, improved education, and streamlined regulation, while nurturing domestic entrepreneurs with export assistance. Robots may one day shut the door to traditional industrialization, but there is every reason to think that for now, the opportunity is still there for the taking.
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Kenyan Leader Likely to Reappoint @njorogep as @CBKKenya Chief @business @herbling Kenyan Economy |
President Uhuru Kenyatta is likely to reappoint Patrick Njoroge for a second term as governor of the east African nation’s central bank, according to people with direct knowledge of the matter. A steady currency, efforts to boost loans to small businesses and market-led bank consolidation put him in good standing to retain the job, according to the people, who asked not to be identified because the matter is still private. Njoroge, whose first four-year term ends June 18, told reporters last week to direct questions on the subject to the appointing authority. Njoroge’s reappointment emboldens him to continue measures that have seen the shilling exchange rate barely move since June 2015, when most other African currencies have seen double-digit depreciation. It also means the currency’s valuation will remain a sticky issue -- Njoroge said the International Monetary Fund, his former employer, made mistakes in calculations that showed the local unit was 17.5% overvalued. Njoroge’s approach of voluntary bank consolidation, as opposed to the Treasury’s failed bid to increase banks’ capital requirements fivefold to force tie-ups, has been vindicated by deals in the pipeline. KCB Group Plc is buying National Bank of Kenya Ltd. and NIC Group Plc and Commercial Bank of Africa Ltd. are merging. “We are not done yet,” Njoroge said on bank consolidation. “The headroom for new borrowing has diminished,” Njoroge said last month.
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Let me end with the Madaraka Day Masterstroke announcement. Africa |
I am sure the Central Bank has visibility on how much Cash is not in circulation. The Announcement might be a catalyst for s short term stimulus as Owners of the ''Jirongos'' try and dispose them. I would have thought the discount is already 20% at the very least. Demonitisation is a very neat Solution. Mohamed Wehliye tweeted
1. It is a one time tax on black money 2. Counterfeiting of 1k down 3. CBK liabilities of Ksh down as a certain percentage of the demonetised 1k will be extinguished - not come back 4. Cash to GDP ratio will go down - 5. % of big denomination re money in circulation down
Its a very clever move and I noticed the President was rather amused by its cleverness.
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