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The Latest Daily PodCast can be found here on the Front Page of the site http://www.rich.co.ke
Macro Thoughts |
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15-JUL-2019 :: US Rate Cut in three weeks a Racing Certainty. @TheStarKenya Africa |
It is now the received market wisdom that a US rate cut in July is now all but certain. In fact the Market in its wisdom is now pricing in 4 rate cuts through 2020. US Core CPI is at 2.1%, Unemployment is at 3.7%, GDP growth at 2.4%, Consumer Credit is growing at +5% annualised and US Stock Markets have punched clean through to Fresh All Time Highs. In fact, it is being reported that Chinese Journalists have been proscribed from comparing the US and Chinese Stock Markets. This is indeed a quite incredible moment in monetary policy making where the markets have led Policy Makers by the nose into a situation of ''Voodoo Economics'' plain and simple. The Violence of the Financial Repression has forced interest rates deeper into negative territory in many parts of the World and spilled over into Frontier markets where Kenya's Eurobonds have served up a mouth-watering 20% gain in the first Half. The Impulse has been so violent it has overwhelmed just about every other calculation. President Trump has been bashing the Federal Reserve Chairman and at least did not summarily dismiss him like Reccip Tayyip Erdogan summarily dismissed his Central Bank Chief a few short days ago but the net effect is the same, The Populists are now in charge, Central Bankers are now doing the bidding of their ''Leaders'' and Erdoganomics [where if Trump lays sanctions on Turkey for the purchase of the Russian S-400 Missile Defence Syste, the economy could crumble like a stale biscuit] might well be the Precursor for where this all ends up. The ''Parrot'' is as dead as it was in the Monte Python sketch
Mr. Praline: Never mind that, my lad. I wish to complain about this parrot what I purchased not half an hour ago from this very boutique. Owner: Oh yes, the, uh, the Norwegian Blue...What's,uh...What's wrong with it? Mr. Praline: I'll tell you what's wrong with it, my lad. 'E's dead, that's what's wrong with it! Owner: No, no, 'e's uh,...he's resting. Mr. Praline: Look, matey, I know a dead parrot when I see one, and I'm looking at one right now. Owner: No no he's not dead, he's, he's restin'! Remarkable bird, the Norwegian Blue, idn'it, ay? Beautiful plumage! Mr. Praline: The plumage don't enter into it. It's stone dead. Owner: Nononono, no, no! 'E's resting! Mr. Praline: All right then, if he's restin', I'll wake him up! (shouting at the cage) 'Ello, Mister Polly Parrot! I've got a lovely fresh cuttle fish for you if you show... (owner hits the cage) Owner: There, he moved! Mr. Praline: No, he didn't, that was you hitting the cage! Owner: I never!! Mr. Praline: Yes, you did! Owner: I never, never did anything...
Specifically, with respect to the United States, stoking up the Fire with rate cuts is a very dangerous situation because according to my calculations, the FED will need to be raising rates into the Election, something that will turn Trump apoplectic I am sure.
Further afield and Interestingly. Singapore has been caught up in the US China Trade War cross fire. Gross domestic product in the export-reliant city state shrank an annualized 3.4% in the second quarter from the previous three months, the biggest decline since 2012. Singapore is an outward facing Economy [unlike the US which is much more inward facing] and therefore this slowdown funk was predicted and predictable. Staying in that Part of the World Hu Xijin 胡锡进 [who tweets Xi Jinping's thoughts in real time - a level of Freedom that no Chinese Journalist or Media has] has been expressing his unhappiness about developments in Taiwan.
''US-Taiwan ties breaching previous restrictions seems to be the trend. China increasing military pressure on Taiwan to suppress secessionists will also be a trend.These two trends will mutually provoke and confront, becoming top risk that could trigger military clash in TW Strait'' 胡锡进 tweeted.
The Taiwan Strait is a part of the Geopolitical Hot Spot of Straits which also includes the Strait of Hormuz where last week according to a UK Government Spokesman
“Three Iranian vessels attempted to impede the passage of a commercial vessel, British Heritage, through the Strait of Hormuz HMS Montrose was forced to position herself between the Iranian vessels and British Heritage and issue verbal warnings to the Iranian vessels, which then turned away.”
Its interesting how these Global and geo-economic chokepoints are flaring.
The UAE's MBZ has bailed out on MBS' Yemen war where the Kingdom sure is bleeding the Houthis but is bleeding in return. How MBS will extract the Kingdom from this unwinnable War is as much a mystery as is the Orb that appeared in the Painting Salvatori Mundi [a Painting that MBS bought for $550m] and in Trump's first visit to the Kingdom.
We might yearn for President John Magufuli's more simple World. He urged Tanzania's women to 'set [their] ovaries free' to have more babies to boost the economy
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Has the @federalreserve fallen victim to bond market bullies? @FT Africa |
The bond market “vigilantes” of old used to bully wastrel governments. Now they appear to have moved on to a grander target — the US Federal Reserve. Traders are betting that the US central bank is certain to trim interest rates when it meets this month. Whatever doubts remained were largely dismissed by Fed chairman Jay Powell on Wednesday, when he focused on persistently low inflation in the world’s largest economy, and a fading global growth outlook. But the prospect of monetary easing still looks odd when set against mostly decent US economic data. Richard Barwell, head of macro research at BNP Paribas Asset Management, argues that investors have browbeaten the central bank into a defensive posture.
“The market has seemingly spooked the Fed into changing strategy twice in the space of six months, first capitulating on the hiking cycle and then embracing an easing cycle,” he said. “It is becoming increasingly difficult to make the argument that this Fed would be cutting rates this month . . . in the absence of the relentless pressure from the market to act now.”
The crucial question confronting the Fed and investors is whether markets are right — and what this means for the longer-term, often tempestuous, relationship between the central bank and investors. The message from the market is clear: interest rate futures indicate traders think the Fed could unravel all of last year’s four rate increases by 2020. But officials themselves seem uncertain about what to do. The latest projections indicate seven policymakers expect 50 basis points of rate cuts by the end of the year, and Mr Powell has indicated that many of the remaining 10 members of the rate-setting Federal Open Market Committee thought the case for easier policy had strengthened. Analysts say the Fed is boxed in and will have to cut to avoid a nasty bout of turbulence in asset prices.
“The market has acted as if the Fed has already cut. If the Fed does not deliver, financial conditions will tighten, creating a headwind for the economy,” said Michelle Meyer, chief US economist at Bank of America. “This puts the Fed in a difficult position,” she added. “On the one hand, they don’t want to be bullied by the markets. But, on the other hand, markets have information that the Fed cannot ignore.” Although US economic data has worsened over the past year, it remains reasonably solid — something even Mr Powell highlighted in his otherwise dovish comments this week.
Indeed, “nowcasting” models made by the St Louis and New York arms of the Fed indicate that growth is now rebounding, and the trade war is at least temporarily on hold, after a tentative truce engineered at the recent G20 meeting.
Moreover, the latest employment data were glowing, and core inflation accelerated last month as some of the “transitory” factors that Mr Powell had previously highlighted started to wane. “The market is bullying them and the data are now trolling them,” Mr Barwell said.
The classic argument against blindly following markets came from former Fed chair Ben Bernanke in 2004. He argued that while markets “aggregate enormous amounts of information and thus provide a rich hunting ground for central bankers trying to learn about the economy”, trying to follow them is a strategy that “quickly degenerates into a hall of mirrors”. In other words, if the Fed simply moves rates around in response to market prices, those prices would be affected by expectations of the Fed following, creating feedback loops, potentially leading to terrible mistakes. Jan Hatzius of Goldman Sachs sees three potential pitfalls.
“First, the hall of mirrors effect would surely degrade the information content of bond yields. Second, the temptation to satisfy market expectations asymmetrically — to avoid delivering hawkish surprises — could undermine financial stability. Third, the bond market could become a channel for political pressure on Fed decisions,” he said.
On the other hand, some analysts argue that the Fed is not only right to follow markets but should do so more often.
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Ruins of Gedi Wikipedia Africa |
The Ruins of Gedi are the remains of a Swahili town located in Gedi, a village near the coastal town of Malindi in Kenya.
From the 13th or 14th to 17th centuries, Gedi was a thriving community along the jungle coast of East Africa. Although no written record exists of this town, excavations between 1948 and 1958 revealed that the Muslim inhabitants traded with people from all over the world. Some of the findings included beads from Venice, coins and a Ming vase from China, an iron lamp from India, and scissors from Spain. The population was estimated to exceed at least 2500 people. These items can be found in the museum in the complex which was opened in 2000.
Gedi had a mosque, a palace, and large stone houses. These houses were complex for their time, with bathrooms with drains and overhead basins to flush toilets. The city's streets were laid out at right angles and had drainage gutters. There are also wells which supplied water to the community. The material used to construct the buildings was made from coral reef from the nearby ocean.
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Sic transit gloria mundi is a Latin phrase that means "Thus passes the glory of the world" Africa |
"Pater Sancte, sic transit gloria mundi!" ("Holy Father, so passes worldly glory!")[2] These words, thus addressed to the pope, served as a reminder of the transitory nature of life and earthly honors.
There are countless sayings in various languages expressing the same sentiment; in English most idiomatic is "All that's fair must fade," following a line of Thomas Moore.
Within Buddhism, the corresponding doctrine is impermanence. In East Asian Buddhism, the analogous saying is the four-character idiom 盛者必衰 (Chinese: {shengzhebishuai}), from a passage in the Humane King Sutra, 「盛者必衰、実者必虚」, which translates as "The prosperous inevitably decline, the full inevitably empty". In Japan this is well-known due to its use in the opening line of The Tale of the Heike, whose latter half reads "the color of the sāla flowers reveals the truth that the prosperous must decline." (沙羅雙樹の花の色、盛者必衰の理を顯す Sarasōju no hana no iro, jōshahissui no kotowari wo arawasu).[11]
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Jorge Luis Borges Limits Africa |
Of all the streets that blur in to the sunset, There must be one (which, I am not sure) That I by now have walked for the last time Without guessing it, the pawn of that Someone
Who fixes in advance omnipotent laws,
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24-JUN-2019 :: Wizard of Oz World. @TheStarKenya Law & Politics |
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. 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 pro- blems, 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, a beautiful fairy, a ball of fire, and 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”.
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South Africa's new justice minister, Ronald Lamola, put the extradition of former Mozambique Finance Minister Manuel Chang back to his home country on hold after learning that he would have immunity from prosecution there. Africa |
Chang was arrested in December in South Africa, where he remains in custody. The U.S. has also applied for his extradition, based on a slew of charges related to financial crimes, including securities fraud and accepting kickbacks in connection with Mozambique’s $2 billion hidden-debt scandal. Lamola authorized his department to oppose an urgent application by Chang himself to be surrendered to Mozambican authorities after receiving the information about his immunity, the Ministry of Justice and Correctional Services said in a statement on Saturday. Under South African law, Chang could only be extradited if charges had already been filed in Mozambique. His immunity would prevent him from actually facing any charges. Chang’s extradition to Mozambique won’t be permitted until his immunity is lifted and charges are filed. A spokesman at the ministry said it wasn’t clear if and when Mozambique would revoke Chang’s immunity. Lamola’s predecessor made a decision to extradite Chang to Mozambique in May.
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