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Macro Thoughts

With the European Union’s blessing, the three states established a
special channel that shields trade with Iran from U.S. sanctions. The
Instrument in Support of Trade Exchanges, or INSTEX, as the channel is
called, holds out the possibility that Europe can yet salvage the
nuclear agreement’s core bargain: that Iran was to limit its nuclear
activities in return for the normalization of economic relations. The
preservation of this arrangement will depend not only on the modicum
of European-Iranian trade that INSTEX might help preserve but on
whether Europe can navigate a narrow path between what Iran expects
and what the United States can tolerate.

In recent months, dozens of international companies have left Iran,
the country’s oil exports have halved, its national currency has
tumbled in value, and inflation has soared. Iran’s parliamentary think
tank has issued a bleak forecast, suggesting that, in the more
optimistic of two scenarios, the country could expect -2.6 percent
growth this year and -4.5 percent next year. The country’s president
has assessed the economic situation as the direst in the four decades
since the 1979 revolution.

Iran is at the Hunter S. Thompson[Ian] edge. “There is no honest way
to explain it because the only people who really know where it is are
the ones who have gone over''
Marwan Bishara wrote, “These [US] demands basically constitute total
Iranian surrender, not only to the US but also to Israel and Saudi
Arabia ‘’MK BhadraKumar writes, ‘’If there can be a lethal game of
Rus- sian roulette in international politics, this is it’’.

The yacht’s location as of May 26 was in the Red Sea off Sharm
el-Sheikh, an Egyptian resort town on the Sinai Peninsula, according
to Bloomberg ship tracking data.
‘‘Salvator Mundi,” whose provenance has been questioned, will remain
aboard MBS’s 439-foot (134-meter) Serene until the Saudis create a
planned cultural hub in the Kingdom’s Al-Ula region, Artnet said. The
project was in an “exploratory phase,” a spokesman for the commission
overseeing the plan said in December.
Experts at the Louvre have attributed the work to Da Vinci’s workshop,
rather than to the artist alone, according to a published report.
Celine Dauvergne, a spokeswoman for the Louvre, declined to comment on
the painting’s attribution, but said the Paris museum has asked to
borrow the work for an October exhibition.

The painting shows Jesus, in Renaissance dress, giving a benediction
with his right hand raised and two fingers extended, while holding a
transparent rock crystal orb in his left hand. The rock crystal orb of
course reappeared during Trump's visit to the Desert Kingdom. The
Painting is currently in the Louvre in Abu Dhabi because the
''optics'' of this $450m purchase did not sit well with being the son
and heir to the Kingdom.  The King is called the Custodian of the Two
Holy Mosques (خادم الحرمين الشريفين) after all. MBS is also the Proud
Owner of the Serene [yacht] which he bought for 500m Euros in 2015,
while vacationing in the south of France. Bruce Reidel alleges MBS
sleeps on the Serene off Jeddah because he too lives in fear of his
life.

“There are decades where nothing happens; and there are weeks where
decades happen.” said Vladimir Ilyich Lenin.
The ''Zeitgeist'' of a time is its defining spirit or its mood.
Capturing the ''zeitgeist'' of the Now is not an easy thing because we
are living in a dizzyingly fluid moment.
Charles Onyango-Obbo @cobbo3 tweeted
''Police teargas Malawi protests against Mutharika’s election “theft
[aka the ''Tippex'' solution] In Liberia demos against corruption
–Weah shutters internet. In Sudan military slaughter 100 in continuing
pro-democracy protests – weeks after Bashir fell. In Algeria
Bouteflika ousted by protestors. What's up?''
Indeed What's up?
Lets start in Khartoum. The ''zeitgeist'' of the Revolution was as
intoxicating as the Oudh that the Saudi Arabian Ambassador once gave
me and I found myself semi delirious intoxicated on my own perfume.
The exquisite murals, the composition of the crowds, the element of
Girl Power which spoke to hope and a Future. As I watched events
unfold it felt like Sudan was a Portal into a whole new another
Normal. David Pilling in the Financial Times captured the Essence by
quoting William Wordsworth, who wrote of the French Revolution:
OH! pleasant exercise of hope and joy! For mighty were the auxiliars
which then stood Upon our side, we who were strong in love! Bliss was
it in that dawn to be alive, But to be young was very heaven!--
Not in Utopia, subterranean fields, Or some secreted island, Heaven
knows where! But in the very world, which is the world Of all of
us,--the place where in the end We find our happiness, or not at all!
And then Darfur came to Khartoum, he concluded or was it Tiananmen and
Tahrir Square? And now we have two visions of the Future. One Vision
played out on our screens, the Protestors could have been our Wives,
our Children, our Daughters and Sons. The Other Vision is that of MBS,
MBZ and Al-Sisi and its red in tooth and claw. Vladimir and Xi backed
the Gulf and America is below the radar.
Hugh Masakela said ''I want to be there when the People start to turn
it around'' Sudan is a Masakela Pivot moment,
Down South The Rand crossed 15.00 levels which were seen only
previously in extremis like when President Zuma conjured up Des Van
Rooyen as his Finance Minister. Essentially the Rand was [Ace]
Magashule-d. Magashule spooked the markets with his televised
declaration that the ANC had decided to broaden the mandate of the
Reserve Bank and told the government to implement quantitative easing.
(He referred to it as "quality easing")
Max du Preez wrote as follows in the  online Afrikaans weekly Vrye Weekblad.
ANC factions are waging war in public. The economy retracted sharply
in the first quarter. Populists in the ruling party are flirting with
radical economic concepts such as quantitative easing and are
determined to undermine the status of the Reserve Bank. It seems there
is an increase in violent crime and farm attacks. The rand is close to
R15 for a dollar. Eskom, Transnet and SAA are close to collapse''
The ANC is in open rebellion except as Thabo learnt the President
serves at the Pleasure of the ANC and not the other way round. I don't
see how this gets finessed in fact the direction of travel is for the
fissure to get wider, Add into the mix a very soft Q1 and a China
South Africa Feedback Loop which is undergoing a Trend reversal and we
have some ingredients in play and pointing to a further slide in the
Rand. I would be selling rebounds and out of the money Call Options
and buying Puts with the premium received.
Zimbabwe has finally dialled up Madam Lagarde but here too Mnanagwa is
not only in the habit of hitching rides on MBZ's I am sure well
appointed  planes but also leans to MBZ's vision of the Future.
Lets turn our gaze to Zambia where President Lungu is seeking to
''nationalise'' Mr. Aggarwal's Copper Mines and the strategy seems to
be to flip it and probably clip the transaction for some juicy
brokerage. The Problem with this strategy is that the Price of Copper
is down -11.4% since Mid-April and there is simply nothing left of FX
reserves. Bond Yields are in default territory. This is a ''Hail
Mary'' Pass I am afraid and Lungu's Cashew Nut moment. What happened
to the cashew nut crop in Tanzania?
What I missed entirely however was the big spike in [SnapChat +155%
YTD] African rare Earth producers. Having spoken about it on my Show
on Metropol TV at least two weeks ago when I said this might prove a
''Hallelujah'' moment  a Geopolitical renaissance for President Pierre
Nkurunziza because there are rare earths in Burundi.  Reuters reported
that The Pentagon has held talks with both companies following threats
by Beijing to cut off supply to the country, Rainbow Rare Earths,
which is developing a project in Burundi, said it could neither
confirm nor deny the news. Mkango, which wants to build a mine and
processing plant in Malawi, did not immediately respond to a request
to comment. Rainbow Rare Earths last traded up 38 per cent at 7.69p,
while Mkango was up 42 per cent at 10.375p. Rare earths are a group of
17 niche minerals that are used in electronics, electric cars, and
some military equipment such as night vision goggles and lasers.
Which is the quandary. It is better to act than to say.
Between the idea
And the reality
Between the motion
And the act
Falls the Shadow

 Here we go round the prickly pear
    Prickly pear prickly pear
    Here we go round the prickly pear
    At five o'clock in the morning.

    Between the idea
    And the reality
    Between the motion
    And the act
    Falls the Shadow
                                   For Thine is the Kingdom

    Between the conception
    And the creation
    Between the emotion
    And the response
    Falls the Shadow
                                   Life is very long

    Between the desire
    And the spasm
    Between the potency
    And the existence
    Between the essence
    And the descent
    Falls the Shadow
                                   For Thine is the Kingdom

    For Thine is
    Life is
    For Thine is the

    This is the way the world ends
    This is the way the world ends
    This is the way the world ends
    Not with a bang but a whimper.

The U.S. Coast Guard is touting increased operations in the Western
Pacific, thousands of miles from American shores, as China’s coast
guard and civilian fishing militias increasingly assert the country’s
territorial claims.

A presence in the South China Sea and elsewhere will help enforce the
sovereignty of partner nations in the disputed waters, U.S. Coast
Guard Pacific Area Commander Vice Admiral Linda Fagan told a
conference call. Coast Guard cutters USCGC Bertholf and USCGC Stratton
are being deployed with the Seventh Fleet based in Yokosuka, Japan.

The ships will help “law enforcement and capacity-building in the
fisheries enforcement realm,” Fagan said.

Euro 1.1325
Dollar Index 96.71
Japan Yen 108.58
Swiss Franc 0.9898
Pound 1.2696
Aussie 0.6957
India Rupee 69.4275
South Korea Won 1180.69
Brazil Real 3.8860
Egypt Pound 16.7282
South Africa Rand 14.7566

Chinese currency which is -8.8% year on year basis is surely a very
visible proxy.
If this all turns ballistic, then this is going to fly through 7.00
and the Chinese will surely use the value as currency as push-back.
If they do, they will be pushing an open door.
It is clear that directionally money wants to leave China and a great
deal of the 2019 surge in Bitcoin is surely correlated to Chinese
Flight Capital.
Therefore, my prediction is when the currency slides it is going to
slide real quick and Dollar Call Options are an interesting
risk-adjusted trade.

Capturing the ''zeitgeist'' of the Now is not an easy thing because we
are living in a dizzyingly fluid moment.
Gladwell stated: "Ideas and products and messages and behaviors spread
like viruses do".
My Point is that the Millenials discovered the virtues of Avocado, the
behaviour spread like a 'virus' and Boom prices sky-rocketed.
The Avocado Price surge is an example of the new c21st Millennial
Economy but there are many other examples.

Emerging Markets

Frontier Markets

“Despite the bravery of the mass movement, there’s a lot of foreign
meddling, regional factors that are decisive and might call the last
shot.”
Both sides are digging in, raising the prospect of more violence.
Hemedti, arguably the most powerful man in Sudan, has little incentive
to cede power.
Thousands of his RSF were already in control of Khartoum even before
the bloodshed.
Armed with rocket-propelled grenades and machine guns mounted on
trucks, the RSF is by far the most feared force in Sudan – menacing
young men who mastered desert warfare in Darfur but lack the
discipline of the regular army.
The RSF grew out of the Arab Janjaweed militias accused of atrocities
in Darfur. Bashir’s government denied that the militias had burned
villages and raped and executed civilians.
The TMC was quick to praise the RSF after the violence, saying it had
a record of defending Sudan against terrorists. It said the force was
targeting criminals and got out of hand.
On Thursday night, mosque clerics in several parts of Khartoum –
acting at about the same time - used microphones to urge people to
take up arms against criminals.
Men on motorcycles beeped their horns and delivered the same message
on the outskirts of the capital.

In a statement, Rwanda’s revenue body said it was “pleased to inform
the general public that heavy trucks are allowed to provisionally
cross Gatuna border,” for 12 days starting Monday. At the end of
February, Rwanda started blocking Ugandan cargo trucks from entering
at the crossing, which Rwandans call Gatuna and Ugandans call Katuna.
Authorities in Kigali also stopped Rwandan nationals from travelling
to Uganda. Rwandan officials said they will decide after two weeks
whether to reopen the border permanently. Rwandans were still banned
from travelling to Uganda, minister of state for foreign affairs
Olivier Nduhungirehe told Reuters. The blocking of cargo has disrupted
commerce on a crucial regional transport artery. Rwanda depends for
much of its imports on a trade route through Uganda to Kenya’s Indian
Ocean seaport of Mombasa. The route is also used to transport goods
from Kenya and Uganda to Burundi and parts of eastern Democratic
Republic of Congo.

“The quarterly decline, the largest in 10 years, is credit negative
for the Government of South Africa’s (Baa3 stable) revenue and policy
options,” Lucie Villa, Moody’s lead sovereign analyst for South Africa
“The first-quarter contraction presages low growth in the year as a
whole,” Villa added.
If Moody’s were to relegate South African debt to “junk” status,
billions of dollars could leave the economy, analysts say.

Dollar versus Rand 6 Month Chart INO 14.76
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 16.761
http://quotes.ino.com/charting/index.html?s=FOREX_USDEGP&v=d3&t=c&a=50&w=1

Egypt EGX30 Bloomberg +8.54% 2019
http://www.bloomberg.com/quote/CASE:IND

Nigeria All Share Bloomberg -3.53% 2019
http://www.bloomberg.com/quote/NGSEINDX:IND

Ghana Stock Exchange Composite Index Bloomberg -2.71% 2019
http://www.bloomberg.com/quote/GGSECI:IND

Chinese ambassador Wu Peng said Beijing was ready to open trade talks
with Kenya via the EAC, which also includes Uganda, Tanzania, Rwanda,
Burundi and South Sudan, guided by World Trade Organisation rules.
“If we want a new, favourable trade agreement for Kenya, we must
consider the whole area. But we are open to this task, this
possibility, and we are ready to talk with the EAC together,” Wu said
in an interview.
China has become one of the biggest trading partners for many East
African countries but their exports to the world’s second-biggest
economy are dwarfed by imports of manufactured goods like electronics
and plant equipment.
Kenya imported goods worth 370.8 billion shillings ($3.67 billion)
from China last year while exporting just 11.32 billion shillings of
goods there.
Nairobi wants to export more farm products, like avocados, to China.
The two nations have completed a protocol opening up frozen avocado
exports to China but exports of fresh avocados are still blocked due
to bio-safety concerns.
“I’m pushing it very hard and maybe it just needs scientific
assistance to Kenyan farmers,” Wu said.

Electricity from a planned coal-fired plant in Lamu, Kenya might cost
10 times as much as its developers suggest, according to an energy
group that wants the project canceled.
The plant, which will require an estimated $2 billion investment, is
projected to be able to produce 1,050 megawatts of electricity. The
project is 51% owned by Nairobi-based Centum Investment co., and is
backed by General Electric Co.’s so-called Ultra-Supercritical Clean
Coal Technology.
Given the “realistic” costs of coal, electricity from the plant could
sell for as much as U.S. cents 75 per kilowatt-hour on average, “more
than 10 times what the plant’s proponents have claimed,”
Cleveland-based Institute for Energy Economics and Financial Analysis
said in a report.
The power purchasing agreement would require payment of at least $360
million in annual capacity charges even when the plant doesn’t produce
any power.

Kenya Airways Plc. is willing to operate under a state-owned holding
company after the troubled airline failed in its bid to jointly run
the country’s main airport, according to Chairman Michael Joseph.
Lawmakers in the East African nation in May rejected the airline’s
proposal to operate Jomo Kenyatta International Airport with the
state-owned Kenya Airports Authority, and are expected to issue
alternative proposals, Joseph said in an interview Monday. The
recommendations could include the partial nationalization of Kenya
Airways, he said. The airline, which reported a 5.95 billion shillings
($59 million) full-year loss, is proposing a model similar to Emirates
Airline and Ethiopian Airlines Enterprise, which operate as units of
state-owned holding companies. Such an arrangement would enable able
it to double its fleet in five years, Joseph said.
“We need the financial structure to enable us to do that,” he said.
“It might not be cash, it might be the balance sheet which is why the
airport deal was very important for us.”
Kenya Airways, which is 48.9% owned by the government, is also on the
hunt for a chief executive officer after Sebastian Mikosz said he
would step down before the end of his three-year contract.
“A mature, seasoned executive is what I will hire,” Joseph said.
“There’s not many around. If it’s delayed beyond December there’ll be
still strong leadership.”
The airline’s stock fell 5.6% in Nairobi on Monday, bringing the loss
this year to 60%.

Hospitality chain TPS Eastern Africa has received waivers from
financiers that had lent it Sh2.5 billion after delays in refurbishing
the company’s flagship Nairobi Serena Hotel affected its cash flow.
The lenders — French sovereign wealth fund Proparco, Barclays Kenya
and Barclays Tanzania — have agreed to allow the Nairobi Securities
Exchange -listed firm to reschedule the loan repayments.

The NSE All Share Index closed at 150.04 and is +6.84% YTD, trading at
a price-to-earnings ratio of 11.81
https://twitter.com/RichEconomics/status/1138323760103264261

Nairobi All Share Bloomberg +6.84% 2019
http://www.BLOOMBERG.COM/quote/NSEASI:IND

Nairobi ^NSE20 Bloomberg -5.02% 2019
http://j.mp/ajuMHJ

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