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Macro Thoughts

The Wizard of Oz is a Film made in 1939 and widely considered to be
one of the greatest films in cinema history, It is  a version of L.
Frank Baum's 1900 children's book The Wonderful Wizard of Oz. and
featured the then child star Judy Garland as Dorothy Gale.  The Wizard
is one of the characters in The Wonderful Wizard of Oz. Unseen for
most of the novel, he is the ruler of the Land of Oz and highly
venerated by his subjects. Believing he is the only man capable of
solving their problems, Dorothy and her friends travel to the Emerald
City, the capital of Oz, to meet him. Oz is very reluctant to meet
them, but eventually each is granted an audience, one by one. In each
of these occasions, the Wizard appears in a different form, once as a
giant head, once as a beautiful fairy, once as a ball of fire, and
once as a horrible monster. When, at last, he grants an audience to
all of them at once, he seems to be a disembodied voice. Eventually,
it is revealed that Oz is actually none of these things, but rather an
ordinary conman from Omaha, Nebraska, who has been using elaborate
magic tricks and props to make himself seem "great and powerful".

Last week we witnessed some ''Wizard of Oz'' level moves in the
markets. The universe of negative-yielding bonds grew about $1.2
trillion last week pushing the total past $13 trillion for the first
time. "Last year, the tally of negative-yielding paper was shrinking
towards $6tn, only for the forces of financial repression to come
roaring back as the global economy encountered turbulence.” [Financial
Times]. Greek 10 Year Bonds which once printed 44% yields are
currently yielding 2.44%.  This violent financial repression climaxed
[or did it?] last week and the Spillover Effect is to be seen in Gold
which crossed $1,400,.00 for the first time since Sep 2013. BITCOIN
[which in my considered opinion has never been about its utility but
all about its Safe haven non-correlated asset status] flew through
10,000.00 crossed 11,000 and was last at 10,700 and has posted a more
than +195% return in 2019. The Yen which is +2.545% versus the Dollar
in 2019 was on a tear last week. The S&P closed at an all-time high up
17.8% year-to-date and has had its  best start to a year since 1997.

The Real Estate Moghul President Trump has been brow-beating The
Federal Reserve Chairman Powell even threatening him with demotion.
Last week Powell whilst holding US interest rates steady signalled the
next move would be lower. The Market fearing the Arrival of the
''Wicked Witch of the West'' has front-run Powell and has priced in 3
rate cuts within 12 months. If You were to look at the US economy in
isolation, You would have to say such a forecast is absurd. The
Economy sure has some soft spots but unemployment is at multi-decade
lows and Consumer spending [the Key Pivot] holding up. The US 2 Year
Note which is at around 1.75% is the Financial Instrument which is the
purest Signal.in all the noise. We are in ''nose-bleed'' Territory and
I afraid this is ''Voodoo Economics'' and just because we have not
reached the point when the curtain was lifted in the Wizard of Oz and
the Wizard revealed to be ''an ordinary conman from Omaha, Nebraska,
who has been using elaborate magic tricks and props to make himself
seem "great and powerful"'' should not lull us into a false sense of
security.

We might ask ourselves what might the ''Wicked Witch of the West''
look like? Is it the spontaneous combustion of the once mighty
Deutsche Bank and a multi trillion dollar derivative blow up? Is it a
War with Iran that spikes Crude Oil and topples the Oil Markets. And
think about this. A momentary blink of eye Flash Move in any of these
markets would be deadly. The Tariff War will be having its 2nd Truce
Dinner imminently. The First was in December and in Buenos Aires and
whilst Donald and Xi quaffed sirloin steaks and Malbec Wine, the
Huawei CFO was being interdicted in Canada that time. What will happen
this time is anybody's Guess. Trump has been massaging the US markets
ahead of his Truce Dinner but he is gaming the markets and like Obama
once confessed, the US President is like a Train Driver he can speed
the train up or slow it down but the Tracks have already been set.
Therefore, I cannot see any quick resolution around the Tariff War.
The US and its allies are upping the Ante in the South China Sea. Hong
Kong speaks to geopolitical Volatility on the Chinese Periphery. And
meanwhile, Trump stood down an Iranian Strike when the Planes were
already in the Sky. Iran has been pushed to the brink by Trump's
coercive, sanction warfare.and with Regime stability now on a
knife-edge, its clear Iran feels it has nothing to lose.

“Don't forget the real business of war is buying and selling. The
murdering and violence are self-policing, and can be entrusted to
non-professionals. The mass nature of wartime death is useful in many
ways. It serves as spectacle, as diversion from the real movements of
the War. It provides raw material to be recorded into History, so that
children may be taught History as sequences of violence, battle after
battle, and be more prepared for the adult world. Best of all, mass
death's a stimolous to just ordinary folks, little fellows, to try 'n'
grab a piece of that Pie while they're still here to gobble it up. The
true war is a celebration of markets.”  ― Thomas Pynchon, Gravity's
Rainbow

We are at the cusp of an unprecedented Financial Moment. How it plays
out is anybodys Guess and that's exactly why Safe-Havens from Gold to
Bitcoin from the Yen to the US 2 Year are bid. Its exactly when the
markets fears ''Tail Risks'' [really really bad outcomes] are sky high
that Safe Havens go bid.

"Last year, the tally of negative-yielding paper was shrinking towards
$6tn, only for the forces of financial repression to come roaring back
as the global economy encountered turbulence.” And this week Draghi
and Powell doubled down. @michaellachlan

The universe of negative-yielding bonds grew about $1.2 trillion this
week after dovish messages from central banks in Europe and the U.S.,
pushing the total past $13 trillion for the first time.
Joining the club of government debt with 10-year yields below zero
this week were Austria, Sweden and France. Japanese and German rates
plumbed fresh all-time lows amid a global bond rally that even got
Wall Street pondering life with Treasuries yields under 1%.

“The message from the markets is that there are problems out there
that central banks, not just the Fed, are now responding to,” Ed
Hyman, Evercore ISI chairman, told Bloomberg TV.

The Wizard is one of the characters in The Wonderful Wizard of Oz.
Unseen for most of the novel, he is the ruler of the Land of Oz and
highly venerated by his subjects. Believing he is the only man capable
of solving their problems, Dorothy and her friends travel to the
Emerald City, the capital of Oz, to meet him. Oz is very reluctant to
meet them, but eventually each is granted an audience, one by one. In
each of these occasions, the Wizard appears in a different form, once
as a giant head, once as a beautiful fairy, once as a ball of fire,
and once as a horrible monster. When, at last, he grants an audience
to all of them at once, he seems to be a disembodied voice.

Eventually, it is revealed that Oz is actually none of these things,
but rather an ordinary conman from Omaha, Nebraska, who has been using
elaborate magic tricks and props to make himself seem "great and
powerful". Working as a magician for a circus, he wrote OZ (the
initials of his first two forenames, Oscar being his first, and
Zoroaster being the first of his seven middle names) on the side of
his hot air balloon for promotional purposes. One day his balloon
sailed into the Land of Oz and he found himself worshipped as a great
sorcerer. As Oz had no leadership at the time, he became Supreme Ruler
of the kingdom and did his best to sustain the myth.

Home Thoughts

Karma (/ˈkɑːrmə/; Sanskrit: कर्म means action, work or deed;  It
also refers to the spiritual principle of cause and effect where
intent and actions of an individual (cause) influence the future of
that individual (effect).
https://twitter.com/sunchartist/status/1142579054832304128

 "circumambulation" -- the act of walking around a sacred object,
building or point in a landscape (often a mountain), as a devotional
act or part of a pilgrimage (Latin circum, around, ambulātus, to
walk). In Sanskrit, parikrama; "the path surrounding something".

A few minutes later, he cried: “We have borne it away, we have borne
it away.”And sure enough, from that moment Babur began to sicken,
while Humayun grew slowly well. Babur died near Agra on December 21,
1530.

Analysts believe America’s firming deterrence in the maritime region,
articulated in a new Indo-Pacific strategy paper released by the
Pentagon, is raising the potential for low-level incidents to spiral
into clashes that could spark a wider multinational conflict over the
sea. Britain and France’s recent warship maneuvers in the South China
Sea, both strongly condemned by Beijing as “illegal”, have made
abundantly clear that they would side with the US over China in any
conflict scenario in the flashpoint maritime area.

Over the last several years, on Mt. Everest, veteran alpine guides
have reported seeing an increasing number of human skeletons and
frozen corpses. One guide named Gelje Sherpa told the Times that when
he first summited, in 2008, he found three bodies, and during a recent
season he found six. “They often haunt me,” he said. The bones and
preserved bodies of climbers who didn’t make it to the summit,
revealed as the peak’s glaciers recede, are, for some, more than
enough evidence that warming temperatures are melting the Himalayan
glaciers at an increasingly quick clip

Maurer developed computer software that created three-dimensional
images from the overlapping pictures, allowing him and his colleagues
to digitally “walk” across the glaciers’ surfaces as they appeared in
1975. In the end, they found that the six hundred and fifty largest
glaciers across India, China, Nepal, and Bhutan, which together
represent fifty-five per cent of the region’s total ice volume, have
lost the equivalent of a vertical foot and a half of ice each year
this century. That’s roughly twice as much as what they lost from 1975
to 2000, when temperatures were, on average, 1.8 degrees Fahrenheit
cooler.

Schaefer told me that people often ask him when the Himalayas are
going to be ice-free. “It’s a little bit like asking, When are the
Antarctic or Greenland ice sheets gonna be gone?” he said.
(Greenland’s summer heat is already weeks ahead of average, breaking
the record for such extensive melting of its ice sheet at an early
date.) “They are interesting questions, but they are not that relevant
for us. If the ice sheets are gone, we are toast anyway. We will be
gone way before.” The relevant question, he continued, “is what is the
societal impact of the doubling in speed of these Himalayan glaciers’
retreats. We know, of course, that it’s really bad, but at least now
we have a study that gives us a decently robust point of view of
what’s actually going to happen as the temperature rapidly increases.”

Thousands of protesters blockaded Hong Kong’s police headquarters
Friday evening, demanding the resignation of the city’s pro-Beijing
leader and the release of demonstrators arrested during the
territory’s worst political crisis in decades. But the focus for the
day and into the evening was the police headquarters where thousands
gathered, many chanting “release the righteous” and “shame on police
thugs” — references to those detained during violence last week
between demonstrators and the police. Another protester likened the
crowds to artificial intelligence. “They learn from themselves, nobody
really teaches them, they just adapt to different situations,” said
Bernard, 21.

“Water is fluid, soft, and yielding. But water will wear away rock,
which is rigid and cannot yield. As a rule, whatever is fluid, soft,
and yielding will overcome whatever is rigid and hard. This is another
paradox: What is soft is strong,” Lao Tzu

Hong Kong is savouring a quite momentous Geopolitical Victory and
seriously countertrend in point of fact. The Supreme and ‘’Paramount
Leader’’ made his first [that I can recall] volte-face.  Make no
mistake the Decider in this matter is Xi who has moved with despatch.
Essentially, he understood Hong Kong could not be ‘’Xinjiang-ed’’
Furthermore, being a ‘’Paramount Leader’’ is a double-edged sword.
“This is all on Xi’s shoulders,” said Trey McArver, co-founder of
Beijing-based research firm Trivium China. [Bloomberg]
“Xi has personally said that he would handle relations with the United
States and at this point, he has failed. Those relations are spiraling
out of control.” [Bloom- berg]
The Periphery is a Boil that will not be lanced.

What we’re seeing unfold in the Persian Gulf is a confrontation
between a U.S. president who doesn’t know when he’s winning, and a
Supreme Leader who doesn’t know when he’s losing. If Donald Trump
changes his mind again and orders an attack on Iranian targets, he
will have played into Ali Khamenei’s hands. It’s too early to exhale
after Trump’s decision to cancel a military strike last night. If he
could order the jets scrambled once – without giving Congress or
American allies much time to consult and advise – he can do so again.
The next time, he may not call it off. But that would be to snatch
defeat from the jaws of victory. Trump seems to have lost sight of the
fact that his “maximum pressure” sanctions campaign against the
Islamic Republic is working: Iran’s economy is feeling great pain, and
its isolation is deepening. For all of its proclamations of resistance
and resilience, the regime in Tehran is plainly alarmed. In its panic,
it has started to lash out in ways that hurt its own interests, and
erode the sympathy it has enjoyed in international circles since Trump
pulled the U.S. out of the nuclear deal last year. The threat to
resume uranium enrichment, and to exceed agreed limits, is already
losing Iran the support of the Europeans, as are the attacks on
neutral shipping near the Persian Gulf. Khamenei’s humiliation of the
Japanese Prime Minister Shinzo Abe, who made a good-faith effort to
mediate an end to the confrontation, has cost Iran more goodwill. The
shooting down of an American drone was yet another demonstration of
the regime’s capacity for self-harm.
And Trump was, for once, playing his cards reasonably well. He stated
his openness to negotiations and his desire to avoid war. He dismissed
the tanker attacks as “very minor” and attributed the downing of the
drone as the work of a “loose and stupid” individual. Secretary of
State Mike Pompeo also let the Iranians know that if their future
actions caused the death of an American service member, it would
trigger reprisals. This is exactly the right response to Iran’s
provocations: To brush them off and allow the regime to damage itself
in the court of world opinion, even as it is continually weakened by
sanctions. For the first time since Trump torched the nuclear deal, it
was just conceivable that he would be able to show the Iranian regime
up for what it is: A danger to its neighbors and the wider world.   An
American military strike now, even if it avoided civilian targets,
would risk undoing all that. It will be hard to justify to the
international community – and indeed, to Americans – that the shooting
down of an unmanned aircraft merits such a response. This would be
true even if the Trump administration were to supply incontrovertible
proof that the drone hadn’t crossed into Iranian airspace. Worse,
there’s no reason to believe that a military strike would alter the
behavior of the Iranian regime. Much more likely, Khamenei would use
any American aggression as a way to rally public opinion among his
countrymen, even among those who despise him. A disproportionate U.S.
response would also let his regime reclaim the sympathy he has lost
because of his recent recklessness. Khamenei might be tempted to keep
provoking U.S. military strikes for just these reasons. While it goes
without saying that a military strike would panic oil markets and
threaten world trade, this would take a greater toll on the U.S. than
on Iran. Khamenei might conclude that his economy is in a shambles
anyway so what’s to lose? To paraphrase the old saying about wrestling
with a pig, a military exchange with the Islamic Republic would hurt
both the U.S. and Iran – but Khamenei would enjoy it. What should
Trump do instead? Hold his nerve, keep his patience and let Iran dig
itself into a deeper hole. Allow Khamenei to drain the pool of
international sympathy for Iran. And allow the “maximum pressure”
campaign to keep weakening the regime. Khamenei may never recognize
that he is losing. But it's time for Trump to see that he's winning.

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''

As I previously reported, shutting down the Strait of Hormuz would
destroy the American economy by detonating the $1.2 quadrillion
derivatives market; and that would collapse the world banking system,
crushing the world’s $80 trillion GDP and causing an unprecedented
depression.
The Persian Gulf is being described as an imminent “shooting gallery.”
Brigadier General Hossein Salami stressed that Iran’s ballistic
missiles are capable of hitting “carriers in the sea” with pinpoint
precision.
The whole northern border of the Persian Gulf, on Iranian territory,
is lined up with anti-ship missiles – as I confirmed with IRGC-related
sources.
We’ll let you know when it’s closed
Then, it happened.
Chairman of the Chiefs of Staff of the Iranian Armed Forces, Major
General Mohammad Baqeri, went straight to the point; “If the Islamic
Republic of Iran were determined to prevent export of oil from the
Persian Gulf, that determination would be realized in full and
announced in public, in view of the power of the country and its Armed
Forces.”
The facts are stark. Tehran simply won’t accept all-out economic war
lying down – prevented to export the oil that protects its economic
survival. The Strait of Hormuz question has been officially addressed.
Now it’s time for the derivatives.
Presenting detailed derivatives analysis plus military analysis to
global media would force the media pack, mostly Western, to go to
Warren Buffett to see if it is true.
And it is true. Soleimani, according to this scenario, should say as
much and recommend that the media go talk to Warren Buffett.
The extent of a possible derivatives crisis is an uber-taboo theme for
the Washington consensus institutions.
According to one of my American banking sources, the most accurate
figure – $1.2 quadrillion – comes from a Swiss banker, off the record.
He should know; the Bank of International Settlements (BIS) – the
central bank of central banks – is in Basle.
The key point is it doesn’t matter how the Strait of Hormuz is blocked.
It could be a false flag. Or it could be because the Iranian
government feels it’s going to be attacked and then sinks a cargo ship
or two.
What matters is the final result; any blocking of the energy flow will
lead the price of oil to reach $200 a barrel, $500 or even, according
to some Goldman Sachs projections, $1,000.
Another US banking source explains:
“The key in the analysis is what is called notional. They are so far
out of the money that they are said to mean nothing. But in a crisis
the notional can become real.  For example, if I buy a call for a
million barrels of oil at $300 a barrel, my cost will not be very
great as it is thought to be inconceivable that the price will go that
high.  That is notional.  But if the Strait is closed, that can become
a stupendous figure.”
BIS will only commit, officially, to indicate the total notional
amount outstanding for contracts in derivatives markers is an
estimated $542.4 trillion. But this is just an estimate.
The banking source adds, “Even here it is the notional that has
meaning.  Huge amounts are interest rate derivatives. Most are
notional but if oil goes to a thousand dollars a barrel, then this
will affect interest rates if 45% of the world’s GDP is oil. This is
what is called in business a contingent liability.”
Goldman Sachs has projected a feasible, possible $1,000 a barrel a few
weeks after the Strait of Hormuz being shut down.
This figure, times 100 million barrels of oil produced per day, leads
us to 45% of the $80 trillion global GDP. It’s self-evident the world
economy would collapse based on just that alone.
As much as 30% of the world’s oil supply transits the Persian Gulf and
the Strait of Hormuz. Wily Persian Gulf traders – who know better –
are virtually unanimous; if Tehran was really responsible for the Gulf
of Oman tanker incident, oil prices would be going through the roof by
now. They aren’t.
Iran’s territorial waters in the Strait of Hormuz amount to 12
nautical miles (22 km). Since 1959, Iran recognizes only non-military
naval transit.
Since 1972, Oman’s territorial waters in the Strait of Hormuz also
amount to 12 nautical miles. At its narrowest, the width of the Strait
is 21 nautical miles (39 km).
That means, crucially, that half of the Strait of Hormuz is in Iranian
territorial waters, and the other half in Oman’s. There are no
“international waters”.
And that adds to Tehran now openly saying that Iran may decide to
close the Strait of Hormuz publicly – and not by stealth.
Iran’s indirect, asymmetric warfare response to any US adventure will
be very painful.
Prof. Mohammad Marandi of the University of Tehran once again
reconfirmed, “even a limited strike will be met by a major and
disproportionate response.”
And that means gloves off, big time; anything from really blowing up
tankers to, in Marandi’s words, “Saudi and UAE oil facilities in
flames”.
Hezbollah will launch tens of thousands of missiles against Israel.
As Hezbollah’s secretary-general Hasan Nasrallah has been stressing in
his speeches, “war on Iran will not remain within that country’s
borders, rather it will mean that the entire [Middle East] region will
be set ablaze. All of the American forces and interests in the region
will be wiped out, and with them the conspirators, first among them
Israel and the Saudi ruling family.”
It’s quite enlightening to pay close attention to what this Israel
intel op is saying. The dogs of war though are barking mad.
Earlier this week, US Secretary of State Mike Pompeo jetted to CENTCOM
in Tampa to discuss “regional security concerns and ongoing
operations” with – skeptical – generals, a euphemism for “maxim
pressure” eventually leading to war on Iran.
Iranian diplomacy, discreetly, has already informed the EU – and the
Swiss – about their ability to crash the entire world economy. But
still that was not enough to remove US sanctions.
As it stands in Trumpland, former CIA Mike “We lied, We cheated, We
stole” Pompeo – America’s “top diplomat” – is virtually running the
Pentagon. “Acting” secretary Shanahan performed self-immolation.
Pompeo continues to actively sell the notion the “intelligence
community is convinced” Iran is responsible for the Gulf of Oman
tanker incident.
Washington is ablaze with rumors of an ominous double bill in the near
future; Pompeo as head of the Pentagon and Psycho John Bolton as
Secretary of State. That would spell out War.
Yet even before sparks start to fly, Iran could declare that the
Persian Gulf is in a state of war; declare that the Strait of Hormuz
is a war zone; and then ban all “hostile” military and civilian
traffic in its half of the Strait.
Without firing a single shot, no shipping company on the planet would
have oil tankers transiting the Persian Gulf.

No number of Trump tweets will dampen the price.

They just need lots of salt and stain remover for the Barolo spills.

“And as I sat there brooding on the old, unknown world, I thought of
Gatsby’s wonder when he first picked out the green light at the end of
Daisy’s dock. He had come a long way to this blue lawn, and his dream
must have seemed so close that he could hardly fail to grasp it. He
did not know that it was already behind him, somewhere back in that
vast obscurity beyond the city, where the dark fields of the republic
rolled on under the night.

Gatsby believed in the green light, the orgastic future that year by
year recedes before us. It eluded us then, but that's no
matter—to-morrow we will run faster, stretch out our arms farther. . .
. And one fine morning——

So we beat on, boats against the current, borne back ceaselessly into
the past.”  ― F. Scott Fitzgerald, The Great Gatsby

Euro 1.1375
Dollar Index 96.197
Japan Yen 107.43
Swiss Franc 0.9771
Pound 1.2725
Aussie 0.6946
India Rupee 69.509
South Korea Won 1156.60
Brazil Real 3.8224
Egypt Pound 16.7010
South Africa Rand 14.2381

https://sk3w.co/options

Murray Hunter, a digital rights researcher, warned that Facebook’s
ubiquity is a “huge concern from a data privacy and social control
point of view”.

“We need to be moving into a space where Facebook has less control
over our lives,” he said. Although there might be “all kinds of
assurances” from Facebook to address the data privacy concerns, he
noted that the company has shown, “time and again, that the promises
it has made to investors and users are not meaningful”.

“Winning Istanbul means winning Turkey” - Pres Erdogan
Erdogan dealt stunning blow as Istanbul elects rival candidate.
Imamoglu took 54% of vote, AK party’s Yildirim won 45%. Defeat in
Istanbul, home to about a fifth of #Turkey’s 82 million people, also
strips Erdogan’s party of a major source of patronage

Frontier Markets

Amhara's deputy security chief tells BBC many places were targeted
including police and regional party headquarters and government
buildings. #EthiopiaCou

The Ethiopian army’s chief of staff was shot dead by a bodyguard in
what the government of Africa’s second-most populous country said was
an assassination related to an attempted coup. General Seare Mekonnen
and retired Major General Gezai Abera were killed Saturday at the army
chief’s residence in the capital, Addis Ababa, Prime Minister Abiy
Ahmed’s office said in an emailed statement. Authorities arrested the
bodyguard. The government earlier thwarted a would-be coup in
Ethiopia’s northern Amhara region that claimed the lives of the
regional authority’s president, Ambachew Mekonnen, and his adviser,
Ezez Wassie. Amhara region’s attorney-general, Migbaru Kebede, was
injured and is in a hospital, the government said Sunday.
“The situation in the Amhara region is currently under full control by
the federation government in collaboration with the regional
government,” it said.
Amhara region has been wracked by unrest for the past three years as
separatists there and in other states call for greater
self-determination. Abiy has tried to show that the central government
is concerned about all regions of the nation by making his
administration more inclusive, even as the ruling party remains
divided over his reform agenda.
Authorities tightened security across the country and canceled large
public gatherings, the prime minister said earlier on national
television. The U.S. embassy in Addis Ababa confirmed reports of
gunshots in the city on Saturday night. Access to the Internet has
been shut down across the nation following reports of the killings,
according to Netblocks, an advocacy group that monitors
cyber-security.
Conflicts have erupted in Ethiopia since Abiy assumed office last year
and began political and economic reforms. An explosion on June 23 of
last year struck a rally in Addis Ababa where Abiy was addressing
thousands of supporters. The country, a federation of more than 80
ethnic groups, plans to hold general elections in 2020.

Plenty of African businesses have tried to conquer new markets over
the years, only to return home sartorially compromised. Colonialism
fragmented the continent and linked its economies to imperial capitals
rather than to each other. That legacy locked many businesses into
national silos. Today big European and American multinationals still
dominate markets from logistics to soft drinks. African firms have
announced $72bn of foreign direct investments in new projects on the
continent this decade, according to fdi Markets, a data provider.
Companies from the rest of the world have made nearly nine times as
much. But the pan-African dream lives on. Two-thirds of African firms
surveyed by McKinsey, a consultancy, in 2017, planned to enter new
countries in the region in the next five years, compared with half of
foreign multinationals in Africa. According to the Boston Consulting
Group, the 30 biggest African companies operated in an average of 16
of the continent’s countries last year, twice as many as in 2008.
Leading African businesses are stitching the region together, making
it easier for others to follow suit. Banks serve their corporate
clients across multiple countries. Business leaders flit between
megacities aboard Ethiopian Airlines, which flies to 36 African
states.The largest firms already have the scale to take on
multinational incumbents. Aliko Dangote, a Nigerian cement baron, has
ventured into ten countries. Dangote Group has overtaken
LafargeHolcim, a Swiss behemoth, as the largest cement producer in
sub-Saharan Africa. Mr Dangote’s plants, built by a Chinese contractor
to two standard designs, are bigger, newer and more efficient than
most others. He has the ear of presidents.Intra-continental expansion
is a response to two challenges. The first is finding customers. The
combined economy of Africa’s 54 countries is smaller than that of
France. As they grow richer, individuals or businesses switch from
informal purveyors to formal markets where big firms operate. But
these customers are concentrated in pockets across a vast land mass.
To reach as many as possible, Shoprite, a South African retailer, has
opened supermarkets in 15 countries. A similar logic drove ocp Group,
a Moroccan phosphate producer, to create a sub-Saharan subsidiary in
2016. By investing in soil research, microcredit and logistics, it
hopes to turn subsistence farmers into commercial growers—and buyers
of its phosphate fertiliser. Other firms are taking similar steps.
The second challenge is uncertainty. Africa’s weak supply chains,
volatile currencies and fickle regulators with a fondness for
expropriation or capital controls, which make repatriating profits
difficult, render the future blurrier than in mature economies.
Businesses focused on a single country (or industry) face greater
risks, notes Kartik Jayaram of McKinsey. Firms with a toehold in many
places and sectors, like Dangote Group or Shoprite, are less exposed
to a setback in any one of them. As Mr Bitature’s experience reveals,
crossing borders can backfire. Policymakers in other countries are
prone to sudden “somersaults”, cautions Abdul Samad Rabiu, whose bua
Group sells everything from cement to sugar but has stuck to native
Nigeria. Foreign soil can be inhospitable even in the absence of
political flips. Tiger Brands, a South African foodmaker, sold its
stake in its Nigerian flour division to Mr Dangote for $1 in 2015,
three years after buying it from him for nearly $200m. A depreciating
naira hit Nigerians’ pockets, dampening demand, and drove up the cost
of imports like wheat, which Tiger could not pass onto consumers
because of stiff competition. The strongest firms are those which are
choosy. mtn, a large South African telecoms company, is pulling back
from some smaller countries. But it is toughing it out in Nigeria,
despite endless battles with regulators; it is a vast market, and
gross operating margins of 44% stiffen the spine. ocp set out to
deepen its presence in 15 African countries. It has winnowed the list
down to five—including the regional giants, Nigeria and Ethiopia—where
policies are most business-friendly.◼

Zimbabwean President Emmerson Mnangagwa and his finance chief want a
new currency by March, would seek financing from the International
Monetary Fund and may even consider a Eurobond offering as the
struggling economy emerges from almost two decades of isolation.
The introduction of a new currency is crucial to his efforts to revive
the economy, said Mnangagwa, who secured a five-year term in July
elections after the military deposed Robert Mugabe in 2017.
“It is necessary that we have our own currency,” he said in an
interview in Maputo, Mozambique’s capital, where he was attending a
conference. “I have faith that we’ll achieve that even before the end
of the year or by the first quarter of next year.”
The state abolished Zimbabwe’s currency in 2009, after an episode of
hyperinflation rendered it worthless. Since then, the southern African
nation has used a basket of currencies, including neighboring South
Africa’s rand and the U.S. dollar.
The country has quasi-currencies known as RTGS, which only exist
electronically, and so-called bond notes, though a persistent dollar
shortage has led to a precipitous decline in their value.
Mnangagwa said his finance minister, Mthuli Ncube, has prepared the
ground for a new currency -- starting with the first budget surplus he
can recall in decades.
“I’ve been in government for 38 years as minister and I can’t remember
when you ever had a budget surplus,” Mnangagwa, 76, said.
“Now, this young man has been able to achieve a budget surplus in less
than eight months. So it tells me that what he tells me is possibly
true on these issues.”
The government last month agreed on measures to re-engage with the IMF
for the first time in more than a decade.
Under the arrangement, known as a staff-monitored program, the fund
will assess government’s economic progress by the end of January,
Ncube, 56, said in the interview.
After that, the government plans to access bridge financing to clear
about $1.2 billion of arrears to the World Bank, African Development
Bank and the European Investment Bank, he said. Next, is a plan to
restructure debt owed to bilateral creditors.
“The first order of business is to clear the arrears and then move
onto phase two, which is the bilateral discussions with the Paris
Club,” Ncube said.
“If it works well in the first phase, it’s the same Paris partners who
control those two big institutions that I was talking about, the same
people. So if they accept supporting us on the same program with the
European Investment Bank, surely they will support us on the bilateral
phase as well.”
“Why not? We can only ask, they can only say no. But if we can get
funding from the IMF that would be fantastic. Just additional support
on our balance-of-payments position."
And on the possibility of selling dollar debt thereafter:
“It’s possible, I would say late next year. At the moment you cannot
go into the Eurobond market, which is commercial debt, while you still
owe concessional debt. It doesn’t work like that.”
“So that’s the sequence. Once we have cleared this, at least the
preferred creditors in February -- the IMF, World Bank and the
European Investment Bank -- then after that point we can go into the
market.”
Zimbabwe’s economy grew by an estimated 3.4% last year, according to
the IMF, which projects a 2.1% contraction in 2019. Growth will
probably be flat this year as a power shortage curbs output, according
to Ncube.
Mnangagwa met with Mozambican President Filipe Nyusi this week and
requested additional electricity supplies from his neighbor’s Cahora
Bassa hydropower dam to help ease the deficit, he said.
“We are weak on the financial side, but it is possible for us to
strike a relationship where we can access the amount of power we need
from Cahora Bassa,” he said. “I think that is going to be consummated
very soon.”
Besides power shortages, there are also self-inflicted risks to
Mnangagwa’s hopes of economic revival.
The IMF warned last month that the violent repression of protests in
August and January set back Zimbabwe’s efforts to re-engage with its
external partners.
Since coming to power in November 2017, Mnangagwa has embarked on a
drive to lure more foreign investment, touting attractions including
the world’s third-biggest reserves of platinum-group metals, the
second-biggest biggest reserves of chrome, along with deposits of gold
and diamonds.
Officials have announced more than $27 billion of planned investment,
including a deal with Russian investors to build a $4 billion platinum
mine.
A stake that the Zimbabwean military held in that project posed a
potential hurdle for its financing, according to people familiar with
the discussions.
The army is no longer a shareholder, Mnangagwa said. That could make
it easier to raise the financing required.
“They have moved out,” Mnangagwa said. “We have removed the Zimbabwe
Defence Forces. It’s now owned by a private company. We moved out the
army which had initially been part of the shareholding.”
“50% is owned by the Russian company and then 50% by a local
Zimbabwean company, which bought out the army,” he said. “We
consummated this a few weeks ago, very recently.”
On Zimbabwe’s growing gold production, Mnangagwa said:
Two years ago, the country produced about 18 metric tons of gold. Last
year it increased to about 33 tons, and output will probably grow to
40 tons this year. In four years’ time, the plan is to reach 100 tons
of gold output yearly.

@afreximbank @KremlinRussia_E and @edmnangagwa

Money is accordingly a system of mutual trust, and not just any system
of mutual trust: money is the most universal and most efficient system
of mutual trust ever devised.”
“Cowry shells and dollars have value only in our common imagination.
Their worth is not inherent in the chemical structure of the shells
and paper, or their colour, or their shape. In other words, money
isn’t a material reality – it is a psychological construct. It works
by converting matter into mind.”
The Point I am seeking to make is that There is a correlation between
high Inflation and revolutionary conditions

Zimbabwe’s government has acquired a huge arsenal of war weapons to
deal with looming street protests, as the intractable political and
economic crisis deepens.
The Harare-based Independent newspaper reports that it has been able
to lay hands on official documents detailing the massive arms purchase
described as “critical requirements” by the Interior Ministry.
The weapons reportedly include more than 4000 AK-47 rifles and
assorted pistols, 22000 AK magazines, 5 000 mortar bombs and millions
of rounds of ammunition.
The Independent, which spoke to military experts and read security and
defence websites to understand the scope of the ammunition procured
claims that some of the weapons labeled under the self-defense
category in the procurements document were actually offensive arms.
Such is the case of 7.62×51mm tracers acquired for machine guns to
improve accuracy in hitting targets within a range of 1500 meters.
“We are just keeping track with the latest policing trends and public
order management systems," Matanga said in remarks published by the
Independent.
According to the newspaper, most major cities including the capital
Harare went without electricity from 4 am to 10 pm on Friday, after
the country’s power utility warned that normal supply will only be
available twice a week.

But as drought grips the region, flow on the Zambezi river has
dwindled to a third of what it was a year ago. Last month, Zambia’s
state-owned power utility began cutting output, unleashing daily
blackouts that leave more than 17 million people in the dark.
“The Kariba Dam has been absolutely essential for that region,” said
Randall Spalding-Fecher, an energy adviser whose doctoral thesis
included examining how climate change may impact hydropower on the
Zambezi. “The challenge is the future doesn’t look like the past.”
Back in Sub-Saharan Africa, Zimbabwe and Zambia are planning another
dam upstream on the Zambezi to address electricity shortages. This
month, they chose General Electric Co. and Power Construction Corp. of
China to build the $4 billion project.
The river, meanwhile, is near its lowest level in half a century. If
the water level continues to fall, Zambia has warned power generation
at the existing dam will be suspended entirely in September. And while
droughts may come and go, the river’s future looks grim.
“Unfortunately climate models are showing decreases in rainfall,” said
Spalding-Fecher, who works for a Norwegian development consultancy
called Carbon Limits. “The Zambezi is particularly at risk.”

The 2,400-megawatt Batoka Gorge plant has been planned for years by
the two southern African nations, both of which are struggling with
electricity shortages after a drought curbed hydropower output.
General Electric and Power China are in a consortium that was
shortlisted in February to build the facility.
“Zambia and Zimbabwe have agreed on this project. We have all agreed
that we give it to GE -- China Power and GE together,” Mnangagwa said
in an interview in Maputo, Mozambique’s capital, where he attended
this week’s U.S.-Africa Business Summit. “It’s critical that we move
fast on that front because it’s necessary that as we industrialize
that we need electricity.”
While the project will address electricity shortages, it’s on the same
river -- the Zambezi -- that has left the downstream Kariba hydropower
dam at less than 30% storage capacity and producing less than half its
intended electricity. The Zambezi’s water flows in 2019 are near the
lowest in half a century, and even worse than during the last severe
drought in 2014-15.

Dollar versus Rand 6 Month Chart INO 14.2480
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 16.70
http://quotes.ino.com/charting/index.html?s=FOREX_USDEGP&v=d3&t=c&a=50&w=1

Egypt EGX30 Bloomberg +7.53% 2019
http://www.bloomberg.com/quote/CASE:IND

Nigeria All Share Bloomberg -5.02% 2019
http://www.bloomberg.com/quote/NGSEINDX:IND

Ghana Stock Exchange Composite Index Bloomberg -4.62% 2019
http://www.bloomberg.com/quote/GGSECI:IND

Total value of the sell orders exceeds the buy orders by an
astronomical amount. Looks like a stampede for the exits.

In Q1 2019, imports dipped 3.9% to Kshs. 421.2b while exports also
fell 3% to Kshs.156.9b (total exports/total imports still flat at
37.2%).

newly issued dual-tranche Eurobond with 7-years and 12-years tenor,
the yield on the 7-year bond declined to 6.6% while the 12-year bond
declined to 6.8% @CytonnInvest
http://bit.ly/2Xxei0R

Improving diaspora remittances, which have increased cumulatively by
6.1% in April 2019 to USD 991.2 mn, from USD 858.6 mn recorded in a
similar period of review in 2018 @CytonnInvest
http://bit.ly/2Xxei0R

Private sector credit growth @CytonnInvest
http://bit.ly/2Xxei0R

Nairobi All Share Bloomberg +4.93% 2019
http://www.BLOOMBERG.COM/quote/NSEASI:IND

Price: 27.15 Market Cap: $10.66b EPS: 1.58 PE: 17.184

Price:  5.94 Market Cap: $363.613m  EPS:1.2 PE: 4.950

Electricity Unit Sales grew by 16% from 3,825 GWh to 4,451GWh
Electricity generated from hydro plants +53% in the period under review
Revenue
Hydro 4.408b versus 4.097b
Geothermal 8.583b versus 8.528b
Wind 1.800b versus 1.729b
Thermal 249m

Price: 505.00 Market Cap: $495.00m  EPS: 40.85 PE: 12.362 FY Basic and
diluted EPS 40.85 +22.452% - Dividend Yield +8.8089%

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